Madhya Pradesh High Court
M/S Peoples General Hospital Private ... vs Union Of India on 3 November, 2023
Author: Anand Pathak
Bench: Anand Pathak
1
IN THE HIGH COURT OF MADHYA PRADESH
AT GWALIOR
BEFORE
HON'BLE SHRI JUSTICE ANAND PATHAK
MISC. CRIMINAL CASE NO. 41956 of 2023
BETWEEN:-
M/S PEOPLES GENERAL HOSPITAL PRIVATE LTD.
(A COMPANY INCORPORATED UNDER
COMPANIES ACT 1956 HAVING ITS REGISTERED
OFFICE AT 6, MALVIYA NAGAR, BHOPAL)
THROUGH ITS DIRECTOR AND AUTHORISED
SIGNATORY COL. ASHOK KUMAR KHURANA
(RETD.) S/O LATE J.S. KHURANA AGED ABOUT 75
YEARS RESIDENT OF PEOPLES CAMPUS
KAROND BHANPUR BYEPASS VILLAGE
RASTAKHEDI TEHSIL HUZUR DISTRICT BHOPAL
462010 (MADHYA PRADESH)
.....PETITIONER
(BY SHRI SIDDHARTH LUTHRA - SENIOR ADVOCATE WITH SHRI
VIVEK KHEDKAR AND YAGYAVALK SHUKLA - ADVOCATES)
AND
1. UNION OF INDIA THROUGH THE DIRECTOR
GENERAL (CORPORATE AFFAIRS) MINISTRY OF
CORPORATE AFFAIRS KOTA HOUSE ANNEXE
SHAJAHAN ROAD - 1 NEW DELHI 110011 (DELHI)
2. OFFICE OF THE REGIONAL DIRECTOR (NORTH
WESTERN REGION) MINISTRY OF CORPORATE
AFFAIRS ROC BHAWAN, OPPOSITE RUPAL PARK,
NEAR ANKUR BUS STAND, NARANAPURA,
AHEMDABAD (GUJARAT)
3. THE REGISTRAR OF COMPANIES, OFFICE OF
THE REGISTRAR OF COMPANIES MADHYA
PRADESH SANJAY COMPLEX, A BLOCK 3RD
FLOOR, JAYENDRAGANJ, GWALIOR (MADHYA
PRADESH)
.....RESPONDENTS
(BY SHRI PRAVEEN KUMAR NEWASKAR - DY. SOLICITOR
2
GENERAL FOR THE RESPONDENTS)
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Reserved on : 18-10-2023
Delivered on : 03-11-2023
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This petition having been heard and reserved for orders coming on for
pronouncement this day, delivered the following:-
ORDER
1. The present petition is preferred under Section 482 of the Code of Criminal Procedure, 1973 at the instance of petitioner seeking following relief:
"In the light of the facts averred and grounds urged in the instant Application, this Hon'ble Court may kindly be pleased to allow the instant Application, thereby, quashing the proceedings bearing Complaint Case No. SC/12/2021 in the Court of IX Additional Sessions Judge cum Special Judge (Companies Act), Gwalior under Section 482 of the Code of Criminal Procedure, 1973, and order dated 11/01/2021 (taking cognizance and issuing process) and be further pleased to quash all further proceedings thereto, in the interest of justice; or pass any Order that this Hon'ble Court deems fit and proper in the interest of justice."
2. Precisely stated facts of the case are that petitioner is a company incorporated under the Companies Act, 1956 (hereinafter referred as "Act of 1956") having its registered office at Bhopal and respondents are Union of India and the functionaries under the Ministry of Cooperate Affairs.
3. A complaint has been filed by respondent No.2/3 with the 3 allegations that between the period 30-11-2000 to 25-07-2006 Alliance Industries Ltd. (a foreign entity) has made investment of Rs.144.18 crores by way of purchase of share at premium (out of which, share capital amount is Rs.14.66 crores and premium amount is Rs.129.52 crores). Company has given loans to the related parties namely PGH International Pvt. Ltd. and Sarvjanik Jankalyan Parmarthik Nyas (SJPN) at the terms which as per the allegations are not in the interest of shareholders of the company.
