M R Patel Former Managing Director vs M/S R K Synthetics & Fibres Pvt Ltd on 24 September, 2008

[Cites 11, Cited by 0]

Karnataka High Court

M R Patel Former Managing Director vs M/S R K Synthetics & Fibres Pvt Ltd on 24 September, 2008

Bench: Jawad Rahim

§

IN THE HIGH COURT OF KARNATAKA AT BANGALORE

DATED THIS THE 24?" DAY OF SEPTEMBER 20,98-.':'_"I..D_

BEFORE

THE HON'BLE MR. 3DST1cE>;AwAD--EA--I§{IA/I'*5:  1'

CRL.R.P. NO. 18f3.§3/2Q_gE§ 4'

BETWEEN 1

(By Ms.LEEIIIVA5-:_EyAI§I}I~4A;§', «._rEA_§O\/. EOE

M RPATEL  
FORMER MAE\iAGIN~f;3 DIRECTCIR 
M/S SUNSU GARM-ENTSl_  " = 
NOW UNDER LIQDID.ATION   
NO 102, 3CROSS,"2"?-ST--,AOIE,'  12*'
INDuST12.IAE    ' 
BANGA.LDR%3"2_.2..    
     " ' PETITIONER

M/S s;I'R"E"EI-I/A.»:.\,fI:,SA AISASOEEI-ATES')v"~'

AND : 

M/S Rx SYI\DfHETIc~S & FIBRES PVT LTD
; I<AISE:NA..MILLS COMPOUND

 EDS MARG;"EvE-MIND SONAPUR

A 1' " I _ M-I TM B"AI_' = 

BEANDDE

 RESPONDENT

(BR/-- SEED -v5"SI~+ANt»<ARA NARAYANA, ADV.) CRL.RE'</ISION PETITION IS FILED L}/8.397 AND 401 CR.P_.C BY THE ADVOCATE FOR THE EETITIDIAER ERAT/INS 'THAT THIS HON'BLE COURT MAY BE PLEASED TO SET ASIDE THE IMPUGNED 3L}D_G¥\_'§E_f\¥T_AE\iD ORDER DT.28.7IO5 """PASSED IN CRL.A,NO.38/O3 ON Tz4IE"F1LE OETHE P.'O'., ' glw "i FAB"? TRACK COURT~V§§, 8'LORE CITY AND THE ORDER PASSED BY THE XV ACMIVL, BIORE, IN C.C.NO.33196[OO. This petition coming on for admission this made the foiiowing This revision petition ui'ider"~,SejCtrios'n 3.97,_'"Cr';!§?'i.r-C.'*1.i_s directed against the jLJdgFT1L'°.iVl_'it"--.__.in C'r'1.2X.38/'Q3A~{passe»d on-.i"

28.7.2005 by the Judge, Fa=st"'-.,i:frag_i< t.i'oi-i..itt_, ifvsfangaiore, confirming the }.L.idgl"£1V€§'ii1¥;r in on the fiie of Metropolitan Magistrateyaangaiore, the petitioner for the offernge i;njde'rVVS'e'ctioii :38 of the Negotiabide"Iinéiﬂtiineritsi'Att,

2. i2,iThis"'ma'tte.r':ha'sxbeen Coming up for admission for qgsgiite.some'"t..i;r*ée. Considering the grounds urged, I am matter requires consideration with regard Hence, the §3etition_is admitted.

Witii""Chv*i'..CfJ:'iiiS€{it of both sides, it is taken 1.1;? kor finai 'hearing'.'' "3. The factuai matrix as manifest from the Case it "'p"ag3ers reveais:

i.

W M/s R.%<.Synthetics & Fibres Private Limited, a company incorporated under the Companies ;i\ct,v.-1956, presented a comeiaint invoking Section 280, Cr.P.C';.H:see:'k_i'nrg prosecetion of M/s Sunsu Garments, a company" reg_ist'etreVc1's V' under the Companies Act, andfits'-manag_.i,njg':v',diVre{i'tor,.. M.R.Patei (petitioner herein) for theoiffexnceitrindevr 1 {J3 business transactionsi-vvitti toA""i>L,r.r»t§hase of polyester wadding and on accounting, it '\_/vats' It failed to pay the iniwthe complainant presenting' C2i'n2pa'::y9*§év!ii'*fOn No.68/99 for winding up of the"cempany"a's become a debtor.

