Delhi High Court
B. Parameswaran vs Small Industries Development Bank Of ... on 10 January, 2008
Author: S. Muralidhar
Bench: S. Muralidhar
ORDER S. Muralidhar, J.
1. This petition under Section 482 of the Code of Criminal Procedure, 1973 (Cr.PC) is directed against the summoning order dated 12th July, 2001 passed by the learned Metropolitan Magistrate, New Delhi (MM) summoning the petitioner in a complaint case titled as Small Industries Development Bank of India v. Uniplas India Limited and Ors. under Section 113 of the Companies Act, 1956 (the Act).
2. The petitioner is a Company Secretary of M/s. Uniplas India Limited (company). This is the description given by the complainant in the complaint before the learned MM. The allegation in the complaint is that certain shares of the company were sought to be transferred in the name of the complainant Bank for which purpose the share certificates along with the duly executed transfer deeds were sent to the company. The specific averments in the complaint in this regard as contained in paras 12 to 15 read as under:
12. That in the month of March 1996, the accused No. 1 transferred the share certificates and accordingly the delivery of 3507248 shares of the accused No. 1 after having duly transferred in favor of the complainant Bank was given to the complainant but the said shares were not split issued in the marketable lots. The accused persons assured the complainant to get the said shares split/issued in marketable lots within two months since they will have to print a very large number of share certificates and then typed it and then signed it.
13. That inspite of the repeated requests and reminders the accused persons have deliberately failed and willfully neglected to split/issue 3507248 shares to the accused No. 1 in the marketable lots. The accused persons have also deliberately failed and willfully neglected to transfer the shares No. 459356 inspite of the repeated assurances given by the accused persons several times.
14. That in the month of August 1996 Shri O.P. Gulati proprietor of M/s. Gulati Associates again sent the aforesaid 3507248 shares already registered in the name of the complainant Bank for split/issue in the marketable lots. The said shares were sent to the Company Secretary of accused No. 1 vide letter dated 3rd August, 1996.
15. That the accused persons have retained the said shares deliberately and willfully. The said shares have not been returned by the accused persons and it has been revealed that the accused persons had a conspiracy to do so.
3. On the basis of the above averments and the statement recorded of the two witnesses of the complainant, the learned MM passed the impugned summoning order.
4. The submission of learned Counsel for the petitioner is that the only offence for which the petitioner has been summoned is under Section 113 of the Act and that provision does not contemplate a situation of failure by the company to deliver the share certificates in marketable lots. In other words, he submits that the only requirement is that after transferring of the shares, the share certificates should be duly returned to the transferee. According to him, Section 113 does not make it a punishable offence if after the company s shares are transferred, the share certificates are not delivered in the marketable lots.
5. On the other hand, learned Counsel for the Respondent refers to its written note of arguments in which it is submitted as under:
In the present case, the point of issuance of share certificates is not involved as the company has already issued the share certificates and the said share certificates were pledged with the respondent Bank by the petitioner and by other accused persons. It is respectfully submitted that the shares of M/s. Uniplus India Limited were transferred in the name of the respondent Bank but they were not transferred in the manner as were required and the said shares were not split into marketable lots. This was intentionally done by the accused persons so that the Bank will not be able to sell them in market. The transfer as envisaged under Section 113 of the Companies Act has to be made in the manner required by the transferee and not to frustrate the transferee.
6. The factual position as can be seen from the complaint itself is that certificates pertaining to 3507248 shares were in fact delivered to the Bank after the shares were duly transferred in its favor. This by itself satisfies the requirement of Section 113(1) of the Act. The only grievance of the complainant was that such share certificates were not split and issued in marketable lots. In order that share certificates in the marketable lots should be issued to it, the Bank once again sent the share certificates, which had already been registered in the name of the complainant Bank, to the company. The complaint is that the company thereafter did not return the share certificates after splitting them into the marketable lots.
7. Section 113 of the Act, on a plain reading of that Section, does not require anything more than the Company having to deliver the share certificates after duly transferring the shares in favor of the transferee. There is no requirement in that provision for delivery of the share certificates after splitting them into the marketable lots. Since Section 113(2) is a penal provision which prescribes a punishment for violation of Section 113(1), it can only admit of a strict construction. A requirement not contained in the express wording of Section 113(1) cannot be read into it.
8. For the above reasons, the case against the petitioner for the offence under Section 113 of the Act is unsustainable in law and accordingly the impugned summoning order dated 12th July, 2001 issued by the MM and the complaint in so far as they concern the Petitioner are hereby quashed.
9. The petition is allowed and disposed of as such with no order as to costs.
10. A copy of this order be given dusty to learned Counsel for the parties.