4. It is further alleged in the complaint that 66% funds were transferred by the company in the financial year 2003-04 and from financial year 2005-06 onwards more than 88% funds were transferred by the company to the related parties. 100% funds from the net worth of the company were transferred as on 31-03- 2018. Rate of interest was much lower than the prevailing market price or the company has given interest free loans to related parties instead of carrying on its main business activities. Loan given to the SJPN are at the interest rate 1 to 3% during the period 2003-04 to 2017-18 contrary to the prevailing market rate.
5. Therefore, it appears that the Central Government vide order dated 24-04-2019 ordered investigation into the affairs of company as per Section 206 of the Companies Act, 2013 (hereinafter referred to as "the Act of 2013") and investigating officer under Section 206(5) was appointed by the Ministry vide order dated 24-04-2019. Report was submitted as per Section 208 of the Act of 2013 on 29-11-2019 to the Central Government. Central Government vide letter dated 24-02-2020 directed the investigating officer to examine in detail and asked for further 4 supplementary inspection report. Investigating officer submitted its supplementary inspection report dated 04-05-2020 to the Central Government.
6. It appears that the Central Government vide order dated 18-05- 2020 directed the office of Registrar of Companies to file prosecution and accordingly prosecution filed against the petitioner for violation of Section 447 of the Act of 2013.
7. Trial Court took cognizance over the compliant so filed and petitioner being crestfallen by cognizance taken by the trial Court, approached this Court under Section 482 of Cr.P.C. for quashment of proceedings.
8. Learned senior counsel appearing for the petitioner argued at length and the pivot of arguments revolves around the competence of respondents to file complaint. It is the submission of learned senior counsel that Section 212 of the Act of 2013 provides for investigation into the affairs of company by Serious Fraud Investigating Officer (SFIO). As per Section 212(6) of the Act of 2013, cognizance can only be taken by the Special Court upon the complaint in writing made by the Director, SFIO or any officer of the Central Government authorized by general or special order in writing in this behalf by that Government and since no authorization has been given to the present complainant i.e. Registrar of Companies to file complaint, therefore, same is vitiated by the effect of Section 212(6) of the Act of 2013. He referred various provisions of Act of 2013 to augment his arguments.
9. Learned senior counsel relied upon the judgment of Telangana 5 High Court in the case of Sumana Paruchuri Vs. Jakka Vinod Kumar Reddy, MANU/TL/0928/2022 and Karnataka High Court passed in the case of Sri M Gopal Vs. Sri Ganga Reddy in Crl.P. No.3550/2017 and Ashish Bhalla Vs. State, 2023 SCC OnLine Del 5818.
10. Another ground raised by learned senior counsel is that the offence comes within the ambit of Companies Act, 1956, therefore, offence as alleged is not cognizable under the Act of 2013. Thus, offence under Section 447 of the Act of 2013 cannot be treated having as ex post facto application of penal provision and placed reliance on the judgments of Apex Court in the matter of Union of India and Ors. Vs. Ganapati Dealcom Pvt. Ltd., (2023) 3 SCC 315, T. Barai Vs. Henry Ah Hoe, (1983) 1 SCC 177, Swetab Kumar Vs. Ministry of Environment, Forest and Climate Change, 2023 SCC OnLine SC 339. According to him, initial complaint is against the legal position, therefore, consequential proceedings are vitiated. He relied upon State of Punjab Vs. Davinder Pal Singh Bhullar and Ors., (2011) 14 SCC 770.
11. It is further submitted that as per summary note of inspection report prepared by the Director General (Cooperate Affairs) vide Anenxure A/10 the opinion given by the concerned authority suggests that no offence was prima facie made out but still the respondents proceeded with filing of complaint. Therefore, approach is arbitrary and illegal.
12. Learned Senior Counsel also referred the factual aspects of the matter and submitted that on merits also no case is made out.