._':,_j}*Da,;.rirag proiiceedings in the company court, on the ,{ind:evrt,a'k.i:ng,,"given by 2"" accused to honestiy discharge the iiabiliity pro'v'id.ed reasonabie time is given, a scheme was "._>WO¥'3<€C! otgtvand he was permitted to pay the amount due in A r~:tf'§A,Vbini.onthiy instaiments. On the basis of such proposition ' accepted by the compiainant, the company petition came to be disposed of with an observation that if for any reason the air 8, N.I.Act on the pr mise tha_t"'the accr_2s'ed c,on::v;5'arsy" had i' initiai;§ed.ti.

4 accused were to commit breacii of the undertaking, theii the complainant Company woiiid be entitled to revivVai._:o'f._its action initiated under company law.

Pursuant to the undertaking, an to be fiied on 7.7.1999 and five ciie=.gue:s-'A.were"._issued~-.,___and.' company petition was disposed off.

The cheques on pArese.n_tat'i"o.n were freturned dishonoured for 'insufficient "i'.:JFid's'_'gi_\2é.ng~. rise to action uricier law to pVrose'c_L2te§;them; ii.nd~e'r.._th'e":deeming provision of Section ;L"3S_,~._i\i:I1V;VA.ct-i_Vj--«.__:.Afteér"t_a%<i_ng required steps in issuance of under ciaose (b) of Section 138 and complying wiitiieiotiier fornnaiities, prosecution was "court tookcognizance of the offence po'r'.i__shabvi.e--'under Section 138 of the Act against the ".COITipaF"'.y'A}3|'iC§ its managing director and subjected them to 'xfiiia_|>.H"ADiiring trial, complainant placed reiiance on the ocuiar teistimoiiy of its officer PW1 and produced 9 documents, 6730 '.}I while' on" behaif of the accused, accused tendered evidence to negate the assertion of the complainant»._f~.._,'l'-..

The trial court considering the evidence o£i=.i'eco'l'--dl V' concluded that it was sufficient to c-:harge_against. the accused for the said offence and'»th'us found ,2,"

guilty, but while recording si'i'ch:"finding*,._ judge held :5' accus.e:d.___wa_s"é,'VA'v,.:lfAonip._a.ny 'ag'ai'n4st which company proceedings were High Court and as the of the matter, proceedings' by the provisions of Section'?l46A..,.o.f_ and Dermission was rzecessaV"ry," Court passed the following order_:__ V' l A it i ' ' '°«c_y ..... 'ORDER »v4Fu,:i':t"'r_f?..er proceedings against A:

is hereby suspended until leave is o'--b:ta'inVed by the complainant company from 'the Hon'§3le High Court to continue prosecution proceedings against A-3 (W company.

t'ne,.'.=|eVavrnWeVd triaé it (3 Acting under Section 255(2) of Cr.P.C., I hereby convict accused no.2 Mr. M.'R.Patel, managing director of A1 company for offence oenishable under Section S"

Section 141 of the N.I.Act E A him to pay a fine of Rs.3,25:,:AOOQ,/:},' a<:cused~2 Mr.§V§.R.Patel_ managit§g_ndirector'*ef«. "

A1 company shall urider:_go_yS.IA."'for»aV of 3 nrzoiiths. _Out -r.ecov.er..ed:finve amount, an ai7"iog'~;it be paid the complainantfais:"co_nfi't>ensa~_tion.'

