S. SATYANARAYANA VERSUS ENERGO MASCH POWER ENGINEERING & CONSULTING PVT. LTD. & ORS
CODE OF CRIMINAL PROCEDURE, 1973 (CrPC)
Section 482 - Saving of inherent powers of High Court
Section 420 - Cheating and dishonestly inducing delivery of property
Supreme Court of India (Division Bench (DB)- Two Judge)
Appeal (Crl.), 516 - 518 of 2010, Judgment Date: Mar 26, 2015
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL Nos. 516-518 OF 2010
S. SATYANARAYANA .... APPELLANT
VERSUS
ENERGO MASCH POWER ENGINEERING &
CONSULTING PVT. LTD. & ORS. .... RESPONDENTS
JUDGMENT
S. A. BOBDE, J.
These Criminal Appeals are preferred by the complainant against
the Judgment of the High Court of Judicature of Andhra Pradesh at Hyderabad
by which the High Court has in exercise of powers under Section 482 of the
Code of Criminal Procedure (in short Cr.P.C.) quashed the proceedings in CC
No. 37 of 2008 on the file of the court of the Special Judge for Economic
Offences at Hyderabad insofar as the accused Nos. A4, A5, A6, A9 and A10
are concerned.
2. The complainant i.e. the appellant herein lodged a private
complaint in his capacity as a Promoter Director of Sri Satyanarayana Power
Private Ltd. - a company incorporated to generate biomass based power
project in the District of Warangal in the State of Andhra Pradesh
(hereinafter referred to as the 'Company'). The complaint was filed in
respect of the offences allegedly committed under Section 628 of the
Companies Act, 1956 (in short the 'Companies Act') and Sections 120B and
420 of the Indian Penal Code (in short the 'IPC'). This complaint was
filed in the Court of Special Judge for Economic Offences at Hyderabad.
3. The accused Nos. 1, 2 and 3 are Directors of the Company. The
accused no. 4 i.e. Energo Masch Power Engineering & Consulting Pvt. Ltd. is
another Company. The accused Nos. 5, 6, 7 & 8 are its Directors. Accused
No. 9 is the Manager of M/s Indian Renewable Energy Development Agency (in
short 'IREDA') a financing agency and is brother-in-law of A5 and A6, and
accused No. 10 is a private person, namely Mrs. Sudha Ramani who is said to
have been given a fictitious authorization in respect of a Bank account by
a resolution of the company.
4. In brief, it was alleged that the accused entered into a
criminal conspiracy to cheat the complainant and the Company. Further,
accused A1 to A3 made false declaration in regard to record maintained
under the provisions of the Companies Act, and filed a false declaration
purporting to be an extract of Board Resolution of the Company before
Andhra Bank, Sowcarpet Branch, Chennai in order to open a bank account.
According to the complainant the signatory to the Board Resolution was not
even a Director in the Company on the date the bank account was opened. A
series of events alleged in the complaint show how the complainant was
induced to invest in the Company by acquiring land for the Company at a
cost of Rs. 20 lakhs and make payment for the front end fee to IREDA which
had in collusion with the other accused sanctioned the financial assistance
to the Company to the extent of Rs. 11.50 crores subject to the condition
that the promoters should invest Rs. 4.98 crores as their contribution
towards the total project cost of Rs. 16.48 crores.
5. According to the complainant, accused A9 - the Manager of
IREDA, suggested that the company should appoint A4 Company as a contractor
representing that the Directors of the said A4 Company i.e. A5 and A6 in
reality his brother-in-law, have wide experience in executing such
projects. The complainant believed that representation and allowed those
persons and others to become Director as a result of which A1 along with
his nominee Directors enjoyed a majority on the Board of the Company.
Thereafter, in order to obtain the first installment of loan the accused
represented that they have spent an amount of Rs. 1,88,21,484/-, to the
accused A4 Company as if the amount was invested from the Company's account
maintained in Andhra Bank, Sowcarpet Branch. On such a representation, A9
IREDA released the first installment of loan. The accused again induced A9
to release the second installment of loan of Rs. 2.85 crores without the
knowledge of the complainant and without submitting any Board Resolution of
the Company. A major amount of the loan was paid to the accused A4
Company, which had not done any substantial work. Though Rs. 145 lakhs
from the first installment of loan and Rs. 92 lakhs from the second
installment of loan were paid to the A4 Company only a nominal amount of
Rs. 30 lakhs was used for work and the rest was swindled. As a part of
these transactions the complainant alleged that A1 to A3 had made a false
declaration as records in a purported Board Resolution of the Company in
order to open a bank account and falsely authorised A10 and thereby made a
false declaration amounting to an offence under Section 628 of the
Companies Act. Thus, A10 was falsely authorized to operate the bank
account.
