Rajasthan High Court - Jaipur
Dilip S. Dahanukar And Ors. vs Padam Kumar Khaitan on 26 May, 1995
Equivalent citations: 1996CRILJ1569, 1995(3)WLC531
Author: Gyan Sudha Misra
Bench: Gyan Sudha Misra
ORDER Gyan Sudha Misra, J.
1. These two Criminal Misc. Petitions have been filed under Section 482, of the Code of Criminal Procedure by the petitoners, Dilip S. Dahanukar & Dr. M.J. Salve, Chairman & Managing Director, respectively, of Ecomax Agro Systems Ltd (since merged with Good Value Marketing Company Ltd.) for quashing the order dated 27-8-1994 passed by the special Court of Judicial Magisirate (Economic Offences) Rajasthan Jaipur, taking cognizance of offence under Section 68 of the Companies Act, 1956 (for short, 'the Act') in pursuance of which processes have been issued to the petitioners.
2. The impugned order was passed on the basis of a complaint which was lodged by the complainant, Shri Padam Kumar Khaitan, a lawyer by profession, on August 3, 1993, for offences under Section 63, 64, 65, 68 of the Act and also under Sections 405, 409 & 416, IPC. The cognizance has. however, been taken only under Section 68 of the Companies Act.
3. It has been stated in the complaint that the complainant is the General Secretary of one, Pinkcity Investor's Forum whose object is to look after the interest of the investors in the shares and to give them legal assistance. The complaint had been lodged against Ecomax Agro System Ltd. (as it then existed) through its Chairman, Shri Dilip S. Dahanukar and its Managing Director, Dr. M.J. Salve - the petitioners herein, and Good Value Marketing Company Ltd., whose Chairman & the Managing Director are respectively the petitioners and Shri Prem Somani, Member, Jaipur Stock Exchange.
4. The complaint has been lodged in great detail giving account of the complainant's grievance and goes on to the extent of pointing out the prescribed punishment for offences alleged, along with legal citations in support of the complaint. However, on a dissection of the same, the substance of the translated version of the complaint which emerges is to the following effect:-
Ecomax Agro System Ltd. (as it then existed i.e. since its merger with Good Value Marketing Company Ltd.) having its office at Dwarka Puri. Jamna Lal Bajaj Marg, 6 - Scheme, Jaipur in order to increase its capital offered to the existing shareholders of Ecomax, the right issue of 49 lacs & 80 thousand shares each of Rs. 10/- and for this purpose, published a prospectus in which Company laid down a rosy picture about future prospects of the Company and on the basis of this came out with a letter of offer, and application form offering rights issue from 18-1-1992 which was to close on 19th Feb., 1992, but the right issue was not fully subscribed due to which the postdated applications and bank drafts were accepted from public and such persons were allotted the shares.
5. It has been further alleged in the complaint that the Company in collusion with its broker/agent, Shri Prem Somani Member Jaipur Stock Exchange, who has also been made as accused-opposite party No.5 (but is not the petitioner herein gave wrong impressions and allured the investors by stating that the Company was doing well and that in the second quarter (April to June, 1992) of the year 1992, it would come out with public issues. It has further been alleged to have been stated by the Company that the public issue was likely to be over-subscribed, therefore, any one who wanted to subscribe to the shares, could buy renunciation forms and apply for shares so that the applicants might be issued shares and it was further stated that the Company in the year 1992 would come out with public issues and after selling shares would receive profits. Being allured with the announcement of the Company, the complainant-respondent No. 1 also bought renunciation application forms of Rs. 15/- each for purchase of 200-200 shares and submitted bank drafts each of Rs. 2000/- and thereafter Rs. 9,000/- for the same and submitted it to the opposite party No.5. The said application forms were received by the opposite party and share certificates were also issued to the complainant. But, it has been alleged that the Company has not come out with public issue even up to this date. It has, therefore, been alleged that the opposite party No. l Ecomax Agro Systems Ltd. with the assistance of the opposite party No. 2 (petitioner herein), 3, 4 & 5 named above, came out with false prospectus and thus cheated by grabbing Rs. 13,000/- in total from the complainant which he would have invested elsewhere and earned interest @24%. It has thus been alleged in the complaint that any person by publishing false prospectus gives wrong statement and collects money from the public is an offence punishable under Section 63 of the Act for which, the petitioners are liable to be punished for 2 years imprisonment along with fine to the extent of Rs. 5000/-.