4. iorderé,' t:h'e"le_a.rned trial judge has referred figaﬁgg 'to 'i":jitEation of winding up pi'ocee_dingsSAAaS~ri_-d in -oaiirvagraohs 12, 13 and 14 of the imou,_g4'ned'~.o'z*d,.er,V'~~.,,___*"?herefore, it is clear from the reasoning rvecorded Sbylvlthe learned trial judge and the o_e.erati'%"}:e jfjogrtion Vvotlthe order, the learned trial judge had not so-hj:'ec'teci.accused no.1 trial. However, the evidence on rec«ord,___v'tia,s'~~'Sheen apelied by the learned trial judge to .,conséd'e.r° proof regarding guilt or otherwise of accused no.2 it '~,f"or..the offence under Section 138, l\l.1.Act. Accepting that .--evidence as sufficient, accused no.2~managing clérector has are '"9 been convicted to pay fine of Rs.3,25,000/» and in default to undergo 8.1. for a period of 3 months, with avi~.f;u~rtiii.er direction to pay Rs.3,20,0iZiO/» as cornpensation__.---iv'

5. The above order was_q.ue_stioried"*iia'efoi'~eV"§irst appellate court in'C:'l.A.38/O3. C'orisri'dering»._lt'he' urged by the accused, it held"i3o't._sufti'cie'nzto'ir€te'i*fiere.3with the fiiwdirig of the 'triai court an_dx'th:..2's_,_ the appeal? came to be dismissed. Aggrieved"'--h"y.Aboi;hi.pthe"s.e'-jtidgments, accused is in revision. "

6. _In the fgirouuinds urged are that proceedin§s"t;:..nd_er C'<)fj*i;)ai1i_e's"Act were pending against the 1" accused provision of Section 446 of the Actproseciition'V--.coAL;_ldhot be initiated without prior leave Company 'coi;rri;.° It was also urged that in view of "'_sd'ch"restrii:tion"..oii prosecution of the is' accused, the n"ianaginvg.--dt'ir_ector and other officers cannot be prosecuted Hwhen prosecution against the 1"' accused itself is improper. Learned counsel for the petitioner has reiterated "these aspects which are seriously opposed by the learned arr "~m__' ti counsel for the respondent~complaihant. Learned counsel for the respondent would contend that the [)fO\,1'..lV'.V§lQ:.'f'i._V of Section 141, ¥\JK1.Act no doubt makes the principal offender, but the liability of the mai'iia.:g:i~n:g'*~:director-«.. and other officers referred to therein .ind'e.oei,i'cle%it"'o_f am?"

action against the <:ompahy V'.l_i"liC|"l"l]l'a"," i_>e""i;fhe4__priiicivpal"; offerider. In other words, it___"isV u.rged."tha't there is no impediment for the c-oi<"r'i_ol;,a_ihai*.3t"=t_o-r'choose whether to prosecute the rcompa:*ay'~»n:r hot, i°Thel_"complainant can proceed agai'instiil;j:tii'_1.»e~o:ffice_Vrs _of}-f_heV"company, leaving the coiiipayn,y_VgVa'par't arid ii}'=si}--iiiiactioiri, ho plea can be taken that in the ya'o~s'egice»g"off'vp__ros.ecution against the principal offender,'=t_hlevactiohia-gainst officers cannot be prosecuted. It..«ii)lasi'.ft.irth'e-rntirged that in the instant case as the » :p«r.oVceeAdi.rigs'i--..against company was kept in abeyance, the H~.or.ovisi'onj..oi'~i.,'S'ectioh 446 of the Companies Act was not applic.£i:i).le'r"'V' Alternatively, it was urged that permission was ";<;o.t. required to prosecute the company even though "sproceedings were pending because the stage at which the H proceedings were at the relevant time is important. 8%.,'/_ 9

8. Learned counsel places reliance on the decision of the apex court in the case of ANIL HADA .

ACRYLIC LTD. ([2960) 1 SCC 1). I t:esa:rd'--'%trh'é learned counsel in supp§emeiitatidnA"Vo'f'the ma_tVeri_aiV rnadne available.

