Gujarat High Court
Registrar Of Companies vs State Of Gujarat & ... on 30 January, 2015
Author: K.J.Thaker
Bench: K.J.Thaker
R/CR.A/733/1994 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CRIMINAL APPEAL NO. 733 of 1994
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE K.J.THAKER Sd/-
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1 Whether Reporters of Local Papers may be allowed to No
see the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy of the No
judgment ?
4 Whether this case involves a substantial question of law No
as to the interpretation of the Constitution of India, 1950
or any order made thereunder ?
5 Whether it is to be circulated to the civil judge ? No
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REGISTRAR OF COMPANIES....Appellant(s)
Versus
STATE OF GUJARAT & 3....Opponent(s)/Respondent(s)
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Appearance:
APPEARANCE DELETED for the Appellant(s) No. 1
MR AC GANDHI, ADVOCATE for the Opponent(s)/Respondent(s) No. 2 - 4
MS CM SHAH, APP for the Opponent(s)/Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE K.J.THAKER
Date : 30/01/2015
ORAL JUDGMENT
Page 1 of 11
R/CR.A/733/1994 JUDGMENT
1. On the last occasion, Mr.Abichandani stated that he will request Mr.Devang Vyas to file his vakalatnama on behalf of the appellant. However, today no one is appearing on behalf of the appellant, Registrar of Companies. Be that as it may, since the appeal is of 1994 and the complaint was filed in the year 1985, the appeal is taken up for final hearing today.
2. The appellant has preferred this appeal under Section 382 read with Section 378 of the Criminal Procedure Code against the judgment and order dated 23.4.1992 rendered by the learned Judicial Magistrate, First Class, Bardoli in Criminal Case No.271 of 1985. The said case was registered against the present respondent nos.2 to 4 for the offence under Sections 58A (4) and 642 of the Indian Companies Act (for short, "the Act") read with Rule 3 of the Companies (Acceptance of Deposits) Rules, 1975 (For short "the Rules").
3. The case of the prosecution is that the appellant-complainant filed Criminal Case No.271 of 1985 complaint against the accused- respondents nos. 2,3 and 4 herein alleging that the company has accepted the deposits of Rs.10,39,882.37 ps. in the year 1982 which was in excess to the tune of Rs,9,75,274/- from the limits prescribed under Rule 3(2)(ii) of the Rules. Similarly in the year 1983, fresh deposits were also accepted and the total deposits reached to the Page 2 of 11 R/CR.A/733/1994 JUDGMENT tune of Rs.13,83,635.59 ps. and the same was also in excess of the limits prescribed under the aforesaid Rules. It is submitted that from the balance-sheet of the company for the year 30th September 1983 to 30th September 1984, it was found by the statutory Auditors, after having gone through all the papers, vouchers and books of accounts of the company, registers of deposits and also after seeking explanation of the company, that the deposits accepted by the company was of the nature covered under Rule 3(2)(ii) of the aforesaid Rules and the contravention to the said Rules has been made by the company. The auditors have very pertinently made qualifying report to be issued under Section 227 of the Act and to be attached under Section 216 of the said Act along with the balance- sheet of the company. Further the aforesaid balance-sheet revealed admissions of the Directors in statutory report of the Directors submitted under section 215 of the Act, wherein the Directors have stated that the deposits shall be reconciled very soon. With such allegations, the complaint was filed against the accused persons. 3.1 Thereafter, on the basis of the complaint and the evidence of on record, the trial was conducted against the accused persons. The charge came to be framed and explained to the accused persons, to which the accused persons pleaded not guilty and claimed to be tried. The accused persons have denied the case of the prosecution and submitted that a false case is filed against them. Page 3 of 11
R/CR.A/733/1994 JUDGMENT 3.2 At the conclusion of trial and after appreciating the oral as well as documentary evidence, the learned Judge vide impugned
Judgment, acquitted the respondents - accused. Being aggrieved by and dissatisfied with the said judgment and order of acquittal dated dated 23.4.1992 rendered by the learned Judicial Magistrate, First Class, Bardoli in Criminal Case No.271 of 1985, the appellant has preferred the present appeal before this Court.