6. The complaint further elaborates that the opposite party knowing fully well that its prospectus and letter of offer had contained wrong, false and misleading facts that they would not be coming out wihl public issues in the second quarter of the year 1992, led the complainant to believe that he should invest in the Company. The complainant has alleged that this action of the opposite party is also an offence punishable under Section 68 of the Act for which the opposite party is liable to be punished for five years imprisonment along with a fine of Rs. 10,000/-. Still further, it has been stated that the action of the opposite party is punishable under Secs. 405, 406 and 416 IPC and also under Secs. 63, 64, 65 & 68 of the Companies Act, and the action should be taken against the opposite party for offences under these sections. The complainant has also cited in the complaint itself a decision of the Apex Court in R.S. Khema v. State of Bihar (1993 (2) JT p. 523) submitting that the Apex Court has taken the view that the action could be taken against the Company even under the IPC. It has further been submitted in the complaint that the jurisdiction of the trial Court for the alleged complaint lies at Jaipur where the complainant bought renunciation forms through the opposite party Prem Somani.
7. However, after the complainant was examined and affidavits were perused which were filed in support of the complaint, cognizance for offence punishable only under Section 68 of the Act was taken by the learned Judicial Magistrate (Economic Offences), Rajasthan, Jaipur vide his order dated 27-8-1994 and the process was issued to the petitioners along with other co-accused persons. Hence these criminal misc. petitions for quashing the order taking cognizance and issuance of processes.
8. In this petition, the petitioner, Dilip S. Dahanukar has given his background by stating that he is a Chemical Engineer from I.I.T. (Powai) and is a Graduate in Business Management from Brooklyn, New York. He is a leading industrialist of the State of Maharashtra and is a person of high repute. He is the author of three books and founder President of Marathwara Chamber of Commerce. The petitioner is also a member of Sales Tax Advisory Committee of the Government of Maharashtra and has been awarded a Gold Metal under the Samajshri Awards of 1994 presented by the Indian Council of Management Executives. Similarly, the petitioner Dr. M.J. Salve, in his petition also, has given his background by stating that he is a highly experienced person in the field of Horticulture and was the Head of the Department of Horticulture, Kokan Krishi Vidhyapeeth, Dapoli, Maharashtra and further is the winner of the prestigious "FIE foundation award- 1994" for evolving seedless mango variety "Sindhu".
9. Perhaps, the petitioners by slating their background intend that considering their respectability, the Court should carefully and meticulously examine, whether any offence is made out against them and should not mechanically take cognizance. The petitioners have further proceeded to state that the complaint is ill-motivated for purposes of extracting/extorting moneys by roping in the highly placed persons in the commercial and industrial world. The complainant is in the habit of filing frivolous complaints against companies, their directors, and officers, and he is alleged to have filed several complaints against few other companies in the Court of Special Judicial Magistrate (Economic Offences) Rajasthan Jaipur. It has been alleged that the Investors forum flouted in the name of Pinkcity Investors Forum with its office at Khaitan Bhawan at Jaipur seems to be an Organisation created by the complainant and such an Organisation is a one man-controlled affair and the complainant by his conduct is abusing the Forum and is attempting to achieve his unjustified demand. It has further been alleged that the only intention behind filing of this complaint is to pressurise the companies to succumb to his unjustified unwholesome, and unwarranted demands. The complainant is alleged to have attempted to achieve his object by exploiting similar situations and the petitioners are also made victims by the complainant for unlawful gains and the Courts should be extremely cautions in dealing with such complaints and should not mechanically pass such orders issuing process.
