Can Magistrate summon an accused in a criminal case unless there is a prima facie case against him?

 As observed by this Court in the case of Pepsi Foods Ltd. v.

Special Judicial Magistrate, (1998) 5 SCC 749 and even thereafter in

catena of decisions, summoning of an accused in a criminal case is a serious matter. Criminal Law cannot be set into motion as a matter of course. In paragraph 28 in Pepsi Foods Limited (supra), it is observed  and held as under:

“28. Summoning of an accused in a criminal case is a serious matter.

Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient

for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused.”

8.3 As held by this Court in the case of India Infoline Limited (supra), in the order issuing summons, the learned Magistrate has to record his satisfaction about a prima facie case against the accused who are Managing Director, the Company Secretary and the Directors of the Company and the role played by them in their respective capacities which is sine qua non for initiating criminal proceedings against them.

Looking to the averments and the allegations in the complaint, there are no specific allegations and/or averments with respect to role played by them in their capacity as Chairman, Managing Director, Executive Director, Deputy General Manager and Planner & Executor. Merely because they are Chairman, Managing Director/Executive Director and/or Deputy General Manager and/or Planner/Supervisor of A1 & A6, without any specific role attributed and the role played by them in their capacity, they cannot be arrayed as an accused, more particularly they cannot be held vicariously liable for the offences committed by A1 & A6.

9. From the order passed by the learned Magistrate issuing the

process against the respondents herein – accused nos. 1 to 8, there does not appear that the learned Magistrate has recorded his  satisfaction about a prima facie case against respondent nos. 2 to 5 and 7 & 8. Merely because respondent Nos. 2 to 5 and 7 & 8 are the Chairman/Managing Director/Executive Director/Deputy General Manager/Planner & Executor, automatically they cannot be held vicariously liable, unless, as observed hereinabove, there are specific allegations and averments against them with respect to their individual role. Under the circumstances, the High Court has rightly dismissed the revision applications and has rightly confirmed the order passed by the learned Sessions Court quashing and setting aside the order passed by the learned Magistrate issuing process against respondent nos. 1 to 8 herein – original accused nos. 1 to 8 for the offences punishable under Sections 427, 447, 506 and 120B read with Section 34 IPC.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NOS.1047-1048/2021

Ravindranatha Bajpe  Vs  Mangalore Special Economic Zone Ltd. & Others

Author: M.R. SHAH, J.

Dated: SEPTEMBER 27, 2021.

Citation: 2021 SCC OnLine SC 806

Print Page

Whether court can entertain a pleading filed by an officer of the company if the company Board resolution does not authorize him?

 According to us, the decision of the Hon'ble Supreme

Court in the case of United Bank of India vs. Naresh Kumar and

ors. (supra) affords a complete answer to the objection now raised by the Appellant. In this case, it is held that as far as possible, substantive rights should not be allowed to be defeated on account of procedural irregularities which are curable. It is further held that companies can sue and can be sued in their own name. Under Order 6, Rule 14 of the CPC, a pleading is required to be signed by the party ad its pleader, if any. As a company is a juristic entity it is obvious that some persons has to sign the pleadings on behalf of the company. Order 29, Rule 1 of CPC, therefore, provides that in a suit by or against a Corporation, the Secretary or any Director or other principal officer of the Corporation who is able to depose to the facts of the case might sign and verify on behalf of the company. Reading Order 6, Rule 14, together with Order 29, Rule 1 of CPC, it would appear that even in the absence of any formal letter of authority or power of attorney having been executed a person referred to in Rule

1 of Order 29 can, by virtue of the office which he holds, sign and

verify the pleadings on behalf of the Corporation. In addition

thereto and dehors Order 29, Rule 1 of the Code of Civil Procedure, as a company is a juristic entity, it can duly authorize any person to sign the plaint or the written statement on its behalf and this would be regarded as sufficient compliance with the provisions of Order 6, Rule 14 of the Code of Civil Procedure. {Para 21}

22. The Hon'ble Supreme Court, in the aforesaid Judgment has

further proceeded to hold that a person may be expressly authorised to sign the pleadings on behalf of the company, for example, by the Board of Directors passing a resolution to that effect or by a power of attorney being executed in favour of any individual. In absence thereof and in cases where pleadings have been signed by one of its officers a Corporation can ratify the said action of its officer in signing the pleadings. Such ratification can be express or implied. The Court can on the basis of evidence on record, and after taking all the circumstances of the case, specifically with regard to the conduct of the trial, come to the conclusion that the corporation had ratified the act of signing of the pleadings by its officer.

26.  In the present case, there is evidence on record that

PW.1, who actually signed, verified and instituted the suit on behalf

of the Respondent, was its Company Secretary and General Manager

(Corporate Affairs). Besides, the facts in the present case on the

issue of institution of the suit, are substantially similar to the facts in

the case of United Bank of India vs. Naresh Kumar and ors . (supra).

Accordingly, the first point for determination will have to be

answered against the Appellant and in favour of the Respondent.