6Petitioner is unnecessarily implicated and harassed.
13. Per contra, learned counsel for the respondent opposed the prayer with vehemence. According to him, as per the provisions of Section 208 of the Act of 2013, the Registrar or Inspector shall submit a report after the inspection of the books of account or an inquiry under Section 206 and other books and papers of the company under Section 207, in writing to the Central Government along with such documents, if any. Such report may, if necessary, include a recommendation that further investigation into the affairs of the company is necessary giving his reasons in support.
14. According to him, Inspecting Officer (IO) submitted its report on 29-11-2019 to the Central Government. Vide letter dated 24-02- 2020 Central Government directed the IO to examine in detail for finding out apprehended diversion and may propose for appropriate action. The Ministry vide mail dated 27-04-2020 asked further supplementary inspection report which was submitted by the IO vide report dated 04-05-2020 to the Central Government.
15. Central Government vide its letter dated 18-05-2020 directed the Registrar of Companies, Gwalior to file prosecution for violation of Section 447 of the Act of 2013. It is the submission of learned counsel for the respondent that violation of Section 447 of the Act of 2013 was established by the Inspector appointed by the Central Government under Section 206(5) of the Act of 2013 and the Inspector in its report under Section 208 of the Act of 2013 recommended action as per Section 447 of the Act of 2013.
16. Learned counsel for the respondent relied upon the reply filed by 7 the respondent and based upon such reply, he opposed the submissions of petitioner on merit also. According to him, inspection of books and accounts of the company carried out by the Central Government under Section 206(5) of the Act of 2013 indicates that company has given wrongful gains to the other related party (SJPN) and it includes management of the company and thus caused wrongful loss to the shareholders/company which tantamounts to fraud. Once the amount in the present manner has been transferred from one entity to another, therefore, it appears to be violative of Section 447 of the Act of 2013. Since it was recurring cause of action and report was obtained in 2019-2020, therefore fraud came to the knowledge of respondent in post 2013 period, therefore, case is to be tried under the provisions of the Act of 2013. No case for interference is made out. He prayed for dismissal of petition.
17. Heard learned counsel for the parties and perused the documents appended thereto.
18. This is a case where petitioner has taken exception to the proceedings bearing complaint No.SC/12/2021 under Section 447 of the Act of 2013 in which cognizance has been taken and process has been issued vide order dated 11-01-2021.
19. So far as arguments of petitioner in respect of authorization of respondents No.2&3 is concerned, same is clarified by the respondents in their reply. It is the specific submission of respondents that vide order dated 24-04-2019, Central Government ordered the inspection into the affairs of Company. Inspecting Officer under Section 206(5) of the Act of 2013 was 8 appointed by the Ministry vide order dated 24-04-2019 and enquiry was held as per Section 206 of the Act of 2013. Thereafter, report was submitted under Section 208 of the Act of 2013 on 29-11-2019. The Central Government vide its letter dated 24-04-2020 directed the IO to examine in detail for finding out the apprehended diversion of funds and may propose for appropriate action. The Ministry vide mail dated 24-07-2020 has asked further supplementary inspection report which was submitted on 04-05-2020 by the IO.
20. Thereafter, the Central Government vide its letter dated 18-05- 2020 directed the office of Registrar of Companies to file prosecution and accordingly the prosecution filed for violation of Section 447 of the Act of 2013. Once the proceedings under Sections 206 and 208 of the Act of 2013 were carried out then authorization as per Section 212(6) of the Act of 2013 was given to Registrar of Companies by Central Government. Therefore, it is not a case where respondents No.2&3 are carrying out the prosecution without any authorization by the Central Government. Therefore, the sheet anchor of the argument of petitioner company goes when authorization is given by the Central Government.