10. In so far as the legal aspect of the matter is concerned, it has been contended on behalf of the petitioner that a perusal of the complaint, indicates that no case is made out for any of the offences alleged in the complaint and the Special Judicial Magistrate, himself, has chosen to take cognizance only for the offence punishable under Section 68 of the Act which is also most unwarranted . The petitioners, therefore, prayed that the complaint, deserves to be quashed even on this solitary ground.
11. It has further been contended in support of the case for quashing the order taking cognizance that a perusal of the complaint, clearly indicates that the respondent No. 1 (complainant) is aggrieved only on account of the fact that Ecomax Agro System Ltd - of which the petitioners respectively are the Chairman and Managing Director, did not come out with a Public Issue as stated in its prospectus which in fact was not prospectus but was merely a Project Profile. The complainant, however, at the time, when he was examined by the subordinate Magistrate, vide his affidavit, was fully aware of the circumstances, under which the Company did not come out with Public Issue on the stipulated date, and even if it did not come out with a Public Issue, that by itself did not make out any offence either under Section 68 of the Act. Moreover, in spite of the fact that the non-petitioner (complainant) was aware of the circumstances, he suppressed before the learned Magistrate the facts under which the Company did not come out with Public Issue. The complainant was fully aware at the time of making statement on oath before the learned Magistrate on 4th July, 1994 that the Ecomax Company did not exist due to which it did not come out with Public Issue since the same stood amalgamated and merged with Good Value Marketing Company. In this regard, the complainant had received a notice and at least should be presumed to have received the said notice which was sent to all the share-holders and it. was in the general meeting of the share-holders wherein merger of the Ecomax Agro Systems Ltd. with Good Value Marketing Company was approved. This notice regarding merger was sent on or about on 4-10-1993 but the respondent No. 1 (complainant) deliberately did not mention in his statement on oath about all these facts although these were fully within his knowledge It has further been explained that as a result of the merger of the Ecomax Agro Systems Ltd. with Good Value Marketing Company, the complainant has gained financially by receiving shares of Good Value Marketing Co. in lieu of shares of Ecomax Co.
12. The background of the merger has also been given out by the petitioner and it has been explained that the Good Value Marketing Co. with which Ecomax Agro Systems Ltd. has merged, is a very old company which was incorporated in the year 1979. It is being listed at Bombay Stock Exchange and is being quoted always at Rs. 85/- to Rs. 90/- against the share face value of Rs. 10/-. It has been declaring dividend for last so many years. It has also been stated on behalf of the petitioner that the merger or amalgamation of the Ecomax Agro Systems Ltd. was not done in a close door meeting or in a clandestine manner, it was duly done after notice to all its share-holders and the merger has also been sanctioned by the Bombay High Court (copy of which has been annexed to this criminal misc. petition) by order dated the 27th January, 1994, as the merger was approved by the share-holders, the Regional Director, Department of Company Law Affairs, Official Liquidator.
13. Giving further details of the merger, it has been stated that in pursuance of the proposal passed in the Board's meeting of Ecomax Agro Systems Ltd. held on 1-10-1993 for merger/amalgamation with Good Value Marketing Co. Ltd: in terms of Sections 391 to 394 of the Companies Act, an application had been made to the High Court at Bombay. Accordingly the Bombay High Court passed an order on 7-10-1993 for convening a meeting under the Chairmanship of Shri K.L. Chugh and then, and extra ordinary General meeting was held on 22nd November, 1993 after which notice was sent to all concerned including the complainant-respondent No. 1. As a result of this merger, the complainant has been allotted one share of Good Value as against eight shares of Ecomax and this ratio of shares had been duly certified by the Auditors, approved by the General Body of share holders at the meeting for the purpose and also sanctioned by the High Court at Bombay by order dated the 27th January, 1994.
