Delhi District Court
The Present Revision Petition Has Been ... vs . on 15 March, 2023
IN THE COURT OF MS. ANU AGGARWAL: ASJ-06 (POCSO):
SOUTH-EAST DISTT: SAKET COURTS: NEW DELHI (was
earlier presiding over as ASJ-07/PHC/New Delhi and had
retained the present file for passing of the orders)
Criminal Revision No. 287/2022
Vimal Kumar Sharma
vs.
Reserve Bank of India
IN THE MATTER OF:
Vimal Kumar Sharma
S/o Shri Guljhari Lal Sharma
R/o B-2/C Shiv Marg, Bani Park,
Shastri Nagar, Jaipur, Rajasthan-302016.
Versus
The Reserve Bank of India
Represented by its Authorized Officer,
Department of Non-Banking Supervision
Reserve Bank of India,
6, Sansad Marg, New Delhi.
Pursuant to the order of Hon'ble High Court of
Delhi No. 07/G.1/Gaz.IA/DHC/2023 dated 01.02.2023, I
have been transferred from the post of ASJ-07, New Delhi,
Patiala House Court to ASJ-06 (POCSO), South-East,
Saket. In the said transfer order, the directions have been
by the Hon'ble High Court of Delhi as under:
"The judicial officers under transfer shall notify the
cases in which they have reserved judgments/ orders
before relinquishing the charge of the Court in terms of
the posting/ transfer order. The judicial officer shall
pronounce judgments/ orders in all such matters on the
day fixed or maximum within a period of 2/3 weeks
thereof, notwithstanding the posting/ transfer."
Therefore, pursuant to the above directions of the
Hon'ble High Court of Delhi, I had retained the present
case and now proceeding with the orders.
ORDER ON REVISION PETITION
Criminal Revision No. 287/2022
Vimal Kumar Sharma vs. Reserve Bank of India Page 1 of 14
1. The present revision petition has been filed u/s 397 of Code of
Criminal Procedure 1973 (hereinafter referred to as Cr.PC) against
order dated 28.04.2022 passed by Ld. MM-06, New Delhi whereby
the application for discharge filed by the revisionist was dismissed.
2. The facts, so far as necessary, for the disposal of the present
revision petition are as follows:
2.1 The respondent/RBI filed a criminal complaint u/s 58E(1) r/w
Section 58B(5) and 58C of Reserve Bank of India Act, 1934 against eight accused persons. The said complaint was filed on 02.06.2000. 2.2 After filing of the complaint, the accused persons were summoned vide order dated 14.11.2000. The revisionist herein is accused No. 8 and is one of the Director of accused No. 1 company namely CRB Capital Markets Limited. The revisionist remained unserved and vide order dated 26.10.2012, the directions were issued to serve him through publication. Pursuant to the publication, he was served and he appeared on 27.04.2013. On 20.07.2013, he filed the application for discharge and the said application was dismissed vide the impugned order.
3. The application for discharge was filed by the revisionist on the ground that the complaint was time barred and no application for condonation of delay was filed by the respondent alongwith the complaint. It was alleged that in the present case, the punishment prescribed u/s 58(b)(5) of RBI Act is only for the term extending upto three years. In terms of Section 468 of Cr.PC, the complaint should have been filed within the period of three years. The respondent/RBI had the knowledge of the alleged irregularities under the RBI Act as the inspection of the goods of account of the company was done between 13.11.1996 and 18.11.1996. As such, the complaint should have been filed within three years from 13.11.1996 Criminal Revision No. 287/2022 Vimal Kumar Sharma vs. Reserve Bank of India Page 2 of 14 to 18.11.1996. However, as the complaint has been filed after the lapse of about four years without any reason/justification, the proceedings should be stopped and accused/revisionist should be discharged.
4. While dismissing the application of discharge of the revisionist, the Ld. MM framed three questions for consideration, which are reproduced as under:
a) Whether an offence committed under section 58B(5) of RBI Act, 1934 is a continuing offence or not?
b) Whether the period involved in securing leave to prosecute under section 446 Companies Act from Hon'ble Delhi High Court can be excluded by computing the period of limitation under section 470(3) Cr.PC?
c) Whether there exists reasonable ground to condoned the delay, if any, in filing of the present complaint?