21. So far as submission of petitioner regarding ex post facto application of penal provision is concerned, it also lacks merits for the reason that from the documents filed by the petitioner as Annexure A/15 (apparently an application filed before the trial Court) details out the course of events in which one Shri Ashok Kumar Khosla took over the Alliance Industries Ltd. in the year 9 2012 by acquiring the shares from the erstwhile shareholders/directors of the company and became the sole shareholder/director of the company. Shri Khosla from 2014 onwards started complaining to the various authorities regarding the practice adopted by the petitioner company to defraud the investors by diverting the funds of the investment to other company, for utilization of the same for unintended purpose. Said application further reveals that on 05-09-2018, Mr. Khosla again wrote to the Cooperate Affairs levelling the allegations of fraudulent inducement to invest money and thereafter misappropriation/conversion of funds by the petitioner company. From the said narration coupled with the fact that 100% funds from the net worth of the company were transferred as on 31-03- 2018 which is post 2013 phenomenon.
22. Therefore, commission of offence was a recurring cause of action and continuous process travelled in pre and post era of the Act of 2013. Thus, it is not a case where offence has been committed in earlier Act of 1956 and application of penal provision of present Act namely the Companies Act, 2013 was applied. Therefore, on this count also, arguments as advanced by counsel for the petitioner pales into oblivion and the judgments relied upon by the petitioner move in different factual realm. The facts as delineated and discussed in the case of Davinder Pal Singh Bhullar (supra) are different and not applicable in the present set of facts. It was in respect of scope of CBI enquiry. Jurisdiction of the Bench, inherent powers under Section 482 of Cr.P.C. and doctrine of Waiver and Judicial Bias etc. Facts of that case and 10 present case are totally different. Therefore, the said judgment is of no help to the petitioner.
23. So far as submission of petitioner regarding opinion given by the office of Director General (Cooperate Affairs) vide Annexure A/10 is concerned, it is not an opinion prima facie. In fact, it was a summary prepared for interdepartmental communication and it proceeds on probabilities. In fact that summary note of inspection report nowhere gives any clean chit to the company. It is mere proposal. Summary note has no legal sanctity prima facie.
24. On merits, allegations are such which requires trial to reach to the truth. This Court does not venture into the factual details on merits of the case in specific terms lest affect the trial but certainly constrains to discuss that the allegations are such which attract trappings of Section 447 of the Act of 2013 for trial prima facie. Transactions were spread out in years together and funds of the company were allegedly siphoned of to different entity (SJPN). Therefore, only the trial would unfold the truth.
25. In the considered opinion of this Court, the petition preferred by the petitioner fails and has no merits to entertain under Section 482 of Cr.P.C. scope of which constricts once parameters as mandated by the Apex Court in the case of State of Haryana and others Vs. Ch. Bhajan Lal and others, AIR 1992 SC 604 and subsequent judgments are not satisfied. Section 482 of Cr.P.C. can be invoked in exceptional circumstances on the basis of grounds as delineated by the Apex Court time and again. Here, this Court desists to invoke such jurisdiction in the given facts and circumstances of the case.
1126. Cumulatively, the petition sans merits, is hereby dismissed.
However, it is hereby clarified that any observations made by this Court in the present petition is confined for discussion in the instant matter and trial Court shall proceed and conclude the trial without being influenced by any observations of this Court.
27. Petition stands dismissed.
(ANAND PATHAK) Anil* JUDGE ANIL Digitally signed by ANIL KUMAR CHAURASIYA DN: c=IN, o=HIGH COURT OF MADHYA KUMAR PRADESH BENCH GWALIOR, ou=HIGH COURT OF MADHYA PRADESH BENCH GWALIOR, postalCode=474001, st=Madhya Pradesh, 2.5.4.20=8512f40a1a9eaa50b6802d068b51da e27e84c266b09d283f0799e67cdc7df50f, CHAURASI pseudonym=F7E569EA2A8955818DF870B0C5 0764B46C526E80, serialNumber=EC534CBB3B245F050119F06F4 A296DD83C765A1E2ACC6EC7D8BD8CBCC9C2 YA 446E, cn=ANIL KUMAR CHAURASIYA Date: 2023.11.04 14:17:10 +05'30'