14. The petitioner further goes on to state that the complainant had never bothered to attend the meeting or to object to the merger before the Bombay High Court even if he was aggrieved in any manner but chose to file criminal complaint to achieve wrongful gains. The complainant claims to have purchased renunciation form of the value of 200 shares and according to his own case, he had been allotted 200 shares of Ecomax but as a result of the merger and in view of the decision taken by the share-holders in its General meeting, the complainant had been allotted 25 shares of Good Value Marketing Company against 200 shares of Ecomax Agro Systems Ltd. which fetched good return as the value of 25 shares of Good Value Marketing Company when multiplied by Rs. 85/- per share would come to Rs. 2,125/- and the complainant would stand benefitted by dividends which the Company - Good Value Marketing Co. giving yield from year to year without any break.
15. The petitioners, therefore, have endeavoured to impress upon this Court that in so far as the facts stand, the allegation that the Company-Ecomax Agro Systems Ltd. have not come out with Public Issue does not really give a cause to file any criminal complaint as no prima facie case is made out and the consequences, if any, of the merger or amalgamation of these two companies were of civil nature which the complainant failed to contest before the High Court at Bombay, if at all, he was aggrieved with it. It has, further been submitted that the complainant, although was examined in the present case, on 4-7-1994, but he intentionally supressed the facts and did not make any mention regarding facts of all subsequent events before the learned Magistrate who was led into passing wrong order of taking cognizance for offence punishable under Section 68 of the Act vide the impugned order, due to which the process has been issued without proper application of mind since the learned Magistrate was not furnished with full materials which would have facilitated him to draw an inference as to whether any prima facie case was made out or not by not coming out with Public Issue at the relevant time, i.e. 2nd quarter of 1992, by Ecomax Agro Systems Ltd. of which the petitioners were respectively the Chairman & Managing Director.
16. It has also been submitted by the petitioners that the complainant failed to show in what circumstances and manner, the complainant was forced into purchase of Renunciation Forms which might be through the Media of some persons, and has not mentioned even a single circumstance in what manner, the complainant had been defrauded by either the said Prem Somani, singly or in collusion with or conspiracy with the petitioners or other impleaded opposite parties. Moreover, it has not even been the allegation of the complainant that he did not get shares of Ecomax Agro Systems Ltd. as against his application form. According to his own case, the complainant received shares against his applications. Under the aforesaid facts & circumstances, it has been submitted that even upon the facts of the complaint, as they stand, no case is made out for taking cognizance of the offence either under Section 68 of the Act or any other allied sections.
17. In order to put the submissions of the petitioners to legal test, it may be worthwhile to quote Section 68 of the Act under which cognizance has been taken by the learned subordinate Magistrate, for ready reference, herein as under:-
"68. Penalty for fraudulently inducing persons to invest money. - Any person who, cither by knowingly or recklessly making any statement, promise or forecast which is false, deceptive or misleading or by any dishonest concealment of material facts, induces or attempts to induce another person to enter into, or to offer to enter into -
(a) any agreement for, or with a view to, acquiring, disposing of, subscribing for, or underwriting shares or debentures; or
(b) any agreement the purpose or pretended purpose of which is to secure a profit to any of the parties from the yield of shares or debentures, or by reference to fluctuations in the value of the shares or debentures; shall be punishable with imprisonment for a term which may extend to five years, or with fine which may extend to ten thousand rupees, or with both."
18. A conjoint reading of the complaint and order taking cognizance as well as the provisions contained in Section 68 of the Act, clearly indicates that the cognizance of offence under Section 68 of the Act has been taken under initial part of this section which lays down that if any person cither intentionally or recklessly makes any statement or promise or forecast which is false or deceptive or misleading, or by any dishonest concealment of material facts, induces any person to enter into, or to offer to enter into any agreement for, or with a view to, to secure profit, it is an offence punishable as envisaged in the section.
19. The security of the complaint indicates that the grievance of the non-petitioner-complainant is on two counts:
(i) that the complainant was misled by the prospectus of the Company. Ecomax Agro Systems Ltd. due to which he was induced into buying the renunciation forms on the basis of which he was allotted shares, for which he suffered loss by way of interest @ 24% on account of his investment in Ecomax Agro Systems Ltd. to the extent of Rs. 13,000/- and, not come out with public issue on the stipulated date in the 2nd quarter of 1992.