5. The Ld. MM held that the offence u/s 58B(5) of RBI Act, 1934 is not a continuing offence. The Ld. MM further held that the time required to obtain the sanction is not to be excluded while calculating the period of limitation as there is no pre requirement of the same. The Ld. MM held that the complaint is time barred in nature. The Ld. MM, while condoning the delay in filing the complaint, has held as under:
"27. In the instant case, admittedly offence committed by the accused company was brought to light on 18.11.1996, insolvency proceedings were initiated against the accused company and an OL was appointed on 27.05.1997. The complainant company promptly applied for a leave to prosecute/sanction as believed by it to have been required under section 446 Companies Act which was finally granted on 25.05.2000. The complainant company after receipt of such sanction filed the present complaint on 02.06.2000. Therefore, there is nothing to indicate that the delay so caused in filing of the complaint was intentional or deliberate or can be attributed to the Criminal Revision No. 287/2022 Vimal Kumar Sharma vs. Reserve Bank of India Page 3 of 14 lackadaisical attitude of the complainant or its stakeholders. In my opinion therefore, the complainant has sufficiently explained the delay in filing of the complaint".
"28. Even otherwise, considering that the complainant is a supervisory authority which is working for regulation and development of the country's financial infrastructure and the allegations qua the accused company are in regards to irregularity qua public deposits, interest of justice shall be best served if the delay in filing of complaint is condoned. Accordingly, period of limitation under section 468 Cr.PC is hereby extended and prayer for codonation of delay is allowed under section 473 Cr.PC".
6. The impugned order has been challenged by the revisionist on the ground that the complaint was time barred by virtue of Section 468 of Cr.PC and the Ld. Trial Court committed an error apparent on the face of record by exercising powers u/s 473 of Cr.PC which are available to the Court while taking the cognizance and not thereafter. It is further stated that the Ld. Trial Court failed to appreciate the mandate of Section 468 of Cr.PC which has created a substantive right in favour of the accused entitling him to seek discharge on the ground of limitation. It is further stated that the Ld. Magistrate assumed that it has power to condone the delay at the stage of framing of charge without there being any direction from any superior Court or any application in that behalf.
7. The Ld. Counsel for the revisionist argued on the same grounds as alleged in the revision petition and has relied upon the following judgments in support of his arguments:
(i) State of Punjab vs. Sarwan Singh, AIR 1981 SC 1054, Supreme Court of India,
(ii) Kathamuthu vs. Balammal, 1985-LW(Crl) 252 High Court of Madras,
(iii) A. V. S. Ganeshan and Ors. vs. State and Ors.
Criminal Revision No. 287/2022 Vimal Kumar Sharma vs. Reserve Bank of India Page 4 of 14 MANU/TN3102/2009 High Court of Madras,
(iv) Jitender Mehta vs. Shivani Mehta and Ors.
MANU/JK0374/2018 High Court of Jammu & Kashmir at Jammu,
(v) Rajasekar vs. The State and Ors. MANU/TN/0617/2022 High Court of Madras (Madhurai Bench),
(vi) K Arunkumar as. State and Ors. and Malairaja and Ors. vs. State and Ors., MANU/TN/0933/2022 High Court of Madras (Madhurai Bench),
(vii) State vs. Vipin Kumar Mehta & Ors., CR. No. 31/17 (168/2017) CNR No. DLST01-003444-2017.
8. The respondent/RBI did not file any reply to the revision petition. It was argued by the Ld. Counsel for the respondent that there was no delay in filing of the complaint. As per the procedure adopted in the year 2000, petition was filed before Hon'ble High Court of Delhi to seek the leave to prosecute/sanction u/s 446 of Companies Act, which was granted on 25.05.2000. The complaint was filed on 02.06.2000 and therefore, it was well within limitation. Ld. Counsel has further argued that the delay, if any, has been rightly condoned by the Ld. MM, as the delay if any, was not intentional or deliberate but due to the reason of seeking leave to prosecute/sanction. Ld. Counsel for the RBI has relied upon following judgments in support of his arguments:
(i) Johny Mathai vs. State of Kerala and Ors., CRL-Rev. Pet. No. 392 of 2015 decided on 31.03.2015,
(ii) Sulochana vs. State Registrar of Chits (Investigation and Prosecution) decided on 15.04.1977,
(iii) Vanka Radhamanohari vs. Vanka Venkata Reddy and Criminal Revision No. 287/2022 Vimal Kumar Sharma vs. Reserve Bank of India Page 5 of 14 Ors., Criminal Appeal No. 339 of 1993 (Arising out of S.L.P (Crl.) No. 2536 of 1992,
(iv) Rakesh Kumar Jain vs. State through CBI, N. Delhi, Crl. A. No. 555 of 1999, decided on 08.08.2000,
(v) Sureshbhai K. Desai vs. State of Gujarat, decided on 21.12.1982,
(vi) Sesh Nath Singh and Ors. vs. Baidyabati Sheoraphuli Co-
operative Bank Ltd. And Ors., Civil Appeal No. 9198 of 2019 decided on 22.03.2021.
