S.A Bobde, J.— These criminal appeals are preferred by the complainant against the judgment1 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 CrPC) 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 Accused A-4, A-5, A-6, A-9 and A-10 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 (P) 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 120-B and 420 of the Penal Code, 1860 (in short “IPC”). This complaint was filed in the Court of the Special Judge for Economic Offences at Hyderabad.
3. Accused 1, 2 and 3 are Directors of the Company. Accused 4 i.e Energo Masch Power Engineering & Consulting (P) Ltd. is another company. Accused 5, 6, 7 and 8 are its Directors. Accused 9 is the Manager of M/s Indian Renewable Energy Development Agency (in short “Ireda”) a financing agency and is the brother-in-law of A-5 and A-6, and Accused 10 is a private person, namely, Mrs Sudha Ramani who is said to have been given a fictitious authorisation 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 A-1 to A-3 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 the 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 A-9 the Manager of Ireda, suggested that the company should appoint A-4 Company as a contractor representing that the Directors of the said A-4 Company i.e A-5 and A-6 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 A-1 along with his nominee Directors enjoyed a majority on the Board of the Company. Thereafter, in order to obtain the first instalment of loan the accused represented that they have spent an amount of Rs 1,88,21,484, to the accused A-4 Company as if the amount was invested from the Company's account maintained in Andhra Bank, Sowcarpet Branch. On such a representation, A-9 Ireda released the first instalment of loan. The accused again induced A-9 to release the second instalment 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 Accused A-4 Company, which had not done any substantial work. Though Rs 145 lakhs from the first instalment of loan and Rs 92 lakhs from the second instalment of loan were paid to the A-4 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 A-1 to A-3 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 A-10 and thereby made a false declaration amounting to an offence under Section 628 of the Companies Act. Thus, A-10 was falsely authorised 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 120-B and 420 IPC and Section 628 of the Companies Act.
7. Against the complaint, the following accused, namely, A-4 Company; its Directors A-5 and A-6; A-9 the manager of Ireda; and A-10 the private person approached the High Court under Section 482 CrPC. The High Court took the view that the Special Judge could not have taken cognizance of the offences under Sections 120-B and 420 IPC unless he could also try the accused under Section 621 of the Companies Act. As regards the accused Company A-4 and its Directors A-5 and A-6, 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 Act2 i.e to say the complainant was neither (a) the Registrar, (b) a shareholder of the company, or (c) a person authorised in that behalf. Thus, the High Court held that taking of cognizance by the Special Court insofar as Accused A-4, A-5 and A-6 are concerned 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 A-9 and A-10 the High Court quashed the taking of cognizance. In fact A-9 is the manager of Ireda, a financing agency and A-10 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 shareholder in the accused Company.
8. However, it is obvious from the complaint that there was no allegation that Accused A-4, A-5, A-6 and A-9 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 Accused A-10 (vide paras 19 and 20 of the complaint). It may be recalled that the allegation as regards section 6283 of the companies act is said to have been committed by Accused A-1 to A-3 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 A-1 had obtained consent of the complainant to open the said account and further since the said Board Resolution is signed by Hari Sesha Reddy A-3 who was not even a Director in the Company as on the date of the opening of the bank account. The offence alleged against A-10 was that she had drawn huge amounts through self-cheques in the capacity of the authorised 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 was made against the said accused persons.
9. 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 the offence under Section 120-B read with Section 420 IPC 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 IPC.
10. The High Court completely overlooked the fact that the complaint made allegations against Accused A-4, A-5, A-6, A-9 and A-10 only in respect of Sections 120-B and 420 IPC 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.
11. We accordingly set aside the findings of the High Court that taking of cognizance against Accused A-4, A-5, A-6 and A-9 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 along with 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 Penal Code, 1860 and any other enactments, if such offences form part of the same transaction….”
(vide Notification reproduced in Supt. of Customs v. Kannur Abdul Kader Mohammed Haneefa 2014 SCC OnLine Hyd 622), SCC OnLine Hyd para 15.
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 the learned counsel 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 IPC as well as the Companies Act as alleged in the complaint.
12. The appeals are allowed in the above terms.