4. It is the case of the appellant that the trial court has erred in appreciating the documentary proof and evidence available in the balance-sheet of the company and instead of appreciating the balance-sheet of the company, the trial court has based its judgment on the accounts of M/s. Patel and Company stated to be a firm lending money to the company. It is also the case of the appellant that in case the company accepts any deposits and the same is covered under the aforesaid Rules, the company has to file the returns of deposits under Rule 10 of the Rules. The company has also filed the returns of deposits made from 31st March 1983 to 31st March 1984 with the office of the complainant and the copies of the same were also filed in the court of learned Judicial Magistrate, First Class, Bardoli. The perusal of the said returns clearly shows that during the period of the returns, the company had accepted/renewed the deposits to the tune of Rs. 11,20,779/- which is 439 percent of the paid up capital and free-reserve of the company. The return has been Page 4 of 11 R/CR.A/733/1994 JUDGMENT signed by the Managing Director Shri Jagdishchandra N. Patel of the company and the said return has been certified and verified by Shri N.M.Shah. Since the return of the deposits is on statutory return required to be filed by the company with the office of the complainant, the correctness of the contents of the return is to be presumed in view of the provision of Section 628 of the Companies Act, providing for the penal consequences. Similarly from the return of the deposits as on 31-3-1984, it is seen that the company has accepted the deposits to the tune of Rs.11,96,661/- which is covered under Rule 3(2) (ii) of the aforesaid Rules and the same is about 1181 percent of the paid up capital and free-reserve of the company. It is also the case of the appellant that the learned trial Judge has failed in appreciating the contents of the return of deposits made upto 31-3- 1983 and 31-3-1984 and instead of relying upon the statutory documents of the company, the trial court has based its judgment on the oral evidence and the books of account of the firm which is stated to be managed by some Directors of the company. It is submitted that the learned trial Judge has based its judgment totally on the oral evidence and documentary evidence of the firm from which the trial court has gathered that the deposits were accepted from the partnership firm, friends and relatives. It is also the case of the appellant that the trial Court has relied upon the concocted story prepared by the accused-directors and their firm. The trial Court has also observed that the deposits have been paid by the company to the depositors. In this connection. it is submitted by the appellant Page 5 of 11 R/CR.A/733/1994 JUDGMENT that the trial court has failed to appreciate the statutory documents of the company filed with the office of the complainant duly audited by the Auditors. It is also the case of the appellant that the trial court has also failed to appreciate admissions made by the company in excess of the limits vide their letter dated 7-6-1984 which has not been rebutted by the company before the trial court. Further the trial court has also failed to properly construe the provisions of Section 58A and Section 642 of the Act and Rule 3 of the relevant Rules. It is also the case of the appellant that the trial court has also erred in not considering the issue of converted unsecured debentures to the depositors of the company has to be made with the compliance of the relevant Rules.
5. It is also the case of the appellant that the trial court has erred in not considering the evidence on record, that the trial court has erred in not properly construing the provisions of Section 58A(4) and Section 624 of the Companies Act. It is also the case of the appellant that the trial court has erred in not properly construing the provisions of Rule 3 of the Companies (Acceptance of Deposits) Rules, 1975. It is also the appellant's case that the trial court has erred in not properly considering the credibility of the statutory returns which are required to be filed by the company itself under the Act, that the trial court has erred in not considering that no proper explanation has been submitted by the company in connection with the acceptance of the deposits. It is also the case of the appellant that the trial court has Page 6 of 11 R/CR.A/733/1994 JUDGMENT erred in finding that no notice has been issued by the complainant to the respondents no.2, 3 and 4 - accused. That the trial court has erred in finding that the offence against the respondents nos.2,3 and 4-accused is not proved. It is also the case of the appellant that the trial court has erred in not considering that the conversion of the deposits in convertible debentures is illegal and therefore, it cannot be accepted as defence and that since the capital was of the partners interse, no offence is committed. Therefore, it is prayed that the judgment and the order of acquittal passed by the trial Court may be quashed and set aside.
6. Ms.Shah, learned APP appearing for the State has supported the case of the appellant.
7. On the other hand, Mr.Gandhi, learned advocate for respondent nos.2 to 4 submitted that there is no infirmity in the impugned order. He submitted that the lower court has rightly appreciated the evidence on record and acquitted the respondents of the charges levelled against them. He submitted that the trial Court has rightly appreciated the evidence on record. He, therefore, submitted that the impugned judgment may not be interfered with and it may be confirmed.
8. I have gone through the papers produced in the case and the evidence on record. I have also heard learned APP as well as Page 7 of 11 R/CR.A/733/1994 JUDGMENT Mr.Gandhi. Looking to the charge framed against the respondents- accused, the prosecution has to prove its case beyond reasonable doubt. While passing the impugned judgment, learned trial Judge has given categorical finding that the nobody has came to reclaim the amounts deposited. It is also found that the amount is converted into convertible debentures. It is found that though the accused have collected more amount, but such amount is not collected from outside but this amount is collected from interse partnership. In view of this, it is found that no offence is proved against the accused under the Companies Act. Therefore, learned Judge has rightly observed that the prosecution could not prove its case against the accused and rightly acquitted the accused-respondents.