9. The first and the foremost question that arises in the present case is whether the complaint filed by the respondent/RBI was time barred and if the answer is in affirmative, then the second question arises that whether the Ld. MM could have condoned the delay in filing of the complaint at the stage of charge.
10. It is admitted fact that the RBI officers conducted the inspection of accused No. 1 company from 13.11.1996 to 18.11.1996 and found various violations of the Reserve Bank directions No. DNBC-38/DG(H)-77 dated 30.06.1997 issued u/s 45J, 45A and 45N of Chapter III-B of the RBI Act, 1934. It is also admitted fact that a show cause notice dated 24.02.1997 was issued which was replied by the company vide reply dated 10.03.1997. It is also admitted fact that the bank filed winding up petition before Hon'ble High Court seeking winding up of the accused company. The RBI filed an application before Hon'ble High Court of Delhi for permission to file criminal complaint against accused persons and the permission was granted on 24.05.2000. It is after the permission was granted that the criminal complaint was filed on 02.06.2000.
11. In the present case, the offence alleged to have been committed by the petitioner is the offence punishable u/s 58B(5) of Criminal Revision No. 287/2022 Vimal Kumar Sharma vs. Reserve Bank of India Page 6 of 14 RBI Act. The said offence is punishable with imprisonment for a term which may extend to three years. Section 468 of Cr.PC creates bar on taking cognizance after the lapse of the period of limitation. As per sub section 2(c) of Section 468 of Cr.PC, the limitation period for filing the complaint/police report for the offence punishable with imprisonment for a term exceeding one year but not exceeding three years. Therefore, the period of limitation for filing the complaint in the present case is three years.
12. Section 469 Cr.PC deals with the commencement of the period of limitation. It is reproduced as under:
"Section 469 in The Code Of Criminal Procedure, 1973
469. Commencement of the period of limitation.
(1) The period of limitation, in relation to an offender, shall commence,-
(a) on the date of the offence; or (b) where the commission of the offence was not known to the
person aggrieved by the offence or to any police officer, the first day on which such offence comes to the knowledge of such person or to any police officer, whichever is earlier; or
(c) where it is not known by whom the offence was committed, the first day on which the identity of the offender is known to the person aggrieved by the offence or to the police officer making investigation into the offence, whichever is earlier. (2) In computing the said period, the day from which such period is to be computed shall be excluded".
Section 470 of Cr.PC deals with exclusion of time in certain cases. As per Section 470 (3) Cr.PC, where in the notice of the prosecution for the offence has been given or where under any law for the timing being in force, the previous consent or sanction of the Criminal Revision No. 287/2022 Vimal Kumar Sharma vs. Reserve Bank of India Page 7 of 14 government or any authority required for the institution of any prosecution for an offence, then, in computing the period of limitation, the period of such notice or, as the case may be, the time required for obtaining such consent or sanction has to be excluded.
13. In the present case, the inspection of the books of the Account of the company was carried out between 13.11.1996 and 18.11.1996. The show cause notice was issued by the RBI on 24.02.1997. The perusal of the show cause notice reflects that the 15 days time period was given to the accused persons from the date of receipt of the notice to reply to the show cause notice. Therefore, the time period of the show cause notice has to be excluded while computing the limitation period. Therefore, the limitation period for filing the complaint has to be computed from 12.03.1997 considering the time period of the show cause notice.
14. The next question that arises for consideration is whether the offence is of continuing nature so as to further extending the limitation period. The Ld. MM had opined that the offence is not of a continuing nature and observed as under:
"Now though it has been alleged and prima facie supported by documents relied by the complainant that accused company stood in violation of section 58B (5) of RBI Act, there is no evidence on record that the company continued to retain public deposit beyond the requisite level after such period so as to allow the Court to infer that the offence continued till such time. It is very much possible that after the inspection by RBI, or after receipt of notice of such violations or on advice of their auditors etc the complainant company rectified the said violations, so as to not be in continuous violation of the said provision of law which is section 58B(5) of RBI Act.