IN THE HIGH COURT OF BOMBAY AT GOA

FIRST APPEAL NO. 123 OF 2013

The New India Assurance Co. Ltd.  Vs  Messrs Sesa Goa Ltd.,

Print Page

Supreme Court: Liability for Criminal offence depends on the role one plays in the affairs of the company and not on mere designation or status

 We may notice that Section 141 of the Negotiable Instruments Act, which was inserted in Negotiable Instruments Act by amendment in the year 1988 contains the same conditions for a person to be proceeded with and punished for offence as contained in Section 68 of FERA, 1973. Section 141(1) of Negotiable Instruments Act uses the same expression "every person, who, at the time the offence was committed, was in charge of and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence". Section 68 of FERA, 1973 as well as Section 141 of the Negotiable Instruments Act deals with the offences by the companies in the same manner. The ratio of the judgments of this Court on Section 141 of Negotiable Instruments Act as noted above are also clearly relevant while interpreting Section 68 of FERA Act. We, thus, hold that for proceeding against a Director of a company for contravention of provisions of FERA, 1973, the necessary ingredient for proceeding shall be that at the time offence was committed, the Director was in charge of and was responsible to the company for the conduct of the business of the company. The liability to be proceeded with for offence Under Section 68 of FERA, 1973 depends on the role one plays in the affairs of the company and not on mere designation or status.

IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 2463 of 2014

Decided On: 27.07.2020

Shailendra Swarup Vs.  The Deputy Director, Enforcement Directorate

Hon'ble Judges/Coram:

Ashok Bhushan and R. Subhash Reddy, JJ.

Citation: MANU/SC/0544/2020

Print Page

Whether creditor can seek more than one remedy simultaneously?

 We may only end by saying that cases like the present one have to be decided by balancing the interest of creditors to whom money is owing, with a debtor company which will now go in the red since a winding up petition is admitted against it. It is not open for persons like the appellant to resist a winding up petition which is otherwise maintainable without there being any bona fide defence to the same. We may also hasten to add that the respondent cannot be said to be blowing hot and cold in pursuing a remedy under the Recovery of Debts Act and a winding up proceeding under the Companies Act, 1956 simultaneously. Here, it is important to refer to the judgment of Lord Atkin in Lissenden v. C.A.V Bosch, Ltd., [1940] 1 All E.R 425, at 436-437, which says:

“The doctrine of election could have no place in the present case. The applicant is not faced with alternative rights. It is the same right that he claims, but in larger degree. In Mills v. Duckworth, [1938] 1 All E.R 318, a plaintiff who had been awarded damages for negligence had taken the judgment sum out of a larger sum paid into Court and had then appealed against the quantum of damages, and was met by a similar objection to his appeal. Greer, L.J, in overruling the objection, pointedly said, at p. 321:

“He [the plaintiff] said: “I am not going to blow hot and cold. I am going to blow hotter.”

Here the applicant is not faced with a choice between alternative rights. He has exercised an undisputed right to compensation, and claims to have a right to more. One has not lost one's right to a second helping because one has taken the first.”

30. When secured creditors like the respondent are driven from pillar to post to recover what is legitimately due to them, in attempting to avail of more than one remedy at the same time, they do not “blow hot and cold”, but they blow hot and hotter. The appeals are accordingly dismissed with no order as to costs.

In the Supreme Court of India

(Before R.F Nariman and Navin Sinha, JJ.)

Civil Appeal No. 1291 of 2019

Swaraj Infrastructure Pvt. Ltd.v.  Kotak Mahindra Bank Ltd

Citation: 2019 SCC OnLine SC 92

Print Page

Whether director of company can file complaint for dishonour of cheque without resolution by board of directors?

 In the case of Chico Ursula D 'Souza v. Goa Plast Pvt. Ltd. (supra) this Court has again held that a person who claims to represent another is expected to produce an authority or power which entitles him to so appear. In the case of Goa State Co-OP. Bank Ltd. v. Kurtarkar Traders (supra) it was held that the complainant as a body corporate can act only by resolutions passed by the directors at its meeting. There was no resolution passed by the complainant in favour of its Managing Director authorising him to appoint any person to prosecute the defaulters whose cheques bounced. Power to lodge complaints could have been given only by a resolution by the board of directors. There was none given and none was produced. It was further observed that in the case of Ashok Bampto Pagoi v. Agencia Real Canacona Pvt. Ltd. (supra) a complaint even by a director of company was not maintainable without a resolution by the board of directors.
IN THE HIGH COURT OF MADRAS

Crl. R.C. Nos. 98 to 103 of 2009 and Connected M.Ps.

Decided On: 20.12.2012

 Vadivel Sizing and Weaving Mills (P) Limited Vs Fenner (India) Limited Textile Division

Print Page

Whether it is necessary to obtain leave of court prior to filing of eviction suit against company in liquidation?

 Having dealt with the aforesaid two preliminary contentions, let me now turn to the judicially recognised principle on which the question of grant of leave under Section 446 of the Companies Act is required to be considered. Based on the survey of the various judicial pronouncement, the general principle, on which the leave is to be granted in an action, may be shortly summarised as follows:

The leave of the court is not granted as a matter of course or merely for the asking. On a formal application being made, the court will examine the facts and circumstances of each case and exercise its discretion judicially and not in a capricious or arbitrary manner. In the exercise of its discretion, it may grant leave unconditionally or on terms or may refuse it absolutely.

The court has the power to incorporate any terms while granting leave, and this is explicit by the words "except by leave of the court and subject to such terms as the court may impose."

The object of the section appears to be to save the company which is being wound up, from unnecessary litigation and to protect the assets for equitable distribution among its creditors and shareholders. The consequence of the winding up order, therefore, is that no suit can be filed against the company without obtaining leave of the court. In dealing with the question of grant of leave, the Court has to necessarily consider the interest of the Company and to see that the assets are not wasted in unnecessary litigation. Leave to file suit should ordinarily be granted where the question at issue is such which cannot be gone into and decided in the winding up proceeding.