9. In this revision petvi_t"ion',the'rn'o.Vot:V.giiefstion that needs to be considered"--.is',_wA--hel::_her'*wi_h-ii/ie_w of the order of the trial court sus'pendi'i'i'g:..pvgrosectutiiionv;a*.ga'Vi'nst 1"" accused (principai obtained from the compariy__Vco'ii.rt:',* against the managing clirector be counsel had diiring the course oi'__alrgVun*seritAs,.--iisuhnwitted that out of 5 cheques iss;,I.ed" by the'Va__ccused in terms of the undertaking given .Ab€§t)re_Vtl5.€.CC'i3f3paﬂy court, four chegues had bounced and in ":_iri:_i_iparV"'«c_ivr.cii~ijr"is'tances other prosecution was launched agains1;..':th'e"'cornpaiiy and managing director. Proceedings ci;hininVa'ted in conviction and was tested in appeal. This "rco'u'rt in revision under Section 397, Cr.P,C. preferred "against such conviction, rejected the revision petition, agu ill confirming not only the finding of guilt, but also consequential sentence. He submits this is the S".??,Vch'e.qLJe and therefore, in view of such finding recorded_..'%§'_}:'§,r"t'h'i'$.,:coi-:__rt _ in the other revision petition, conﬁrming .c'o'i'ivvicti,o'n. of thuev accused (petitioner herein), there,is:1'%:aarr'di«\;'.,at-mgr" sicof-pe"rifor reconsideration of groundsurged as, the s»an'.i.ev.,hVas_,§beierruv taken into consideration by cri.«.'i:2_e,i/isiion Petition ?»éo.393/{)4 and connected

10. urged regarding tenability rr:-,an.aging director, it would be api:>'r'o'p'r'ia.:te"to:::f%§je'fe:'r-rt?itheiorder passed by this court in the rei/isi'--o.'n of 4 similar prosecutions. The same is-. e'><tr'§3",C=teAc!_ below:

' "'«E_or the above said reasons, all the four M'V.iT;,?','\;»;AéVi:§\,_E:"l":peU'CiOl'iS are allowed in part. Both the V}'ti'(.jl'grTV}?3Vi;i'tS or the learned Presiding Officer, Fast Courvfl, Barigaiore, in Ci'l.Appeal "._l5ios.666/O2 and 667'/D2 are hereby set aside. The convictions of accused nos]; and 2 for the offence ounrshable urider Sections 138 of the Negotiabie Instruments Act as recorded by the learned trial judge in C.C. l\ios.33920/DO and or 1 § 33720,/O0 are confirmed' As regards other two cases, Le. c.c.32:=~,73/op aria c.c.332s9,r99, findings of conviction as recorded by the tri--'aV'i'»""-- '' gudge and as affirmed an appeals are confir:fne'd*tyyy".

Sentences in all these four cases as :rnp_oseo I teamed trial lodge are ?7WOdlf§E3dHr3§'l'Ci'thE% sent5eh'cex imposed on accused no.2 Vandfco'mli>9_hsat'ion' awarded in favour ofV.th.e cornp_la'ir-nantaln9..ea'ch case shall be as under:

The default*~..gentencein yueaych cas'e°as stipulated by the trVlal'court :i'"el"n"a»iV_r:sthe same in each case; .

«*fh"e__aAccu.se'd_noi'2;. lsgrantecf tame to pay the said ..fin'e. ernountsyVwiivﬁtén'the"g:>eriod as stipulated bell CW. 1' 25 . _ VV " In Crl 81.2'/"Q4" Six weeks In_Cr{.R.P.. t31&3"_/704 Two months in Crl,R.P."v_39':t/O4 Three months tn"C,rVl.R.P. 392/O4 Four months _A'TThe amount already deposited by accused ﬂ:=1.o."2VV'qsixzall be immediately pasd to the cohjpliaanazut towards fine. If the accused no.2 v--..Vfal'ls"'to pay the balance of fine amount in any x within the period as aforesasd, the trial court as directed to secure has presence and to send hem to undergo the default sentence and to take steps to recover the fine and compensation amounts in the concerned case.' 3*"

11. It is thus clear that the grounds t1rg€C1V.VéZQt'c3.i'i1St the reasoning of the trial judge and appellate _ revision petitions were not of the nature as"t»h.ej~on*e: in .. case. In those cases, the impugned order ot,t'ri.a'l"-cou'i<tt_ read as fotlows:

*.A.c<;i_i.<;,ea in c.c.32373/do-«:_ to pa---yy_VV:ltii':ne of Rs.1,90,000/- in _ def'a--ugl't-- to-._underg'o-.s:m'pEe imprisonment for tw4o"'nlior.iths.:V ~ ' Accused in C.C.33269,/9'-ftzll to fine of Rs.2,4O,OOOf*-V' in ,"'de'r'afuEt" undergo ssmpte imDE'iS3Ol'lEfi'iEftt.,.f53i" two i;.*.«:mth*s Accused pay a fine of Rs.3,28.,VOG.O;ﬁ- in «.ed'efa_uEt"t to: undergo simpée 1mprtsognmentiifotr three monthsv,"