20. The duty of this Court, therefore, lies in the fact to examine whether any prima facie case is made out against the petitioners under Section 68 of the Act under which cognizance has been taken, or not. The complainant-respondent No. 1 appearing in person has cited several decisions regarding the circumstances in which complaint cannot be quashed, viz. Smt. Nagawwa v. Veeranna and also decisions of various High Courts. But it is needless to discuss those judgments since the legal position in regard to quashing of matters is well settled that the Court has only to see whether any prima facie case on the basis of the alleged facts is made out for trial of the offence or not. But, it is equally well established that it is imperative for the Court to see, whether the trial on the basis of the complaint would result into abuse of process of the Court or not and, it is equally an obligation on the Court to interfere with an order to prevent harassment of the Citizen of India by illegal prosecution.
21. Adjudging the facts of the complaint in the light of these legal proposition, it may be relevant to enter into scrutiny of the complaint, as it stands. It is clear that allegation of the complaint is not Ecomax Agro Systems Ltd. is a bogus company and did not exist at all or that he was contacted by any agent of the Company so as to infer that he was induced into buying the renunciation forms of the Company in question. The complainant/respondent admittedly as a result of the purchase of the renunciation form was allotted shares. The complainant, however alleges that since Ecomax did not come out with its public shares, therefore, his money to the extent of Rs. 13,000/- got blocked and did not earn profit @ 24% interest if it had been invested elsewhere the same would have earned profit. But this by itself, in my view, cannot be said to make out any offence under Section 68 of the Act for, obviously, the complainant cannot be said to have been induced for entering into agreement with the company by way of purchase of shares. The complainant voluntarily purchased the renunciation form and on that basis admittedly he was also allotted the shares for which he had applied. Subsequently, however, this Ecomax Co. got merged with Good Value but thereafter he also got the shares of the merged company Good Value in proportion to the share of Ecomax. It is not even the case of the complainant/respondent that the petitioner Company withheld the money which was invested in purchase of renunciation form, but the shares were admittedly duly allotted of' the said Company to the complainant which was fully entitled to trade since the amalgamated company had already been listed in the stock exchange. Therefore no case can be held to have been made out against the petitioners-opposite party in so far as this limb of the complaint is concerned.
22. Coming to the other aspect, i.e. second part of the complaint, it has to be examined as to whether any case is made out or not, due to the fact that the company did not come out with Public issue. In my view, this also clearly does not come out within ambit of section 68 of the Act, since the cognizance has been taken only for the offence under Section 68 of the Act, as indicated in the order taking cognizance. Even if it is implied that this matter may be scrutinised at the trial of the complaint, that would not be clearly justified since the act of the company' in not coming out with Public Issue has been explained by the petitioner, which fact has not been rebutted even by the complainant. Perhaps the complaint could be said to have made out a prima facie case for not coming out with Public Issue if allegations were to the extent that the amalgamation or merger of the Company, Ecomax Agro Systems Ltd. with Good Value Marketing Pvt. Ltd. was done in any way in a clandestine manner or in a closed door meeting. The merger had been done bypassing a resolution in General Meeting of the Board of Directors of the Company in question and the matter was also thrashed out in High Court at Bombay after the notices were issued in this regard to all its share-holders. If at all, it is accepted that the complainant did not receive any notice at all, the remedy in my view, lies under the civil law or under the provisions of the Act by challenging amalgamation due to which he may or may not have suffered any loss if the complainant respondent No. 1 is aggrieved that he should not have been allotted only 25 shares of Good Value Marketing Ltd. in lieu of 200 shares of Ecomax Agro Systems. Thus in so far as the facts of this case are concerned the same, in my view, should not have given rise to an occasion to lodge a criminal complaint in this regard. The complaint of the complainant-respondent in my view, is purely of civil . nature and cannot be said to be subject matter of a criminal complaint.