34. This Court, while considering the prayer for grant of leave has to bear in mind the aforesaid settled principles culled down from the various judgments of the various courts. Now, let me turn to the question whether the interest of the company would get affected, if the leave to file suit as prayed for by the applicant is granted. While considering this aspect, one has to keep in mind the law laid down by the Apex Court in the case of Nirmala R. Bafna v. Khandesh Spinning and Weaving Mills Company Limited (supra), wherein the Apex Court ruled that in addition to the factual situation there are two other circumstances which must be taken into consideration, namely, (a) the tenancy rights of the Company in the tenanted premises are not an asset for the purpose of liquidation proceedings; and (b) merely because the Company moves in liquidation and a Liquidator / Official Liquidator is appointed, the rights of the company vis-a-vis its landlord or tenants do not undergo any change. Keeping in mind these judicially recognised statements of law; if one turns to the reply filed by the Official Liquidator to oppose this application, it is amply made clear that the Official Liquidator does not need premises for its use and therefore the Official Liquidator has no objection for releasing the premises in favour of the Land Lord. If that be so, it would not be necessary for the Official Liquidator to incur expenses to defend the suit because the Official Liquidator does not need the suit premises and on the top of it tenancy rights, the Company had in the premises, are not the asset for the purpose of liquidation proceedings. So far as the sub-tenant is concerned, he would be the only contesting party to the suit. Therefore, the question of creating strain on the financial resources of the Company in Liquidation could not be a factor which should weigh with this Court while considering the application for grant of leave.

The issues involved in the suit and the reliefs claimed cannot be adjudicated upon or decided by this Court in exercise of company jurisdiction. That jurisdiction shall be with the court trying the suit. The interest of the company in liquidation is not at all involved in the said suit as already recorded hereinabove for the reasons stated. Therefore, the question of invocation of jurisdiction of the Small Causes Court either under Section 28 of the Bombay Rent Act or under Section 33 of the Maharashtra Rent Act or under Section 41 of the Presidency Small Causes Court Act is not relevant for the purpose of grant of leave because the question of jurisdiction of the court will have to be decided on the basis of the plaint pleadings.

42. The small Causes Court would be well within its right to decide its own jurisdiction. In the event; it comes to the conclusion that it has no jurisdiction to try a suit under the Presidency Small Causes Court Act, in that event, it would be open for that Court either to return or reject the plaint or permit the conversion of the suit. All these conflicting questions need not be gone into and adjudicated upon by this Court at the stage of grant of leave. Only this Court has to consider that the suit is not a frivolous suit, that the suit is not such which is bound to fail for the reasons apparent on the face of the record and the same is not going to create strain on the resources of the Official Liquidator. 

IN THE HIGH COURT OF BOMBAY

Company Application No. 720 of 2006 in Company Petition No. 201 of 1994

Decided On: 05.03.2007

 K.R. Steelunion Limited,  Vs. Poysha Industrial Company Ltd., Company through its Official Liquidator, High Court

Hon'ble Judges/Coram:

V.C. Daga, J.

Citation : 2007 (4)MhLj 280,2007(3) Bom CR 821

Print Page

Whether certified copy of resolution or extract of minutes book is admissible without proof of original?

Next comes the document No. 1 -the certified true copy of the resolution dated 16.2.2009, whereby the complainant company had allegedly resolved to give consent of the Board of Directors to execute power of attorney in favour of Ashwin Sheth, Managing Director and/or Sharad Doshi, Executive Assistant to the Managing Director to institute or defend any suit or criminal proceedings. The learned trial Court observed in the impugned order that there is no clear-cut provision about issuance of certified copy of extract of minutes book but if Sub-section (2) of Section 196 of the Companies Act is read, it may be stated that certified copy of the minutes can be given. The learned trial Court observed that the witness Sharad Doshi in his affidavit had deposed about the said document and thereby he has proved the genuineness of the document. Under Section 195 of the Companies Act, where minutes of the proceedings of any general meeting of the company have been kept in accordance with the provisions of Section 193, then, until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have duly taken place. Section 194 of the Companies Act provides that the minutes of meetings kept in accordance with the provisions of Section 193 shall be evidence of the proceedings recorded therein. However, no provision in the Companies Act is brought to my notice which provides that the certified copy or extract of the minutes would be admissible in evidence without proof of the original. Section 65(f) of the Evidence Act provides that secondary evidence may be given of the existence, condition and contents of the document when the original is the document of which a certified copy is permitted by the Evidence Act or by any other law in force in India to be given in evidence. As no provision from the Companies Act is brought to my notice under which the certified copy of the minutes of the meetings of the board of directors is admissible in evidence without proof of the original, it must be said that the copy of the minutes cannot be admitted in evidence directly unless the original is proved or the copy is admitted by opposite party. Therefore, even though that document is given exhibit number, it cannot be treated to have been proved, unless the complainant leads appropriate evidence to prove the minutes.

IN THE HIGH COURT OF BOMBAY

Criminal Writ Petition No. 40 of 2011

Decided On: 16.03.2011

Ashish C. Shah Vs. Sheth Developers Pvt. Ltd., 

Hon'ble Judges/Coram:

J.H. Bhatia, J.

Citation: 2011(4) MHLJ 288

Print Page

How to prove resolution passed by board of directors of company?