Accused' to Day a fine of Rs.3'r,.28l,OC)G;'--- "girl, "default to undergo simpée impris'c.nment'for~.tw'o.months.

l3L;t_45i:.he___imVpugne'd-o..:f_der in this revision reads as follows:

A _ f-.'For_ther proceedings against A-1 company is "rieifepy ,AVS%.l-Sﬁeﬂded till Eeave ES obtained by the coinp'ljatn?-ant company from the Hon'b!e High Court to _ co.:~itinu:e prosecution proceedings against A-1 'co to pa n y.

Acting u/Sec.2S5(2) of Cr.P.C., I hereby xa";convi<:t accused no.2 Mr.ivl_R,PateE, managing ' dzrector of A-1 company for the offence punishable u/s 138 r/w Sec.141 of N.I.Act and I sentence him to pay a fine of Rs.3,2S,G0O/» in default, accused 2- lVlr.M.R.PateE managing director of A-1 company shall E3 undergo 3.1. for a period of three months. Out of the recovered fine amount, an amount of----.__ Rs.3,20,000/~ shall be paid to the Complainant as, compensation. * ' The difference is very rnateriai. In C.C.33'9~2Q'{U.QV,:~A.Vj;llE3 tri'ail._i""

court had exercised power dndei:__ and the company was arraigri-ed as".accLiser§v'no.,i1 'and "theﬂ managing director was arraigne-d'g:'asV acc'e.sg_edV':no'.:§2 "for the offence under Section' gthevaccvesed were sentenced to pay a fivne..,:'oVf.. in defaelt, directed p.iQ\f/impi"isonment for 3 months: learned trial gudge has siispeiide€_i against the company, requiring,_the obtain prior permission of the cornpaey color-tygtio' 'proceed against it. The words used in the i«nftpughedTuxorder iiiii Hciearly indicate that prosecution i"'pro;:eedi'i*.g_s.i'.i'-against the company were kept in abeyan_'ce£si;1spei1ded tili permission was obtained and h .therefore, in the strict legai sense, trial of accused no.1was "'icsi;i-spﬁended. The trial had not recorded any finding agaisnt " V-the company. It aiso shows that the learned trial judge (}cQ/ iii proceeded independentiy against accused no.2 and found him guiity and passed the impugned sentence. 1:2. Referenee made to the order of the.__co.--jo.rd'i'nia»te'c Bench of this court in Cri.R.P.391j-"O?-i and i:onnect.ed: casensig wiil not be of any avail to thegVrespobg§e'n_t in has to be next seen, when proseic-ution p.roceei_§in'gs'V'ag'ainst V' the principai offender,'c~a_n V;V"r,si__3be'ya'gCe;': can the managing director or othe.r_oifficieirs_:b'efgziriogceeeied against.

As seen from is liabie to be tried for V;5;ee.t'ion 138, NJ. Act as offender,Mthe':V:(qnée:§Vt'i'oij'~.Vg;V'§;-It company which is a juristicVVv'p.ers.on, of the cheque, who would be the p_rivncipa'i~i o'1"fenVdeAr-?b The company being the drawer of '=..tiiei..c'ne,,quewv, is thiep-riincipai offender as engrafted in Section y._'1'?~iV1'"of:"tbV.e».}'1\rjt;'--" However, the provision makes persons in cing-ﬁgev_ofc::__that ji.iI'iSUC person iiable for consequent \.,punisi'*.ment. In its terminoiogy, the provision expresses "--"_twh_igsi_ntention very clearly, as under: 14-1. Offences by companies:

(1) if the person cominitnng an offence under Section 138 is a company, every person who, at the time (W

1."

the offence was commltted, was in charge of, and was responsible to the company for the con"d*-act of the business of the company, as weE"E'~w.a'sV"t.he comparw, as weil as the coi'hpa%}y';"'shal_l' -1:!_}e_ deemed to be guslty of the offence'~-..andl."sha!ll' iiable to be proceeded"aga:'nst_..aAnd<_ puniéshed accordingty.