In absence of any evidence that the accused company continued to hold the public deposit beyond requisite level, it cannot be said that in the present facts, the offence alleged was continued on day to day basis so as to allow extension of period of limitation. Therefore, contentions of Ld. Counsel for the complainant in this Criminal Revision No. 287/2022 Vimal Kumar Sharma vs. Reserve Bank of India Page 8 of 14 regard are dismissed being non-meritorious".
15. A continuing offence is one which is susceptible of continuance and is distinguishable from the one which is committed once and for all. It is one of those offences which arises out of a failure to obey or comply with a rule or its requirement and which involves a penalty, the liability for which continues until the rule or its requirement is obeyed or complied with. On every occasion that such disobedience or non-compliance occurs and recurs, there is the offence committed. The distinction between the two kinds of offences is between an act or omission which constitutes an offence once and for all and an act or omission which continues and therefore, constitutes a fresh offence every time or occasion on which it continues. In the case of a continuing offence, there is thus the ingredient of continuance of the offence which is absent in the case of an offence which takes place when an act or omission is committed once and for all.
16. As per complaint, the accused company CRB Capital Markets Limited is Non Banking Financial Company and the petitioner is one of the director of the accused company. It is stated that the RBI conducted the inspection of the books of Accounts of the company between 13.11.1996 and 18.11.1996 with reference to his its financial position as on 31.03.1996 and found that the company had violated several provisions of the Act. Some of the specific violations which were found was the acceptance of excess public deposit. It is stated that the accused company being a loan company was entitled to hold 25% of its NOF as public deposits i.e. Rs. 107.19 crores. However, the company had held the public deposits of Rs. 139.83 crores. The company also borrowed the money from Criminal Revision No. 287/2022 Vimal Kumar Sharma vs. Reserve Bank of India Page 9 of 14 other cooperate entities and the period of borrowing was more than 12 months and therefore, to be treated as public deposits. Therefore, as on 31.03.1996, the accused bank was having the total public deposit of Rs. 141.91 crores and was having excess deposit of Rs. 34.72 crores. It is further stated that the company accepted the deposit of Rs. 0.98 crores from Canfin Homes Limited for the period of seven years whereas they were not entitled to accept the public deposits beyond sixty months (05 years). The company accepted inter corporate deposits from various other cooperate entities on the rate of interest of 18% and 18.5%, whereas they could not have accepted the deposit of the rate of interest of more than 15% per annum. The company had paid the brokerage/commission amounting to Rs. 4.04 crores. The company had paid 2.5 % brokerage/commission on the total public deposit of Rs. 173.04 crores and they could not have offer more than 2% of brokerage/commission. The text of advertisement published on 27.08.1996 in Economic Times and Nav Bharat Times contained incorrect information. The company failed to produce all the securities in physical form before the Inspectors.
17. The accused company had held the public deposits. The perusal of the complaint reflects that the accused company was governed by the provisions of Non Banking Financial Companies (Reserve Bank) directions contained in Notification No. DNBC- 38/DG(H)-77 dated June 20, 1997 issued under Section 45J, 45K and 45L of RBI Act 1934 and the copy of the said directions are annexed with the complaint. Part II of the directions deals with the acceptance of deposits. The deposits are also payable on demand or notice as per the above directions. Since the accused company had held the public deposits which were payable on demand, till the time Criminal Revision No. 287/2022 Vimal Kumar Sharma vs. Reserve Bank of India Page 10 of 14 the deposits were in the hands of the accused company and were payable on demand, the offence is of continuing nature.
18. The RBI filed a winding up petition vide CP No. 191/1997 before the Hon'ble High Court of Delhi for winding up of the accused company in which the official liquidator was appointed on 27.05.1997. Before the appointment of official liquidator, the public deposits were in the hands of the accused company and payable on demand, therefore, the offence was of continuing nature till 27.05.1997. However, once the official liquidator was appointed and all the asset of the company was taken over by the official liquidator, no public deposit remained in the hands of the accused company to pay on demand.
19. As regard excluding the period involved in securing the leave to prosecute u/s 446 Companies Act from Hon'ble Delhi High Court in computing the period of limitation, the Ld. MM decided this issue in favour of the petitioner and has held that such period cannot be excluded relying upon the judgment of Hon'ble High Court of Delhi in D K Kapur vs. Reserve Bank of India & Ors. 90 (2001) DLT
127.
20. In D K Kapur case (supra), Hon'ble Delhi High Court has held that the expression "suit" or "other legal proceedings" in section 446(1) and expression "suit or proceedings" under section 446(2) of the Companies Act, 1956 do not include a "criminal proceedings"
and therefore, no permission was required to be taken from Company Court for filing criminal complaint either against the company or against its directors.