9. In a recent decision of the Apex Court in the case of State of Goa V. Sanjay Thakran & Anr. Reported in (2007)3 SCC 75, the Court has reiterated the powers of the High Court in such cases. In para 16 of the said decision the Court has observed as under:
"16. From the aforesaid decisions, it is apparent that while exercising the powers in appeal against the order of acquittal the Court of appeal would not ordinarily interfere with the order of acquittal unless the approach of the lower Court is vitiated by some manifest illegality and the conclusion arrived at would not be arrived at by any reasonable person and, therefore, the decision is to be characterized as perverse. Merely because two views are possible, the Court of appeal would not take the view which would upset the judgment delivered by the Court below. However, the appellate court has a power to review the Page 8 of 11 R/CR.A/733/1994 JUDGMENT evidence if it is of the view that the conclusion arrived at by the Court below is perverse and the Court has committed a manifest error of law and ignored the material evidence on record. A duty is cast upon the appellate court, in such circumstances, to re-appreciate the evidence to arrive to a just decision on the basis of material placed on record to find out whether any of the accused is connected with the commission of the crime he is charged with."
10. Similar principle has been laid down by the Apex Court in the cases of State of Uttar Pradesh Vs. Ram Veer Singh & Ors, reported in 2007 AIR SCW 5553 and in Girja Prasad (Dead) by LRs Vs. state of MP, reported in 2007 AIR SCW 5589. Thus, the powers which this Court may exercise against an order of acquittal are well settled.
11. Even in a recent decision of the Apex Court in the case of Mookiah and Anr. Vs. State, Rep. By the Inspector of Police, Tamil Nadu (AIR 2013 SC 321), the Apex Court in Para-4 has held as under:
4. It is not in dispute that the trial Court, on appreciation of oral and documentary evidence led by the prosecution and defence, acquitted the accused in respect of the charges leveled against them. On appeal by the State, the High Court, by impugned order, reversed the said decision and convicted the accused under Section 302 read with Section 34 of IPC and awarded RI for life. Since counsel for the appellants very much emphasized that the High Court has exceeded its jurisdiction in Page 9 of 11 R/CR.A/733/1994 JUDGMENT upsetting the order of acquittal into conviction, let us analyze the scope and power of the High Court in an appeal filed against the order of acquittal. This Court in a series of decisions has repeatedly laid down that as the first appellate court the High Court, even while dealing with an appeal against acquittal, was also entitled, and obliged as well, to scan through and if need be reappreciate the entire evidence, though while choosing to interfere only the court should find an absolute assurance of the guilt on the basis of the evidence on record and not merely because the High Court could take one more possible or a different view only. Except the above, where the matter of the extent and depth of consideration of the appeal is concerned, no distinctions or differences in approach are envisaged in dealing with an appeal as such merely because one was against conviction or the other against an acquittal. [Vide State of Rajasthan vs. Sohan Lal and Others, (2004) 5 SCC 573]
12. It is settled legal position that in an acquittal appeal, the Appellate Court is not required to re-write the Judgment or to give fresh reasonings when the Appellate Court is in agreement with the reasons assigned by the trial Court acquitting the accused. In the instant case, this Court is in full agreement with the reasons given and findings recorded by the trial Court while acquitting the respondent - accused and adopting the said reasons as well as the reasons aforesaid, in my view, the impugned Judgment is just, legal and proper and requires no interference by this Court at this stage. I do not find any cogent reason to interfere with the impugned decision as it cannot be said to be either perverse or not borne out from the Page 10 of 11 R/CR.A/733/1994 JUDGMENT facts of the case. The appellant has not been able to persuade this Court to take a different view in this matter. Hence, this appeal sans merit and is required to be dismissed.
13. In the result, the appeal is hereby dismissed. The impugned judgment and order dated 23.4.1992 rendered by the learned Judicial Magistrate, First Class, Bardoli in Criminal Case No.271 of 1985, acquitting the respondents, is hereby confirmed. Record and Proceedings, if any, be sent back to the trial Court concerned forthwith. Bail and bail bond, if any, stands cancelled.
Sd/-
(K.J.THAKER, J) *malek Page 11 of 11