Therefore, the principal offenlcler'being"'th_Ve'vcorn§pany, the person in charge haa_._"':l)ee.;§ for consequential QtiTllSh:'Tl€!"llZ on Ax/icarioos_,l'i_a.bilittyi» i'i'ivv'An'ijVl..Hacia case supra the Apex co_ai{t oébselye-cl thtis (:_E3a_%a'x'12----wand 13) 1 ._1Zffijhus.l"\riheVn~':V't'heV"dravirerllof the cheque who w»étli,in of §e"c"t":o'n 138 of the Act is a humansbeangtozfb4'a,:bod"y'corporate or even ﬁrm, proselctition 'as¥¢c§é'a}'n'g'5 can be initiated agalnst A . such éldtravwerpj. In--._l;hés"conte><t the phrase "as well as"

En lsuub.-s_e_ctv.on (1) of Sectlon 141 of the Act _is'o.me importance. The said phrase would ' persons mentéoned in the férst category wétnin the tentacles of the offence on a par wsth the ovtteizdliswg company. Ssmléarly the words "shail aiso"

it v:n«:'sub~section (2) are capabie of bringing the third category persons additionally within the dragnet of the offence on an equal par. The effect of reading Section 141 is that when the company is the drawer of the cheque such company is the principal Bl"

the penal iraprtrty created through the legai ﬁctron envisaged Eﬂ Sectzon trail of the Act.

13. The observations of the paragraph 33 of the judgment referred to adurrabrates if the offence was corhrrii'tt'ed by ~;c"i.1¢.'C)b'23_';,I,3xE3"l:1V"\/' it. can be Dunished oniY if the ,ComDfarJ\/has pr0l,3."¢C'ri'teci,'=.4\"8ta't'--.. instead of prosecuting the cor"*epe2.rey it'thVe=p.ayee'VVoVpts to if prosecute only the persons°'"fa'i§sirigVj"r~vy%thinf"2""V and 3"

category the payee can Case onty if he succeeds in sh.ow.i_n't; thigit offeri'c'e.,é_.sajactuatiy committed by the cOirr.pa;rr;y. 3Iif"th"e.V,sa'rhe"pa--ragraph, though the apex cotrrt h'e§d"t'he not coirtain a condition that a prosecutionfof the cor"§?s;§an'y is sine--Qua--non for prosecution '"~,of of,t'het._,V.persons'who faii within 2"'; and 3"" categories Yet in the same paragraph the Hon'b$e Ape;€"tCourt'i',iijarsVheld "No doubt a finding that the offence rhwas n;oVrr:_mV%tted by the company is sénacguaunon for A C_'con\f/"ii-cyting those other persons". It is further held, if a company is not prosecuted due to any iegai snag or otherwise, the other prosecuted persons cannot, on that &Q,/ iii score alone escape from the penal liability created through the iegai fiction envisaged in Section 141 of the A4c.tii*~..4_:F'rorn the discussions above it is clear that the burderfis'u~3p;o:nj' complainant toestablish that duemto an'y"'i~eg'al""s:n Q} otherwise company is not prosecu'»t4ed;.:"'fo--§* examp'ie"'p:e..ndrAs;;3g adjudication of winding? V.-;ipv..___proceedingsjayga,i_VnVst:\§ companies etc.,.