Sec. 193(1A)(a) of Company Act makes it clear that each page of the minute book is to be initialed or signed and the last page of the record of proceedings of each meeting in such book is to be dated and signed in case of minutes or proceedings of a meeting of Board or of a committee thereof, by the chairman of the said meeting or the chairman of the next succeeding meeting. Ld. counsel for the plaintiff has tried to make mountain out of a mole hill in view of the photostat copy Ex. DW 1/1 (mark A) of the resolution dated 9.3.1999 i.e. the 83rd resolution. In this document (mark A) Ex. DW 1/1 Ajay Chaudhary was mentioned as the chairman. Ld. Counsel for the plaintiff wanted to take this particular fact to be sufficient to conclude that this resolution was fabricated as Shiv Nadar was not present on 9.3.99 and he had later on signed the same. It is not in dispute that Shiv Nadar was the chairman of the company. Therefore in view of Sec. 193(1A)(a) Companies Act he had signed the 83rd resolution at the time of the meeting dated 20.4.99 on which date 84th meeting of the board of director had been convened. The photostat copy of the 84th meeting of Board of Directors shows that it was attended by Shiv Nadar. Therefore, in view of Sec. 193(1A)(a) of Companies Act, he was entitled to sign the minutes of the 83rd meeting. Thus, there is no material to hold that the minute book had been fabricated later on. The original minute book had been produced at the time of recording of statement of G.P. Kalra DW 1. The evidence had been recorded by my ld. predecessor. When the defendants were directed to produce the photostat copy of the minute book containing the entries of 83rd and 84th meeting, the same had been produced before on 13.12.2003. I had also perused the original minute book containing the minutes of 83rd and 84th meeting. The minute book appeared to be properly maintained in accordance with Sec. 193 of Companies Act and there did not appear anything to raise suspicion.

The judgment relied upon in the case of Amal Kumar Mukherjee (supra) with respect to the argument that the minute book of a company ought to be bound and written in hand, is to be read in the context of the facts of the said case wherein there were disputes inter se shareholders of a company and in such circumstances, the issue had arisen with respect to manipulation of the minute book of the company. In the present case, there is no dispute inter se shareholders or inter se Directors of the Board of the company and therefore the judgment in the case of Amal Kumar Mukherjee (supra) will have no application to the facts of the present case, especially for the reasons stated above that there is no subsequent resolution of the Board of Directors or any resolution in the General Body meeting of defendant No. 1/respondent No. 1-company questioning or rescinding the termination of services of the appellant - Sh. Pawan Kumar Dalmia.

IN THE HIGH COURT OF DELHI

RFA Nos. 180/2004 and 235/2004

Decided On: 13.03.2012

Pawan Kumar Dalmia Vs. M/s. HCL Infosystems Ltd. & Ors.

Hon'ble Judges/Coram:

Hon'ble Mr. Justice Valmiki J. Mehta

Print Page

Whether resolution of board of directors is more important letter issued by company?

 Whether the defendant company in refusing to register shares did so on the ground of indebtedness of Hemmad or not has in our opinion first to be found from the terms of the resolution of the meeting of the Board of Directors. The company or the Board of Directors speak primarily through its or their resolution. If the enquiry is as to what was the decision taken by the Board of Directors the Court would look more and depend more on the actual terms of the resolution than on the terms and the language in which such decision was conveyed by letter or correspondence even if such a letter in fact was written and despatched. It is, therefore, necessary to refer to the resolutions in this case.

Calcutta High Court

Babulal Choukhani vs Western India Theatres Ltd. And ... on 5 December, 1956

Print Page

How doctrine of single economic entity is applicable to arbitration proceeding?

Bharat Aluminium Company Ltd., 2011 IV AD (Delhi) 212 after relying upon DHN Food Distributors Ltd. and Others v. London Borough of Tower Hamlets [1976] 3 ALL ER 462 at Page 467 has recognised the doctrine of single economic entity. In DHN Food Distributors Ltd. (Supra), it was held as under:-

".....We all know that in many respects a group of companies are treated together for the purpose of general accounts, balance sheet and profit and loss account. They are treated as one concern. Professor Gower in his book on company law says : „there is evidence of a general tendency to ignore the separate legal entities of various companies within a group, and to look instead at the economic entity of the whole group‟. This is especially the case when a parent company owns all the shares of the subsidiaries, so much so that it can control every movement of the subsidiaries. These subsidiaries are bound hand and foot to the parent company and must do just what the parent company says. A striking instance is the decision of the House of Lords in Harold Holdworth & Co. (Wakefield) Ltd. v. Caddies. So here. This group is virtually the same as a partnership in which all the three companies are partners. They should not be treated separately so as to be defeated on a technical point. They should not be deprived of the compensation which should justly be payable for disturbance. The three companies should, for present purposes, be treated as one, and the parent company, DHN, should be treated as that one. So that DHN are entitled to claim compensation accordingly. It was not necessary for them to go through a conveyancing device to get it."

Consequently, the defendants No.1 and 2 as well as their subsidiary VIHBV, prima facie, seem to be one single economic entity.

This Court is of the prima facie opinion that as the claimants in the two arbitral proceedings form part of the same corporate group being run, governed and managed by the same set of shareholders, they cannot file two independent arbitral proceedings as that amounts to abuse of process of law.

This Court is further of the prima facie view that there is a risk of parallel proceedings and inconsistent decisions by two separate arbitral tribunals in the present case.

In the prima facie opinion of this Court, it would be inequitable, unfair and unjust to permit the defendants to prosecute the foreign arbitration.