23. In this context, it may be relevant to refer to a decison in N. Parthasarathy v. Controller of Capital Issues - cited by the complainant-respondent himself, which clearly indicates that in matters of similar nature, the remedy which was adopted by the aggrieved party was a writ petition in the High Court challenging the transfer of shares by Public Financial Institutions to another company indicating that in such situation, the remedy is a civil one and not before the criminal Court. In the case, supra, also, one Mr. Harish Jagtiani, a practising Advocate of the High Court of Bombay and policy holder under the Life Insurance Corporation of India and also holder of Units issued by the Unit Trust of India and one, Mr. Shamit Majumdar, a holder of shares and debentures of Larsen & Toubro Ltd. filed a Writ Petition being No. 2595 of 1989 in the High Court at Bombay against the Union of India and others including financial institutions questioning the legality and validity of the consent given by the Controller of Capital Issues for the proposed issue of convertible secured debentures aggregating Rs. 820/- crores by Larsen Toubro Ltd. through its instrumentality of BOB Fiscal Services Ltd. to the Reliance Groups of Industries. Since the petitioners were having interest in the financial institutions by virtue of the fact that they were share holders or policy holders of L.I.C. of India challenging such transfer as arbitrary, illegal, mala fide and a fraud on the statutory powers of the respondent-Controller of Capital Issues on the ground that they had entered into a secret arrangement by which a large chunk of equity shares of Larsen & Toubro Ltd. was alleged to have been surreptitiously divested by the Controller of Capital Issues in favour of the Ambani Group, the third largest monopoly house in India. This matter was thrashed out in the High Court of Bombay under its writ jurisdiction and thereafter in the Supreme Court by way of special leave petition in its civil appellate jurisdiction wherein such transfers were held to be illegal. Although the respondent herein Shri Khaitan has relied upon this decision in support of his submission that in view of Section 68 of the Act, terms of prospectus or statements in lieu of prospectus cannot be varied and has also tried to establish that such violation calls for subjecting of punishment to the violator, he seems to have missed that even such violations have been dealt with under civil writ jurisdiction of the High Court and even before the Supreme Court under civil appellate jurisdiction, even though allegation according to the petitioners in the said case was that the transfer had been done in a surreptitious manner but in spite of that, this matter gave rise to a civil dispute.
24. Another ease relied upon by the complainant-respondent is the case of R.S. Khemka v. State of Bihar (1993 Cri LJ 2888) (SC). In this case, the learned Judges of the Supreme Court no doubt held that if the promotors or those in charge of managing affairs of the company are found to have committed offences like cheating, criminal breach of trust, criminal misappropriation or alike, then it cannot be held that the only remedy to which the investor is entitled to pursue is under and in accordance with the provisions of the Act. They can be prosecuted for offences under the Penal Code, if it is established that primary object of the incorporation and existence of the company is to defraud public: "But, the learned Judges held that while taking cognizance of alleged offences in connection with the registration, issuance of prospectus, collection of moneys from the investors and the misappropriation of the fund collected from the share-holders which constitute one offence or other under the Penal Code, Court must be satisfied that prima facie an offence under the Penal Code has been disclosed on the materials produced before the Court. The learned Judge further went on to hold that the ingredients of the different offences can be proved from the circumstances of a particular case that the intention of the promotors or the directors was dishonest since very inception or that they developed such intention at some stage, for their wrongful gain and causing wrongful loss to the investors. Therefore, the learned Judges held that if the screening on this question is not done properly at the stage of initiation of the criminal proceeding, in many cases, some disgruntled share-holders may launch prosecution against the promotors, directors and those in charge of the management of the company concerned and can paralyse the functioning of such company. The learned Judges themselves have held that it need not be impressed that for prosecution for offences under the Penal Code the complainant has to make out a prima facie case against the individuals concerned, regarding their acts and omissions which constitute the different ingredients of the offences under the Penal Code. In the case, supra, the Deputy Secretary to the Government of India had lodged a complaint to the CBI mentioning different circumstances to show that the directors did not intend to carry on any business and in spite of the rejection of the application by the Stock Exchange, Calcutta, the promotors of the Company retained the share moneys of the applicants with dishonest intention and those allegations were investigated by the CBI. Ultimately, charge-sheet was submitted on the basis of which cognizance was taken. The High Court had thought it proper to quash proceedings against the directors only on the ground that it was open to the applicants for shares to take recourse to the provisions of the Companies Act. This order of the High Court was quashed by the learned Judges of the Supreme Court holding that the proceedings could not be quashed merely on the ground of availability of alternative remedy under the Companies Act.
