Delhi High Court
Rakoor Industries (P) Ltd. & Anr. vs R. L. Bali, Ito & Anr. on 18 September, 2001
Equivalent citations: [2001]252ITR802(DELHI)
Author: K S. Gupta
Bench: K S. Gupta
JUDGMENT K S. Gupta, J.
This revision petition is directed against the order dated 23-5-2001, passed by the Additional Chief Metropolitan Magistrate, Delhi, dismissing the application of the petitioners for staying the proceedings in -R. L. Bali v. Rakoor Industries Pvt. Ltd. Criminal Complaint No. 1229/1/of 1997.
2. In short the submission advanced by Sh. Shambhu Nath for the petitioners whom I heard on the point of admission, was that as the provisional liquidator with respect to Rakoor Industries Pvt. Ltd., petitioner No. 1, had been appointed in C. P. No. 17 of 1988 by the order dated 22-5-1990, the complaint filed by respondent No. 1 for the offences punishable under sections 276C and 277 of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), against the petitioners could not be proceeded with except by leave of winding up court which respondent No. 1 has not obtained and, thus, the impugned order declining to stay proceedings is bad in law. He pointed out that the decision in BSI Ltd. v. Gift Holdings Ltd. Ltd. (2000) 21 CC (Case Law) 66 (SC) : (2000) 100 Comp Case 436 (SC), relied upon by the Additional Chief Metropolitan Magistrate is inapplicable as it was rendered with reference to section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985. The submission is, however, without any merit. A complaint was filed by respondent No. 1 against petitioner No.1 company, R. K. Gupta, petitioner No. 2, and Smt. Prem Lata Gupta who is alleged to have died, on 31-3-1987. Rajender Kumar Gupta and Smt. Prem Lata Gupta had been im-pleaded as accused being managing director/director of accused/petitioner No. 1-company. Para No. 6 of the complaint (copy at pages 10 to 15) which is material, reads thus :
"From the facts stated hereinabove, it is clear that the accused willfully attempted to evade tax, penalty or interest chargeable or imposable under the provisions of the Act and as such, they are guilty of offence punishable under section 276C of the Act. From the facts stated hereinabove, it is further clear that the accused made a statement in the verification of the return and delivered accounts/statements which were false and which they knew or believed to be false and as such they are guilty of offences under section 277 of the Act."
It was prayed that the accused be punished for the offences under sections 276C and 277 of the Act.
3. Section 446(1) of the Companies Act says that when a winding-up order has been made or official liquidator appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the time of winding-up order, shall be proceeded with, against the company, except by leave of the court and subject to such terms as the court may impose. The expression "legal proceedings" in section 446(1) is wide enough to include criminal prosecution also but such proceedings must be in relation to the assets of the company. As the proceedings arising out of a criminal complaint for alleged violation of said two sections of the Act are not in respect of assets of petitioner No.1-company, said sub-section (1) of section 446 has no applicability. Further, the aforesaid section cannot be invoked as regards criminal proceedings against the managing director/director of the company for the offences under the Act. I am fortified in this view of mine by the decision in Jose Antony v. Official Liquidator (2000) 28 CC (Case Law) 17 (Ker-HC) : (2000) 100 Comp Case 811 (Ker), wherein the scope of section 446(1) vis-a-vis section 138 of the Negotiable Instruments Act was considered by a Division Bench of the Kerala High Court. As was rightly pointed out, BSI Ltd. case (supra) has no applicability in the matter as it was not decided with reference to section 446 of the Companies Act.
For the foregoing discussion, proceedings against the petitioners in the pending criminal complaint cannot be stayed by invoking section 446(1) of the Companies Act.
Revision petition is, therefore, dismissed.