6. It will thus be seen from the above that according to the
complainant the transactions of all the accused persons in conspiracy with
each other amounted to offences under Sections 120B and 420 of the IPC and
Section 628 of the Companies Act.
7. Against the complaint, the following accused-namely A4 Company;
its Directors A5 and A6; A9 the manager of the IREDA; and A10 the private
person approached the High Court under Section 482 of the Cr.P.C.. The
High Court took the view that the Special Judge could not have taken
cognizance of the offences under Sections 120B and 420 of the IPC unless he
could also try the accused under Section 621 of the Companies Act. As
regards the accused Company A4 and its Directors A5 and A6, the High Court
held that no cognizance could be taken against the said accused because the
complainant did not belong to any of the categories or persons who were
entitled to file a complaint under Section 621 of the Companies Act[1] i.e.
to say the complainant was neither (a) the Registrar, (b) a shareholder of
the company, or (c) a person authorized in that behalf. Thus, the High
Court held that taking of cognizance by the Special Court in so far as
accused nos. A4, A5 and A6 is without jurisdiction. This finding is sought
to be supported by the provisions of Section 621(1) of the Companies Act.
However, without giving any special reasons as regards accused Nos. A9 and
A10 the High Court quashed the taking of cognizance. In fact A9 is the
manager of IREDA a financing agency and A10 is a private person and are
prima facie not a company or officers of a Company vide Section 621. The
High Court has not committed any error in reading Section 621 of the
Companies Act and observing an accused cannot be prosecuted under Section
621 of the Companies Act because the complainant is not a share holder in
the accused Company. However, it is obvious from the complaint that there
was no allegation that the accused Nos. A4, A5, A6 and A9 have committed an
offence under Section 628 of the Companies Act. Such an allegation of
commission of an offence under Section 628 of the Companies Act was only
against the accused A10 (vide para 19 and 20 of the complaint). It may be
recalled that the allegation as regards Section 628[2] of the Companies Act
is said to have been committed by the accused A1 to A3 by making a false
declaration with regard to the record that is maintained in accordance with
Section 193 of the Companies Act by filing an extract of the Board
resolution of the company before the Andhra Bank, Sowcarpet Branch, Chennai
in order to open a bank account 'the said Board resolution being a false
declaration,' since a bank account in the said bank was already opened even
before A1 had obtained consent of the complainant to open the said account
and further since the said Board resolution is signed by Hari Sesha Reddy -
A3 who was not even a Director in the company as on the date of the opening
of the bank account. The offence alleged against A10 was that she had
drawn huge amounts through self cheques in the capacity of the authorized
signatory of the company. It is surprising to see that the High Court has
quashed the complaint against the accused persons on the ground of legal
defects though no allegation containing such defects were made against the
said accused persons.
8. As can be seen from the complaint the allegations are that the
accused conspired with each other to cheat the complainant and a series of
transactions gave rise to offence under Section 120B read with Section 420
of the Indian Penal Code as also Section 628 of the Companies Act. It is,
therefore, clear that if the Special Court has jurisdiction to try offences
under both the aforesaid Acts then the trial can certainly continue in
respect of the offences which do not require the complainant to belong to
the categories specified under Section 621 of the Companies Act. Thus the
trial could certainly continue against those accused under the IPC.
9. The High Court completely overlooked the fact that the
complaint made allegations against the accused A4, A5, A6, A9 and A10 only
in respect of Section 120B and 420 of Indian Penal Code and there was no
reason in law to quash a complaint against them on the ground that they
were immune from prosecution under Section 628 of the Companies Act by
virtue of Section 621 of that Act.
10. We accordingly set aside the findings of the High Court that
taking of cognizance against the accused A4, A5, A6 and A9 is without
jurisdiction on the ground that the complaint does not make out a prima
facie case for the offences under Section 628 of the Companies Act, 1956
against the said accused. At this stage, it may be noted that the Special
Court is empowered to try the offences under the Companies Act alongwith
other Acts by virtue of a notification issued by the erstwhile Government
of Andhra Pradesh dated 13.3.1981 which empowers such special Courts to try
offences under specified enactments such as The Companies Act, 1956, The
Income-tax Act, 1961, The Wealth-tax Act, 1957 etc., which reads as
follows:-
"even if such cases include offences punishable under the Indian Penal
Code, 1860 and any other enactments, if such offences form part of the same
transaction."
[vide Notification reproduced in Criminal Petition No. 5846 of 2014 The
Superintendent Of Customs Vs. Kannur Abdul Kader Mohammed Haneefa reported
in 2014 (310) ELT49(A.P.)]
