Delhi H.C : Chief Metropolitan Magistrate, Delhi, dismissing the application of the petitioners for staying the proceedings in Criminal Complaint No. 1229/1/ of 1997, R.L. Bali vs. Rakoor Industries (P) Ltd.

High Court Of Delhi

Rakoor Industries (P) Ltd. & Anr. vs. R.L. Bali, ITO & Anr.

Sections 276C, 277, COMP 446

K.S. Gupta, J.

Crl. Rev. No. 451 of 2001

18th September, 2001

Counsel Appeared

Shambhu Nath, for the Petitioner : None, for the Respondent

JUDGMENT

K.S. GUPTA, J.:

This revision petition is directed against the order dt. 23rd May, 2001, passed by the Addl. Chief Metropolitan Magistrate, Delhi, dismissing the application of the petitioners for staying the proceedings in Criminal Complaint No. 1229/1/ of 1997, R.L. Bali vs. Rakoor Industries (P) Ltd.

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 (P) Ltd., petitioner No. 1, had been appointed in C.P. No. 17 of 1988 by the order dt. 22nd May, 1990, the complaint filed by respondent No. 1 for the offences punishable under ss. 276C and 277 of the IT Act, 1961 (for short “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. & Anr. vs. Gift Holdings (P) Ltd. & Anr. (2000) 2 Supreme Today 41, relied upon by the Addl. Chief Metropolitan Magistrate is inapplicable as it was rendered with reference to s. 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985. The submission is, however, without any merit. 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 31st March, 1987. Rajender Kumar Gupta and Smt. Prem Lata Gupta had been impleaded as accused being managing director/director of accused/petitioner No. 1-company. Para No. 6 of the complaint (copy at pp. 10 to 15) which is material, reads thus : “From the facts stated hereinabove, it is clear that the accused wilfully 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 s. 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 s. 277 of the Act.” It was prayed that the accused be punished for the offences under ss.276C and 277 of the Act.

3. Sec. 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. Expression “legal proceedings” in s. 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-s. (1) of s. 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 vs. Official Liquidator (2000) 3 Crimes 191, wherein the scope of s. 446(1) vis-a-vis s. 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 s. 446 of the Companies Act.

For the foregoing discussion, proceedings against the petitioners in the pending criminal complaint cannot be stayed by invoking s. 446(1) of the Companies Act. Revision petition is, therefore, dismissed.

[Citation : 252 ITR 802]

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