Delhi High Court

Union Of India vs Vodafone Group Plc United Kingdom ... on 22 August, 2017

Print Page

Whether Registrar of BIFR can dismiss application for reference under SICA Act?

Regulation 19(5) extracted above, requires the
Registrar or the Secretary, as may be, to make an
endorsement of the date of receipt of the
Reference [Regulation 19(4)] and thereafter on
scrutiny thereof to register the same and place
before the Chairman for being referred to the
Bench. When the Regulations framed under the
statute vests in the Registrar or the Secretary of
the Board the power to “scrutinize” an application
prior to registration thereof and thereafter to
register and place the same before the Bench, we
do not see how such power of scrutiny can be
understood to be vesting in any of the said
authorities the power to adjudicate the question
as to whether a company is an industrial company
within the meaning of Section 3(e) read with 3(f)
and 3(n) of the SICA. A claim to come within the
ambit of the aforesaid provisions of the SICA i.e.
to be an industrial company, more often than not,
would be a contentious issue. In the present case,
it certainly was. The specific stand of the
respondent No. 1 company in this regard need not
detain the Court save and except to state that by
a detailed description of the manufacturing
process the respondent No. 1 company had sought to
contend that it is an industrial company. Surely,
the rejection of the above stand could have been
made only by a process of adjudication which power
and jurisdiction clearly and undoubtedly is vested
by the SICA and the Regulations framed thereunder
in a Bench of the Board and not in authorities
like the Registrar and the Secretary.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
 CIVIL APPEAL NO.3055 OF 2017
(Arising out of S.L.P.(C) No.1587 of 2015)
BANK OF NEW YORK MELLON
LONDON BRANCH 
V
ZENITH INFOTECH LIMITED.
Dated:FEBRUARY 21, 2017.
Citation: AIR 2017 SC 1735

Print Page

Whether civil court has jurisdiction to try cases if relief is claimed against companies?

 In Santosh Poddars’ case (supra), the Division
Bench of this court was dealing with a suit where
the plaintiffs had prayed for a declaration that 
defendant 1 therein had ceased to be a director of
Poddar Tyres Limited, defendant 3 therein, with
effect from 31/12/1990. They sought a further
declaration that all meetings of the Board of
Directors of defendant 3 company held after
31/12/1990 and in particular, the meetings allegedly
held on 23/3/1991 and 10/6/1991 are illegal,
invalid, nonest and the resolutions passed at these
meetings are illegal, invalid and nonest and not
binding on defendant 3 company or the plaintiffs. A
further declaration was sought that they continued
to be the directors of defendant 3 company and
their purported cessation as such directors is
invalid, illegal, nonest and void. In yet another suit,
similar declaration was sought. The suits were filed
in the City Civil Court at Bombay. The plaintiffs
had taken out a notice of motion for interim relief.
In the affidavits in reply filed by the defendants, a
preliminary objection was taken to the jurisdiction
of the City Civil Court to entertain and try the suits.
The City Civil Court framed a preliminary issue as
to whether it has jurisdiction to entertain and try the
suit in view of the provisions of section 10 of the
said Act read with the Notification dated 29/5/1959.
This court referred to sections 2(11) and 10
of the said Act and came to the conclusion that
whenever there is any reference under the said Act
to any proceedings before a Court under that Act,
(other than proceedings relating to an offence under 
the Act), the court which will have jurisdiction shall
be the High Court or, if there is the requisite
Notification, the District Court. However, there is
no ouster of the jurisdiction of the City Civil Court
in all cases where the provisions of the said Act
may be attracted. It was further observed that it is
only in respect of those proceedings which are
expressly contemplated under the said Act under
any specific provision that the court which is
referred to in that section would be the special
court, namely the High Court or the Notified
District Court. In all other cases, ordinarily the civil
courts would continue to have jurisdiction. In this
behalf, the Division Bench placed reliance on the
judgment of the single judge of this court in Rao
Saheb Manilal Gangaram Sindore v. M/s.
Western India Theatres Ltd., LXIV Bom.L.R.
532.
9. The Division Bench also referred to Dhulabhai’s
case (supra) and finally observed as under:
"From the provisions of the Companies
Act, we do not find anything by which
we can infer that the jurisdiction of the
Civil Court is ousted. The very fact that
section 2(11) is part of the definition
clause under the Companies Act under
which a Court is defined to mean the
Court as prescribed under section 10,
clearly shows that whenever the term
‘the court’ is used in any section of the
Companies Act, the term ‘Court’ will
have to be interpreted with reference to
section 10. These sections will have no
application where any general civil suit
is filed. The definition clause is attracted
only when resort is had to a proceeding
under the Companies Act under a
section which prescribes resort to a
Court. Under the Companies act, powers
are conferred not only on Courts but
also on other authorities like the
Company Law Board, the Central
Government and the Registrar. Where a
power is vested by the Act in a Court,
that Court has to be ascertained with
reference to section 10. Beyond so
specifying the Court competent to deal
with such a matter, section 10 cannot
be construed as investing the Company
Court with jurisdiction over every
matter which may arise in respect of a
Company or as divesting Civil Courts of
their jurisdiction."
10. The trial court has placed reliance on this
judgment and I find the reliance placed on this
judgment to be apt. It is pertinent to note that in that
case also, the declaration was sought that all
meetings of the Board of Directors of defendant 3
company and the resolutions passed at these
meetings are illegal, invalid and nonest and not
binding on defendant 3 company or the plaintiffs
and defendant 1 had ceased to be a director of
Poddar Tyres Limited. A further declaration was
also sought that the plaintiffs continued to be the
directors of defendant 3 company and their
purported cessation as such directors is invalid,
illegal, nonest and void. In the present case also, a
declaration is sought that the appointment of 
defendants 3 and 4 as directors of defendant 1 is
illegal, null and void and of no consequence
whatsoever and any acts, deeds and/or things of any
nature whatsoever done by defendant 1 company in
pursuance of the alleged appointment of defendants
3 and 4 as the directors and/or any other act, deed,
thing done by defendants 3 and 4 in exercise of
powers in the alleged capacity as directors of
defendant 1 is illegal, null and void and not
binding. A similar declaration is sought that any
resolutions allegedly passed in any purported
meeting of shareholders or of Board of Directors of
defendant 1 allegedly held by the Kapoor family or
any of them is illegal, null and void and of no
consequence whatsoever.
13. In that case, the Division Bench was
considering section 155 of the said Act. Section 155
of the said Act vests jurisdiction in the company
judge, and impliedly ousts the jurisdiction of the
civil court in respect of rectification. After referring
to Raja Ram Kumar Bhargava v. Union of
India, AIR 1988 SC 752, this court observed that
this judgment is an authority for the proposition that
if a pre-existing right in common law is recognised
by the statute and a new statutory remedy for this
enforcement provided, without expressly excluding
the civil court’s jurisdiction, then both the common
law and the statutory remedies might become 
concurrent remedies. 
IN THE HIGH COURT OF BOMBAY AT GOA
FIRST APPEAL NO. 62 OF 2016