14. In the instanvt-.c_as'ef"fact_s:.:'n.o;tV1'd_ii_spL;te{J are that though the; winding up company in company petition" thewsaild"_petition came to be disposed of, pe and the accused company to reach _vamic'abl'e .sVe--ttle_mVe*ht in terms of which the accused coissillpagy was peVr'n"i*i't"L'ed to pay the amount due by it in five egsL_.i'atet:§,_;9r;».oli1.i;Vh'i--y installments. Therefore affirmatively it has to rvecotrdeld that no proceedings for winding up of the first 'a_ci::Lised company was pending as on the date p.ros"ecution was initiated and has also on the date the judgimient was rendered by the Trial Court. This makes lot of difference. Because as the company proceedings for &Q/ l9 winding up of the conipany was not pending question of invoking Section 446 of the companies act did not»._4a':-.i_se. Hence there was no legal snag to proceed _ accused company. On this basis itﬁhas to_-berv--h':e!.cl 'trhe.A'%'rig:ai*«.. Court on wrong presumption thatwirndingipp-..'p'roce:e_dings were pending against the first«-.._accu's~ed cor".r.i'p'é::'r}y_Vlgeplt titled. proceecléngs pending. As there vi:-ags no legalyil_nﬁpecf.':iirnents or snag it was necessary'f'orT'the._Tr2i_alg'Cou.rt'~ro record finding as to whether the .:.harge.-aig.ai:nst*~ltgfor"voflfelnche under Section 1.38 of N€(_I}_Q..l'.l*3bl%fU:'f'lS'CF"LlPaiazeildt vivaVVs"'p'roved to indict other accusediprin--ci_gp*le"'Vloi-- iyicariﬁotis liability, and Section 1 41 oi?VV_l\ie_gotiVa'§3.le.. ﬁns»t'rc«:ii»_ri~i.e_r1t £:\Ctk __1S. l°'~From_'V--_the above extraction, portion of the «it isx"cl'ear' that the company is the principal offei1.d:e«r:ia.n'dg:Vother categories of persons are offenders by iegaincu¢n;7 $6. Learned counsel for the respondent has placed %Heax}y reliance on the observation of the apex court to "contend that prosecution of the company is not at ail (lie, 20 necessary and the complainant can proceed against two categories of persons without prosecuting the comp.a'nv,"..,E3e it on its own volition or be it due to any irTi,px_:'€..C§lI'Ti"Vei.n:t' snag, E arn unable to accept this ,,contenti"o'n---obegcaeitise no proceeding in'view of Section 445 of C:o'n3paAr'riies.'Actand following paragraph 13 have niiobe read conjoiwijvitiyi vanti ngotiiinfv isolation: Consecguently, it the observation made in paragraph 13 does not have the haillifyin.g:'eff'e,ct_o'f."th,e".observation made in i)aragra§_?i7.thei:.f:iVrst:.4V;"ifa,rt'Vioffparagraph 13. it, therefor_e,,_,Veisp§:,:g1'§§s_' or otherwise, the prosecitrted from liability. The word used 'pr'ose:cutved"«:r'efers:"'t:o4postwprosecution stage and not preg:.;§§'rosAecutio'ii-A Therefore, I am satisfied that if the cotztt fiiids that the prosecution against the principal i"'o_ffe.nder':"a~:.qrj'drawer cannot be proceeded with by reason of legal re-striction and even then, the trial court is required to record a 'finding on fact about guilt of that guristicperson to °gir'os'ecute the category of persons recorded as observed by "the apex court. In the instant case, the finding of guilt of 8.9% 7 l the company becomes a precondition for proceeding to punish the person falling in the category referred____to in Section 14: of i\i.I. Act.

17. The learned trial judge has noticed on prosecution of the 3"" acci.ise'd""'wh.ich h_.asAl'-not"b'eeh assailed. Since that finding is erro%ée_o'u-s,z the.'cooncii«is"io"n..vof._ the trial court that accused no'.~2]'i*s_liabletoubev.pVi;.nui's'he'd, is' improper.

18. For the reason-sfalfoflesaith"t_hez_'ijmgmgned order cannot be stist~va'i'n.eci--. ¥The r3natte'r'..r'e.qui:}*es reconsideration by the:'--.__ trial lgcourt."<ACco'rd_in-glly, the revision petition is allowed. The~ii"np'i;ig'r'ied.. is set aside so far as sentence of a»ccu'se.ci no.'2~.Vcon'cerned. Ttte matter is remanded to _tri.al_1"court-tvo proceed against the first accused company land'l'.t_Vhle}w. .§'o.,v_pro'ceed against accused no.2, in the light of the decis-ions-..'"of'vthe apex court referred to above, by passing it pprop riate ord ers.

19. It is submitted that ttte matter is pending for quite some time and time .be fixed. Accorclingl\,1, four (W T3") mcmths time from the date of {eceipt of a copy of this hprder is granted to dispose of the matter.

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Karnataka High Court