Surendra Nath Sarkar And Ors. v. Kalipada Das Complainant, Opposite Party

The Judgment of the Court was as follows:—

Henderson, J.:— These are two Rules calling upon the District Magistrate of Birbhum to show cause why certain proceedings taken against the Petitioners for alleged offences against certain provisions of the Indian Companies Act and of the Indian Penal Code should not be quashed. The complainant is a policy-holder of a Company known as Nabasakti Insurance Company which has been incorporated both under Act VII of 1913 and Act V of 1912. The Petitioner Surendra Nath Sarkar is the manager of the Company. The ground upon which the Rule was issued is that the Magistrate has no jurisdiction to take proceedings in these matters on a private complaint.

Mr. S.K Basu appeared in support of the Rule. I may note that in Case No. 823 the allegation is one of falsification of accounts and in Case No. 825 various offences are alleged to have been committed against the provisions of the Indian Companies Act.

Mr. Basu contended that the new Indian Companies Act has made elaborate provisions for the investigation of offences in connection with companies and for prosecution by the Advocate-General or the Public Prosecutor. He asked us to say that in view of these elaborate provisions the intention of the legislature was that prosecutions by private persons should not be allowed. The relevant sections are sec. 141A of the Indian Companies Act and sec. 107 of the Insurance Act.

There is nothing in the actual terms of sec. 141A to justify any such inference. That section casts a duty upon the Advocate-General or the Public Prosecutor to cause proceedings to be instituted in certain circumstances. It also casts a duty upon the officers of the Company to render assistance in connection with any such prosecution. The terms of the section are quite different from those, for example, of secs. 196 and 198 of the Code of Criminal Procedure, by which a bar is placed upon the jurisdiction of Criminal Courts.

Mr. Basu, however, based his argument not so much upon the terms of the section as upon the fact that there is no section containing provisions similar to those of sec. 368 of the English Companies Act of 1929. That section is in these terms:

“Nothing in this Act relating to the institution of criminal proceedings by the Director of Public Prosecutions shall be taken to preclude any person from instituting or carrying on any such proceedings.”

It is thus clear that even apart from that section it does not follow that a private prosecution would be barred under the English Act. The section was merely inserted to put the matter beyond doubt.

In this connection Mr. Chatterjee on behalf of the Crown drew our attention to certain decisions in connection with the Fishery Acts [The Queen v. Cubitt (1) and Anderson v. Hamlin (2)]. It was there held that private prosecutions under these Acts were barred. It is true that those decisions were based upon the actual words used in the relevant statutes. But it may well be that sec. 368 was inserted in the English Act to place the matter beyond doubt. At any rate, in the absence of any specific provision in the Act itself we cannot infer from the mere omission of a similar provision in the Indian Act that the intention of the legislature was to bar private prosecutions. There was no doubt at all that such prosecutions were permitted by the old Act.

In the second place, sec. 141A only comes into force after a report has been made under sec. 138. There is, at any rate up to the present, no such report in this case. In this connection, it is necessary to consider the effect of sec. 137. Under sub-sec. (6) a representation may be made by any contributor or creditor to the Registrar; then if the Registrar makes a report to the Local Government, an investigation may be ordered under sec. 138. Of course, as a result of such an investigation proceedings might be taken under sec. 141A.

We find it impossible to read into this sub-section any prohibition of private prosecutions. It is not merely that there are no words containing any such prohibition. The subject-matter of sec. 137 is an investigation rather than a prosecution. Sub-sec. (6) is confined to cases in which there are allegations of fraud and many prosecutions under the Act would be entirely outside it. In matters, however, involving allegations of fraud a private prosecutor would be almost helpless, as without an investigation it would be very difficult to establish the existence of fraud. The Registrar is, however, given powers of investigation. Officers and ex-officers of the Company are bound to supply him with information and explanations. On his application the Court can compel the production of documents. On his report the Local Government may order an inspector to investigate. We are quite satisfied that the intention of the section is to facilitate the investigation of the affairs of a Company and it has no reference to actual proceedings in Court.

Sec. 107 of the Insurance Act requires the sanction of the Advocate-General before a private prosecution could be started. On behalf of the Crown Mr. Chatterjee contended that section relates only to a prosecution under sub-sec. (2) of sec. 41. Sec. 107 is in these terms:

“Except where proceedings are instituted by the Superintendent of Insurance, no proceedings under this Act against an insurer or any director, manager or other officer of an insurer or any person who is liable under sub-section (2) of section 41 shall be instituted by any person unless he has previous thereto obtained the sanction of the Advocate General.”

Sec. 41 deals with prohibition of rebates. Policy-holders are forbidden to accept any rebate unless it is allowed in accordance with the published prospectus of the insurer. In my judgment, the words “who is liable…. sec. 41” qualify the words “any person.” Otherwise, the words “no proceedings under this Act” would have no real meaning. We are, therefore, of opinion that if the complainant wishes to prosecute for an offence under the Insurance Act, he must obtain the sanction of the Advocate-General.

We have not examined the allegations in detail nor have they been put before us in the course of the argument. It may be that some of them amount to offences under both the Acts. In such circumstances, it would be trifling with the law to prosecute under the Companies Act instead of under the Insurance Act. We are, therefore, of opinion that in Case No. 825 the prosecution should be confined to matters which are offences under the Indian Companies Act only, unless in the meantime the complainant obtains the sanction of the Advocate-General.

With these observations, the Rules are discharged.

Akram, J.:— I agree that these Rules 823 and 825 of 1939, should be discharged. In Rule No. 825 of 1939, I desire to say a few words in connection with the argument advanced by the learned Advocate for the Petitioner that having regard to the provisions of secs. 137 and 141A, the Companies Act contemplated only a Crown prosecution and not a prosecution by a private individual.

Looking into the Companies Act, I find that sec. 137 deals with “Investigation by the Registrar” in certain circumstances. There may, however, be a complaint by a contributory or a creditor for failure to comply with the requirements of the Act, without alleging any fraud mentioned in sec. 137 (6); in such a case, apparently, no investigation under sec. 137 and no report under sec. 138 will be made; consequently sec. 141A will not come into operation as a bar to the proceeding.

I am therefore of opinion that the learned Sub-Divisional Magistrate should proceed with the trial on the lines indicated in the judgment that has been delivered by my learned brother.

P.C