 M/s. Candolim Developers Pvt. Ltd. V Mr. Pravin Grover,


Coram:- F. M. REIS & NUTAN D. SARDESSAI, JJ.
 Date:- 13th October, 2016
Citation: 2017(2) ALLMR117

Print Page

When Criminal complaint filed by shareholder against company and its management is tenable?

While it is true that a Company registered under the Companies Act is a legal person, separate and distinct from its individual members, its property is not the property of the shareholders. A shareholder has merely interest in the company, arising under its Article of Association, measured by a sum of money for the purpose of liability and by a share in the profit. As such, a shareholder many not be entitled to complain about infringement of rights of the Company but this right of a shareholder in the event of substantial reduction in the value of his investment in shares, seizure of his right to receive dividend from investment, can obviously furnish him ground to initiate action against those who are responsible in dwindling the financial status of the Company or the Managing Director, Directors and other office bearers who are in helm of affairs of the Company.

IN THE HIGH COURT OF RAJASTHAN (JODHPUR BENCH)

Criminal Misc. (Pet.) (CRLMP) No. 613/2014

Decided On: 11.11.2016

Tribhuvan Raj Bhandari

Vs.

State of Rajasthan

Hon'ble Judges/Coram:

Pratap Krishna Lohra, J.

Citation: 2017 CRLJ 852

Print Page

Whether Indian penal code provides for vicarious liability for any offence alleged to have committed by company?

Learned counsel for the respondents have not

rebutted this issue in any of his arguments. With the

meticulous understanding of the orders of the Courts

below in the instant case, we can see that general and

bald allegations are made in the context of appellant

No.1 who is a juristic person and not a natural

person. The Indian Penal Code, 1860, does not

provide for vicarious liability for any offence alleged to

be committed by a company. If and when a statue

contemplates creation of such a legal fiction, it

provides specifically therefor, e.g. Negotiable

Instruments Act, 1881. Further, reliance was made

on S.K. Alagh Vs. State of Uttar Pradesh & Ors.,

reported in (2008) 5 SCC 662, where at paragraph 16,

this Court observed that “Indian Penal Code, save and

except some provisions specifically providing therefor,

does not contemplate any vicarious liability on the part

of a party who is not charged directly for commission of

an offence.” Further in Maksud Saiyed Vs. State of

Gujrat & Ors., reported in (2008) 5 SCC 668, at

paragraph 13, this Court observed that where a

jurisdiction is exercised on a complaint petition filed

in terms of Section 156(3) or Section 200 of the Code

of Criminal Procedure, the Magistrate is required to

apply his mind. Indian Penal Code does not contain

any provision for attaching vicarious liability on the

part of the Managing Director or the Directors of the

Company when the accused is the Company. The

Learned Magistrate failed to pose unto himself the

correct question viz. as to whether the complaint

petition, even if given face value and taken to be

correct in its entirety, would lead to the conclusion

that the respondents herein were personally liable for

any offence. The Bank is a body corporate. Vicarious

liability of the Managing Director and Director would

arise provided any provision exists in that behalf in

the statute. Statutes indisputably must contain

provision fixing such vicarious liability. Even for the

said purpose, it is obligatory on the part of the

complainant to make requisite allegations which

would attract the provisions constituting vicarious

liability. 

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 1213 OF 2016

(Arising out of S.L.P.(Crl.) No.1913 of 2012)

HDFC Securities Ltd. & Ors 

V

State of Maharashtra & Anr.

Dated:December 9, 2016. 

Citation:(2017)1SCC640

Print Page

Whether complaint for dishonour of cheque is maintainable by officer of company if he is not specifically authorized in that behalf?

Reference was also made to M/s. Hari Shree Enterprises V/ s. M/s. Vikas Housing Ltd. & Ors. (2009 (4) ALL MR 247) wherein it was held that unless a power to institute a suit is specifically conferred on particular director, he has no authority to institute a suit on behalf of the company. It was further held therein that it was essential requirement of this provision that the company which is a juristic person must itself decide to sue and once that is done, it would authorise one of its directors who is the agent of a company or its principal officers, the secretary of the company or the managing director to file the suit. The suing in each case is a separate act. The company acts only through its meetings. The Board of Directors in the day to day management of the company must decide and resolve to sue or not to sue.