21. It is important to observe that the judgment in D K Kapur case was delivered by the Hon'ble High Court of Delhi on 19.01.2001. Whereas, the present criminal complaint was filed by the RBI on Criminal Revision No. 287/2022 Vimal Kumar Sharma vs. Reserve Bank of India Page 11 of 14 02.06.2000 and therefore, it is necessary to look at the position of law in the year 2000.
22. The RBI had filed the application u/s 45 MC of RBI Act r/w Section 433 of the Companies Act seeking winding up of the accused company. In the said petition, they also filed an application seeking leave of the company Court to initiate legal proceedings as against the company under the provisions of the RBI Act. The said application was decided by the Hon'ble High Court of Delhi vide order dated 24.05.2000. The Hon'ble High Court of Delhi in the said order has observed as under:
"It cannot be disputed that for initiation of criminal proceedings and for proceedings against the Directors and the officers of a company where the provisional liquidator is appointed, no leave is required to be sought for from the company Court in terms of Section 446(1) of the Companies Act. Section 446(1) specifically provides that when a winding up order has been made or an official liquidator has been appointed as provisional liquidator no suit or other legal proceedings shall be commenced or pending on the date of winding up order shall be instituted or proceeded with against the company except by the leave of the Court and subject such terms as the Court may imposed. Here is a case where provisional liquidator was appointed although a winding up order has not yet been passed by the company Court. Since the official liquidator has been appointed as a provisional liquidator by an order of this Court, therefore, no suit or other legal proceedings could be commenced except by the leave of the company Court and subject to such terms as the Court may impose. The leave is sought for in the present case for initiation of proceedings under the provision of Section 58B and 58C of Reserve Bank of India Act and such proceedings would be in the nature of criminal proceedings. In the present case, no contention is raised by the parties that a proceeding of a nature as sought to be initiated by the applicant against the respondent company would not come within the ambit of expression "other legal proceedings". It being the common case of the parties herein, that the proceeding of a nature sought to be initiated would be included within the ambit of expression "other legal proceedings", I do not venture into examine whether for initiation of criminal proceedings also as against the company leave Criminal Revision No. 287/2022 Vimal Kumar Sharma vs. Reserve Bank of India Page 12 of 14 has to be sought for under the provisions of Section 446 of the Companies Act. It is the common case of the parties that the leave is required to be sought for in the present case from the company Court before a proceeding under Section 58B and 58C of the Reserve Bank of India Act is initiated and therefore, I proceed to decide the said issue as to whether the leave in the said case should be granted or not as sought by the applicant/petitioner".
23. Therefore, the position before passing of the D K Kapur order (Supra) was seeking leave of the company Court to file criminal proceedings as against the company. It is important to observe that the statue has not changed and the provisions of the statue are same. What has been changed is the interpretation of the word "other legal proceedings" u/s 446 of Company Act. Since the present case was instituted prior to the D K Kapur case (Supra), wherein the permission was sought for filing of criminal complaint against the company, in my considered view, such time period involved in securing the leave to prosecute u/s 446 of the Companies Act from Hon'ble High Court of Delhi has to be excluded u/s 470(3)Cr.PC. The leave to file the present criminal complaint was given by the Hon'ble High Court of Delhi vide order dated 24.05.2000 and the present complaint was filed on 02.06.2000 and therefore, the present complaint is within limitation.
24. It is also important to observe that the petitioner herein has been arrayed in the criminal complaint as one of the Director of the accused company and not in individual capacity. This being the position, no criminal complaint against him could have been filed without making the accused company an accused.
25. The revision petition is devoid of any merits. The revision petition is dismissed.
26. The Trial Court Record and the revision petition be sent to the Criminal Revision No. 287/2022 Vimal Kumar Sharma vs. Reserve Bank of India Page 13 of 14 Ahlmad of Ld. ASJ-07/PHC to consign the Revision Petition to the Record Room and to send the TCR alongwith the copy of the order to the Ld. Trial Court. A soft copy of the order be also sent to the Reader of Ld. ASJ-07/PHC to upload the same on the website. Announced in Open Court on 15th March, 2023.
(Anu Aggarwal) ASJ-06 POCSO Act, South-East District, Saket Courts, New Delhi Earlier was posted as ASJ-07, PHC, New Delhi.
Criminal Revision No. 287/2022 Vimal Kumar Sharma vs. Reserve Bank of India Page 14 of 14