25. The facts of the instant ease stand altogether on distinguished footing for the reason that even according to the complainant, what he is perhaps aggrieved of is that he has got only 8 shares in lieu of one share meaning thereby that he could not have been allotted only 25 shares of the Good Value Marketing Co. in lieu of 200 shares of Ecomax Agro Systems Ltd. But, this question has thoroughly been gone into at the time of merger and the terms of the merger had been sanctioned by the High Court at Bombay wherein question regarding allotment of one share of Good Value Marketing Co. as against eight shares of Ecomax Agro Systems Ltd. had been duly certified by the auditors and approved by the General Body of share-holders at the meeting for the purpose and also sanctioned by the High Court at Bombay. Therefore, the question which had already been gone into in a proceeding before the High Court at Bombay under the Companies Act cannot, in my view, be made subject matter of dispute by lodging a criminal complaint under the Act or the Penal Code. Even otherwise, the learned Magistrate, himself, has chosen to take cognizance only under Section 68 of the Companies Act not under the Penal Code.
26. Hence, by drawing comparision between the facts of the case, supra, with the instant case, it clearly emerges that the dispute between the complainant-respondent herein and the petitioners, if any, ought to be thrashed out before a Court dealing with civil dispute. Perhaps, remedy lies by way of an appeal against. the order of the High Court of Bombay allowing merger of Ecomax Agro Systems Ltd. with Good Value Marketing Co. Ltd. on account of which he alleged to have suffered loss as even according to his allegation what he is aggrieved of, is the fact that he has got one share of Good Value Marketing Ltd. in lieu of 25 shares of Ecomax.
27. This in my view, even on the facts as it stands in the complaint, there is absolutely no ingredient to make out an offence or case for an offence punishable under Section 68 of the Act on the ground that the petitioners did not come out with Public Issue on the stipulated date.
28. The learned counsel for the petitioners had initially attempted to advance arguments as to whether publications of Project profile by the Company in question can be said to be a prospectus within the meaning of Section 63 of the Act. But since, the cognizance has not been taken for offence under Section 63 of the Act, I do not see any reason to enter into this question and the petitioner's counsel ultimately gave up his arguments on this Court.
29. Thus, on scrutiny of the facts stated in the complaint and consideration of allied circumstances given out by the petitioners in these petitions which led to the merger of the Company Ecomax Agro Systems Ltd. with Good Value Marketing Ltd. by virtue of the order of the High Court at Bombay which certainly in my view, ought to be taken into consideration before upholding the order of issuance of process, leads me to hold that the order of the learned Special Judicial Magistrate deserves to be quashed as I am of the firm opinion that no case is made out for proceeding against the petitioners in a criminal court on the basis of the complaint lodged by the complainant-respondent under various Sections of the Companies Act and the Indian Penal Code regarding which cognizance has been taken only in Section 68 of the Companies Act especially when the complainant-respondent suppressed the material facts at the time of his examination before the Magistrate. It is quite likely that if the full facts had been disclosed before the Judicial Magistrate by the complainant no order taking cognizance would have been passed at all even under Section 68 of the Companies Act. In my view, no case having been made out even under Section 68 of the Companies Act, there is no reason to proceed further in the cases pending before the Special Court of Judicial Magistrate as the same would clearly amount to abuse of the process of the Court resulting in harassment of a citizen and causing mental agony.
30. In the result, these two Criminal Misc. Petitions are allowed and the criminal proceedings pending before the learned Special Court of Judicial Magistrate (Economic Offences), Rajasthan, Jaipur in case No. 82/94 is quashed and the summons issued to the petitioners under those proceedings shall stand discharged.