12. In the light of the law laid down by this Court, I need not refer to the case of Geekay Exim (India) Ltd. & Ors. V/s. State of Gujarat and Anr. MANU/GJ/0023/1997 : (1998 Cri.L.J. 700) which was followed by this Court in the case of M/s. Credential Finance Ltd. V/s. State of Maharashtra & Ors. (MANU/MH/0359/1999 : 1999 (1) ALL MR 211) or for that matter the case of Hyderabad Lamps V/s Asiatic Oxygen (2000 DCR 615).

13. The complainant was the payee in this case and was juristic person. It had passed no resolution in favour of the said Shri Gomes either to file the complaint or to depose in favour of the complainant. The case being criminal in nature it was for the said Shri Gomes to prove that he had authority from the company either to file the complaint or to depose in support of the complainant. The accused has a profound right to remain silent in a criminal trial and that fundamental principle need be followed even in cases under Section 138 of the Negotiable Instruments Act. The accused had clearly suggested to the complainant that he had no right to file the complaint. At least at that stage the said Shri Viegas ought to have made an effort to produce a resolution, if there was one, or get the acts done by him ratified by a resolution of the company. That he accepted two payments made by the accused on behalf of the company would not cure the fundamental defect of there being no resolution authorising him to file a complaint or depose in support of the complaint. In the absence of any resolution by the complainant - company in favour of Shri Viegas either to file a complaint and/or depose on behalf of the complainant, the accused could not have been convicted. Shri Viegas who claimed that he was the authorised representative was expected to produce such authority and the Court was not expected to believe him, in the absence of such authorisation, even if the accused had not contested his statement. In my view, the acquittal of the accused cannot be faulted. This is not a fit case to grant leave to appeal.

IN THE HIGH COURT OF BOMBAY AT GOA

Criminal Misc. Application No. 241 of 2010 in stamp Number Main No. 1828 of 2010

Decided On: 25.11.2010

 Candy Spirit Pvt. Ltd.
Vs.
 Reeves Mia

Hon'ble Judges/Coram:

N.A. Britto, J.

Print Page

When suit filed by company for defamation is not tenable?

The present suit has been filed by the Plaintiffs against the Defendant alleging
defamation by the Defendant. Plaintiff No. 1 is a Company named Subhiksha
Trading Services Ltd. and Plaintiff No.2 Mr. R. Subramanian is the Promoter and
Managing Director of Plaintiff No.1. The Plaint was verified by Plaintiff No.2. In
paragraph 38 of the Plaint, Plaintiff No.2 has stated that he has signed and verified
the Plaint as the Promoter and Managing Director of Plaintiff No.1. However, there
is no reference to Plaintiff No.2 being authorized on behalf of Plaintiff No.1 to file the
suit.
. In the Defendant’s Written Statement, the Defendant challenged the
maintainability of the suit, inter alia, on the ground that Plaintiff No.2 had no
authority to file the suit on behalf of Plaintiff No.1 and further that under the Articles
of Association of Plaintiff No.1, any resolution for commencement or discontinuance
of any litigation as set out therein required the consent of at least one Director
nominated by the VC Investor (i.e. ICICI Trusteeship Services Ltd.) or the VC
Investor itself. It was further submitted that there was no board resolution
authorizing Plaintiff No.2 to file the present suit on behalf of Plaintiff No.1.
The Plaintiffs state that due to this act of the Defendant, the
Plaintiffs have suffered a serious setback in reviving its operations as
also in society and to their standing and credibility in business and
trade which setback is not fully quantifiable in monetary terms.
27. The Plaintiffs state that the Defendant is aware of the fact
they have received security deposit of Rs.2300,00,00,000/- Rupees
two thousand three hundred crores) from Blue Green Construction
and Investment Limited for in respect of a license for business granted
by it to the said company and that the Plaintiff is entitled to receive
Rs.138,00,00,000 (Rupees one hundred thirty eight crores) per
annum as license fees from the said Blue Green Construction and
Investment Limited for allowing the use of the brand Subhiksha and
the facilities and infrastructure and licenses of the Plaintiff No. 1. The

arrangement was entered into in July 2008 for a period of 3 years.
The Plaintiff craves leave to refer to and rely upon the said agreement
as and when produced. The said company is presently controlled and
managed by Plaintiff No. 2. For reason of the defamatory statements
of Defendant, the said Blue Green Construction and Investment
Limited is unable to rope in adequate franchisees. The goodwill and
reputation of the Plaintiffs have been severely damaged and the
Plaintiffs have suffered a serious setback in their ability to resume and
revive business. The Plaintiffs therefore state and submit that they
have been grossly defamed by the Defendant and are therefore entitled
to claim apart from normal damages by way of compensation
exemplary and / or aggravated damages against the Defendant
quantified at Rs.500,00,00,000 (Rupees five hundred crores only) as
more particularly prayed for in the Particulars of Claim, not only for
the purpose of compensating the Plaintiffs but also for the purpose of
punishing and deterring the Defendant by himself, his servants,
agents, officers and subordinates from in any manner publishing /
telecasting and / or causing to be published / telecast and / or
permitting to be published / telecast any articles defamatory of the
Plaintiffs, similar to the article as stated above or any such similar
articles. Hereto annexed and marked as Exhibit-E is the Particulars of
Claim mentioned hereinabove."

