F.J. Heredia and Another vs Registrar of Companies

S.R. Venkatesha Murthy, J.—These three cases are consolidated for purposes of disposal by a common order.

In Criminal Petition No. 258 of 1997, the petitioners who are accused in C. C. No. 1281 of 1988 on the file of the Special Court for Economic

Offences, Bangalore, seek to challenge the continuance of the proceedings against them as being contrary to the directions given in Common

Cause, A Registered Society v. Union of India AIR 1996 SC 1619 : [1998] 94 Comp Cas 776. The case against the petitioners is that they are

guilty of an offence under Sub-section (5) of Section 210 of the Companies Act, 1956, for an alleged failure to hold the annual general body

meeting latest by September 26, 1987, and to lay the balance-sheet and profit and loss account for the period in question. The offence is

admittedly punishable with imprisonment for six months and/or fine of Rs. 1,000. The case against accused Nos. 1 to 4 was dismissed on account

of the inability of the prosecution to secure their presence. The petitioners seek quashing of the complaint on the ground that the trial has not

commenced, notwithstanding"" the expiry of the period stipulated in the common cause''s judgment.

In Criminal Petition No. 259 of 1997, the petitioners are prosecuted for an offence u/s 159 read with Section 162 of the Companies Act in C.

C. No. 1279 of 1988 on the file of the Special Court for Economic Offences, Bangalore. The petitioners were the only persons who could be

secured before the court, while the others could not be secured. The petitioners also moved for dropping the proceedings in accordance with the

directions contained in Common Cause, A Regd. Society, New Delhi Vs. Union of India (UOI) and Others, referred to above.

In Criminal Petition No. 270 of 1997, the offence alleged before the trial court was failure to file before the Registrar of Companies, three

copies of the balance-sheets under Sub-section (3) of Section 220 of the Act. The offence was punishable with a fine of Rs. 50 per day for

default. The petitioners also prayed to the magistrate to drop the proceedings. Hence, the petitions u/s 482 of the Criminal Procedure Code.

The point for consideration is, whether the offences under the Companies Act are to be characterised as ""economic offences"" specified in the

Common Cause judgment to be continued even beyond the time stipulated in directions 1 and 2, therein.

Admittedly the jurisdiction to try the offences under the Companies Act is conferred on the Special Court for Economic Offences apparently by

way of a certain policy decision. The designation of the court as the Special Court for Economic Offences does not determine its jurisdiction and

its jurisdiction is determined on the basis of provisions made conferring jurisdiction under various enactments, and the Companies Act is one such

enactment. Merely because the offences under the Companies Act are tried by the Special Court for Economic Offences it cannot follow that all

offences tried by that court are economic offences. This is all the more so with reference to the decision in Common Cause, A Regd. Society, New

Delhi Vs. Union of India (UOI) and Others, . In Common Cause case [1998] 94 Comp Cas 776, the Supreme Court identified various offences in

relation to which after the expiry of a specified time, the proceedings are to be closed or the accused discharged as the case may be. In para. 4 of

the judgment, the Supreme Court carved out exceptions and it reads as follows (page 780) :

Directions (1) and (2) made hereinabove shall not apply to cases of offences involving (a) corruption, misappropriation of public funds, cheating,

whether under the Indian Penal Code, Prevention of Corruption Act, 1947, or any other statute ; (b) smuggling; foreign exchange violation and

offences under the Narcotics Drugs and Psychotropic Substances Act, 1985 ; (c) Essential Commodities Act, 1955, Food Adulteration Act, Acts

dealing with Environment or any other economic offences ; (d) offences under the Arms Act, 1959, the Explosive Substances Act, 1908, the

Terrorists and Disruptive Activities Act, 1987 ; (e) offences relating to the Army, Navy and Air Force ; (f) offences against public tranquillity ; (g)

offences relating to public servants ; (h) offences relating to coins and Government stamp ; (i) offences relating to elections; (j) offences relating to

giving false evidence and offences against public justice ; (k) any other type of offences against the State ; (l) offences under the taxing enactments

and (m) offences of defamation as defined in Section 499 of the Indian Penal Code."" (emphasis supplied)

A reading of the above paragraph would show that directions Nos. 1 and 2 are made inapplicable to various categories of offences which are

regarded as serious offences. Amongst the various offences identified, the Supreme Court has used the expression ""or any other economic

offences"". The intention was to include within its compass any offence relating to economic matters. Obviously, the Supreme Court did not seek to

identify all those economic offences which could come under the expression referred to above. It is clear therefore that the expression should be

understood as a common parlance expression. Money and money related offences would become the subject of an economic offence. Technical

offences that are identified under various laws which do not relate to either money or money related matters, which are intended to furnish

statistical information to parties or to inform parties as to the status of those persons in relation to a company, as in these cases, cannot be, and are

not, understood as economic offences. In these circumstances, it is clear that the offences under the Companies Act referred to above in these

petitions cannot, by any stretch of imagination, be regarded as economic offences to which directions Nos. 1 and 2 in the Common Cause, A

Regd. Society, New Delhi Vs. Union of India (UOI) and Others, , would be applicable. In these circumstances, the petitions are allowed and the

trial court shall close the cases against the petitioners herein.