11. Thus, even if a number of persons are accused of offences under
a special enactment such as 'the Companies Act and as also the IPC' in
respect of the same transaction or facts and even if some could not be
tried under the special enactment, it is the special court alone which
would have jurisdiction to try all the offences based on the same
transaction to avoid multiplicity of proceedings. We make this observation
because at some stage in the hearing learned counsels addressed us on this
point. We make it clear that in the present case all the accused are
liable to be tried by the special court in respect of the offences under
the IPC as well as the Companies Act as alleged in the complaint.
12. Appeals are allowed in above terms.
....................................................J.
[JAGDISH SINGH KHEHAR]
...............................................J.
[S.A. BOBDE]
NEW DELHI,
MARCH 26, 2015
ITEM NO.101 COURT NO.4 SECTION II
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Criminal Appeal No(s). 516-518/2010
S. SATYANARAYANA Appellant(s)
VERSUS
ENERGO MASCH POWER ENGG.&CONST.P.L.&ORS. Respondent(s)
(for directions)
Date : 26/03/2015 These appeals were called on for hearing
today.
CORAM :
HON'BLE MR. JUSTICE JAGDISH SINGH KHEHAR
HON'BLE MR. JUSTICE S.A. BOBDE
For Appellant(s) Mr. Vikas Singh, Sr. Adv.
Mr. Vivek Singh
Ms. Deepika Kalia, Adv.
Mr. Kapish Seth, Adv.
for Mr. Lakshmi Raman Singh,AOR
For Respondent(s)Mr. Suresh Babu, Adv.
Mr. Ravi Kumar Tomar,AOR
Mr. V.Senthil Kumar, Adv.
Mr. K. Muthu, Adv.
Mr. M. A. Chinnasamy,Adv.
Mr. V. N. Raghupathy,Adv.(NP)
UPON hearing the counsel the Court made the following
O R D E R
Heard learned counsel for the appearing parties.
Registry is directed to list the appeals today (26.03.2015) for
pronouncement of judgment at 2.00 p.m.
(Parveen Kr. Chawla) (Renu Diwan)
Court Master Court Master
ITEM NO.1D COURT NO.4 SECTION II
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Criminal Appeal No(s). 516-518/2010
S. SATYANARAYANA Appellant(s)
VERSUS
ENERGO MASCH POWER ENGG.&CONST.P.L.&ORS. Respondent(s)
[HEARD BY HON'BLE JAGDISH SINGH KHEHAR AND HON'BLE S.A.BOBDE, JJ.]
Date : 26/03/2015 These appeals were called on for judgment
today.
For Appellant(s) Mr. Vivek Singh
for Mr. Lakshmi Raman Singh,AOR
For Respondent(s)Mr. Ravi Kumar Tomar,AOR
Mr. M. A. Chinnasamy,AOR
Mr. V. N. Raghupathy,Adv.(NP)
Hon'ble Mr. Justice S.A. Bobde pronounced the judgment of the
Bench comprising Hon'ble Mr. Justice Jagdish Singh Khehar and His Lordship.
For the reasons recorded in the Reportable judgment, which is
placed on the file, the appeals are allowed.
(Parveen Kr. Chawla) (Renu Diwan)
Court Master Court Master
-----------------------
[1] "621. Offences against Act to be cognizable only on complaint by
Registrar, shareholder or Government-
(1) No court shall take cognizance of any offence against this Act
which is alleged to have been committed by any company or any officer
thereof, except on the complaint in writing of the Registrar, or of a
shareholder of the company, or of a person authorised by the Central
Government in that behalf:
Provided that nothing in this sub- section shall apply to a
prosecution by a company of any of its officers.
[Provided further that the Court may take cognizance of offence
relating to issue and transfer of securities and non-payment of dividend on
a complaint in writing by a person authorized by the Securities Exchange
Board of India].
(1A) Notwithstanding anything contained in the Code of Criminal
Procedure, 1898 , (5 of 1898) where the complainant under sub- section (1)
is the Registrar or a person authorised by the Central Government, the
personal attendance of the complainant before the Court trying the offence
shall not be necessary unless the Court for reasons to be recorded in
writing requires his personal attendance at the trial.]
(2) Sub- section (1) shall not apply to any action taken by the
liquidator of a company in respect of any offence alleged to have been
committed in respect of any of the matters included in Part VII (sections
425 to 560) or in any other provision of this Act relating to the winding
up of companies.
(3) A liquidator of a company shall not be deemed to be an officer of
the company, within the meaning of sub- section (1)."
[2] 628. Penalty for false statements.- If in any return, report,
certificate, balance sheet, prospectus, statement or other document
required by or for the purposes of any of the provisions of this Act, any
person makes a statement-
(a) which is false in any material particular, knowing it to be
false; or
(b) which omits any material fact knowing it to be material,
he shall, save as otherwise expressly provided in this Act, be
punish- able with imprisonment for a term which may extend to two years,
and shall also be liable to fine.