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2007 DIGILAW 493 (PAT)

Chandra Mohan Jha v. State Of Bihar

2007-03-09

GHANSHYAM PRASAD

body2007
Judgment 1. Heard. 2. This application under Sec. 482 Cr.P.C. has been filed for quashing of F.i.R. of Patliputra P.S. Case No.5 of 2005 dated 6.1.2005 corresponding to G.R. Case No. 107 of 2005 lodged by the Registrar of Companies under Sections 420, 406, 467, 468 and 471/ 120-B of the I.P.C. pending in the Court of C.J.M., Patna. 3. The petitioners are Promoters/Directors of M/s Cilson Organics Ltd. having its registered office at Boring Road, Patliputra Colony, Patna. The firm was registered Company having Registration No. 03-2834. In the year 1996, the Company issued prospectus with false promises and assurances and thereby induced the public to invest in the Company. The company collected Rs. 10,75,81,000/- from the public and thereafter, the petitioners and others disappeared and misappropriated the entire public money. 4. The simple submission of the learned counsel for the petitioners is that the offences alleged to be committed by the Company shall be dealt under Company Act, 1956 and not under Penal Code. The Registrar of the Company who is the informant has already filed complaint case under the provisions of Company Act which is pending in the Special Court of Economic Offences. Therefore, lodging of the fardbeyan in question under Penal Code is misuse of the processes of the Court. The copy of the Complaint Case No. 239 of 2002 as well as 46(C) of 2003 have also been annexed with the application. 5. The allegations disclosed in the fardbeyan clearly come within the mischief of cheating and criminal breach of trust or misappropriation. The only question as to whether the petitioners shall be dealt with under the provisions of Penal Code or only under Company Act. The matter has been settled by the Apex Court in a case reported in 1993 Cr. Law Journal 2888 (Radhey Shyam Khemka vs. State of Bihar). It has been held that if the promoters or incharge of managing the affairs of the Company are found to have committed offence like cheating criminal breach of trust or misappropriation, they may apart from the Company Act, can be prosecuted under the Penal Code. Law Journal 2888 (Radhey Shyam Khemka vs. State of Bihar). It has been held that if the promoters or incharge of managing the affairs of the Company are found to have committed offence like cheating criminal breach of trust or misappropriation, they may apart from the Company Act, can be prosecuted under the Penal Code. In this regard, paragraph-4 of the above decision is important which is as follows: "It is true that the Companies Act contains provisions regarding the issuance of prospectus, applications for shares and allotment thereof and provides different checks over the misuse of the fund collected from the public for issuance of shares or debentures. But can it be said that where persons issue prospectus and collect moneys from public assuring them that they intend to do business with the public money for their benefit and the benefit of such public, but the real intention is to do no business other than collecting the moneys from the public for their personal gain, still such persons are immune from the provisions of the Penal Code?" 6. From the above decision of the Apex Court, it is quite clear that there is no merit in the submission of the learned counsel for the petitioners. 7. It is true that apart from the police case, the informant has also lodged case before the Special Court of Economic Offences. Hoever, that case is entirely of different nature. The Promoters/Directors have been prosecuted for the violation of mandatory provisions of Companies Act. Therefore filing of complaint case for violation of provisions of Company Act is not going to affect the merit of the police case which has been filed for the commission of offences falling under provisions of the Indian Penal Code. 8. Thus, having regard to the facts and circumstances. I find no merit in this application. Accordingly, the same is hereby rejected.