 Sub-clause (t) of Article 17A makes it clear that the litigation must be "material in the
context of the Company's business" and need not actually relate to its business. A
defamatory allegation concerning the Company's business, which had caused a
considerable adverse impact on the Company's business leading to "substantial

damages to the tune of Rs. 500 crores" can only be described as "material in the
context of the Company's business". In the circumstances it is clear that as per the
Plaintiffs' own case, the alleged defamatory statements are extremely material in the
context of Plaintiff No.1's business and the Plaintiffs cannot be heard to say that the
present suit is not in the context of the Company's business , let alone not being
material to it.
24. As regards the submission advanced on behalf of the Official Liquidator
attached to the Madras High Court that under Section 441 read with Section 457 of
the Companies Act, 1956, the Official Liquidator was entitled to prosecute the suit on
behalf of Plaintiff No. 1 and in light of Section 9 of the Companies Act, 1956, as the
Official Liquidator was now appointed, the Official Liquidator was entitled to step
into the shoes of Plaintiff No.1 and could ratify the filing of the suit, thereby
overcoming the defect of non-compliance with Article 17A, I agree with the
submission advanced by the learned Senior Advocate appearing for the Defendant
that the said argument is completely fallacious on various counts. Firstly, under
Sections 441 r/w 457 the fiction whereby the winding up of the company is deemed to
commence at the time of presentation of the Petition for winding up is extended to
apply only in certain specific situations such as under Section 536, and cannot be
applied to cure a bar or a defect in the filing of the suit, which suit was filed prior in
point in time to the winding up order. Furthermore, the contention that the Official

Liquidator can ratify the failure to obtain consent as required under Article 17A
cannot be accepted, as it would amount to an opportunistic misuse of the provisions
of law. The suit being infirm on the date it was filed, it cannot be sought to be
rendered proper merely by the happen chance of the company having subsequently
been ordered to be wound up. In any event, the bar arises under Article 17A on
account of failure to obtain the consent of the VC Investor, that is to say a third party.
There can be no ratification by the Official Liquidator of such a failure, as the entire
object of ratification would be to cure a defect which was capable of being complied
with by the company in the first instance. As the defect in the present case is failure
to obtain a third party’s consent, there is no question of the Official Liquidator
ratifying the filing of the suit without the said consent being obtained, which
admittedly has not been obtained in the present case. Section 9 of the Companies Act,
1956 does not authorize the Official Liquidator to continue proceedings which were
initiated illegally and without authority and which were non-est. The judgment of All
India Reporter Ltd. v. Ramchandra Dhondo Datar (supra) relied upon by the learned
Counsel for the Official Liquidator has no application in the present case as the same
pertains to a defect in the verification and presentation of the Plaint and a failure to
comply with certain procedural requirements, which is very different from the facts of
the present case where the defect is not procedural at all, but one which goes to the
root of jurisdiction as held by this Court in the order dated 5th May 2015. As correctly
submitted by Mr. Sen, the present case is not merely a case of a defect in verification

as a procedural requirement but one wherein there is a pre-condition in the Articles of
Association to the filing of the suit without the consent of the VC Investor. The suit
filed in non-compliance of such a precondition is non-est and cannot be legitimized
merely because of an appointment of the Official Liquidator or by the Official
Liquidator purporting to rectify the same.
25. In the circumstances I hold that the present suit qua Plaintiff No. 1 is not
maintainable for want of authority of Plaintiff No. 2 to file the suit on behalf of
Plaintiff No.1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
SUIT NO. 965 OF 2011
 Subhiksha Trading Services Ltd. 
 versus
Mr. Azim Premji, 
 CORAM: S. J. KATHAWALLA, J.

 Judgment pronounced on: 12th May, 2016
Citation: 2016 (5) ALLMR125

Print Page

Procedure to be followed by company law board for conducting its proceeding

A conjoint reading of Section 4(C), 5 and 6 of Section
10E of the Act would show that the CLB is principally to be guided
by the principles of natural justice and can act in its discretion.
Albeit, it would be a judicial discretion. Every power is conceded
to the CLB to regulate its own procedure. Subject to this,
subsection 4(C) of Section 10E only enumerates the various 
powers, which the CLB can exercise, which are available to a
Court while trying a suit and which powers are enumerated in
clauses (a) to (f) of subsection 4(C) of Section 10E. Thus, the
legislative intent is clear that a certain free play is given to the
CLB in the matter of regulating its own procedure and generally,
the CLB has to be guided by the principles of natural justice and
shall act in its discretion. It is, thus, clear that the provisions of
the Code would not be stricto sensu applicable to the proceedings
before the CLB. Had the legislature intended it to be so, nothing
prevented it from saying that the proceedings before the CLB shall
be governed by the Code of Civil Procedure. Thus, while
enumerating specific enabling provisions under subsection 4(C) of
Section 10E of the Act, subsections 5 and 6 leave no manner of
doubt that the CLB can regulate its own procedure and has done

so by framing the regulations.

IN THE HIGH COURT OF BOMBAY AT GOA
COMPANY APPEAL NOS. 1 to 7 of 2015
 COMPANY APPEAL No. 1/2015
Anju Timblo, 
Versus
Dilip Timblo, 
CORAM :- C. V. BHADANG, J.
Pronounced on : 6thAugust, 2015
Citation: 2016(2) ALLMR 302

Print Page