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Judgment
M. Chockalingam, J.—This O.P. has been brought forth by the petitioner, who faces trial in C.C. No. 286 of 2004 which was taken
cognizance by the Judicial Magistrate No. II, Dindigul, under Sections 406 and 420 of I.P.C.
The de facto complainant gave a complaint alleging that it rendered service to M/s. Sri Venkatesa Paper and Boards Ltd. for which there was a
liability of Rs. 7,47,500 payable to the de facto complainant; that on the request of M/s. Sri Venkatesa Paper and Boards Ltd., through its
Directors, the same was deposited in the fixed deposit, on the promise to return the same on maturity; that the same was also matured on
8.5.2001; that there was a further promise of returning the same with interest; that it was again renewed for one year; that despite the maturity of
the same, it was not repaid, and hence, it has become necessary to initiate proceedings. On receipt of the complaint, a case came to be registered
by the State through the first respondent police under Sections 406 and 420 of I.P.C., and subsequently, it was taken cognizance by the Judicial
Magistrate as Calendar Case referred to above.
While the matter stood thus, the accused has approached this Court for quashing the proceedings stating that M/s. Sri Venkatesa Paper and
Boards Ltd., is a Public Limited Company; that it is governed by the special enactments namely The Companies Act; that it was a deposit made;
that the company has been declared as a sick unit u/s 22-A of the Act; that it could not dispose of any of the assets without getting the consent of
the Board for Industrial and Financial Reconstruction (BIFR); that apart from that, in view of the provision u/s 22 of the Act, the de facto
complainant was barred from initiating any action, without the prior consent of the BIFR; that it was a deposit made to the Company in question,
and thus, the provisions of the Companies Act would prevail the provisions of law as to the deposits made and accepted which are governed by
Sections 58-A and 58-AA of the Act; that they are cognizable under the Code of Criminal Procedure; that Section 58-AAA of the Act would
clearly reveal that every offence connected with or arising out of acceptance of deposits u/s 58-A or Section 58-AA would remain cognizable
under the Code of Criminal Procedure, notwithstanding anything contained in Sections 621 and 624 of the Act; and that cognizance is possible
only when a complaint is made by the Central Government or any Officer authorised in this behalf.
The learned Counsel appearing for the petitioner would further add that it was a deposit made; that there is nothing to indicate that at the time of
making the deposit or getting the deposit, the petitioner had got any mens rea to cheat; that so long as it is not shown, the complaint for cheating
has to fall; that there is no question of any entrustment, which would attract the provisions of the I.P.C., which would penalize the breach of trust,
and thus, the penal provisions of Sections 406 and 420 of I.P.C. would not be attracted under the facts of the case, and hence, the proceedings
pending in the hands of the lower Court, have got to be quashed.
Heard the learned Government Advocate for the first respondent on the above contentions.
The learned Counsel for the second respondent would submit that there was a deposit made by the petitioner herein, which would not fall within
the ambit of the provisions of the Companies Act; that it was really an amount, to which the de facto complainant is entitled by way of rendering
services, and the same amount was deposited; that it became matured; that even after the date of maturity, there was a renewal; that at that time, it
was well within the knowledge of the accused that the company has become sick and has been running in loss, and thus, it would be very clear that
even at the time of the renewal, the accused had the mental frame to cheat; that so long as the deposit was not made either u/s 58-A or u/s 58-AA
of the Act, the provisions of Section 58-AAA of the Act have no application; that it is true that a complaint has got to be lodged by the Central
Government or any Officer authorized in this behalf, so long as the deposits are made under the provisions of Section 58-A or Section 58-AA of
the Act; that the deposit in question would not fall within those provisions of law; that if a deposit is to be made u/s 58-A, necessary
advertisements have got to be made; that in the instant case, the deposit was made not pursuant to an advertisement, and hence, it cannot be stated
that if, in a given case, the advertisement was not done, the statement would be suffice to the Registrar of Companies; that whether any statement
was made is the question of fact; that apart from that, the statements were made pertaining to the year 1998-99; but, these deposits have been
made subsequently; that no material is available to indicate that the statements were made for the relevant period, and under the circumstances, the
proceedings have got to be proceeded with, and the O.P. for quash has got to be dismissed.
After careful consideration of the rival submissions made, this Court is of the considered opinion that the O.P. has got to be dismissed as one
devoid of merits.
The first contention of the learned Counsel for the petitioner that the deposit what was made, would fall within the provisions of the Companies
Act, and if there is any default, it should be brought by way of a complaint before the Company Law Board cannot be countenanced at this stage.
It is not in dispute that the complainant originally rendered service towards which the sum of Rs. 7,47,500 was payable, and there was a deposit to
that extent, and a voucher was passed. Thus, it would be clear that it was not made out of any advertisement. Apart from that, so long as the
deposit is not made either u/s 58-A or Section 58-AA of the Act, no question of application of Section 58-AAA of the Act would arise. It would
be more appropriate and advantageous to reproduce Section 58-AAA of the Companies Act, which reads thus:
58-AAA: (1) Notwithstanding anything contained in Sections 621 and 624, every offence connected with or arising out of acceptance of deposits
u/s 58-A or Section 58-AA shall be cognizable offence under the Code of Criminal Procedure, 1973 (2 of 1974).
(2) No Court shall take cognizance of any offence under Sub-section (1) except on a complaint made by the Central Government or any Officer
authorized by it in this behalf.
A very reading of the above provisions would make it abundantly clear that a complaint has got to be made by the Central Government or any
Officer authorized in this behalf in respect of the offence, which is connected with or arising out of acceptance of deposits u/s 58-A or Section 58-
AA. But, in the instant case, the facts and circumstances recorded above, would clearly indicate that it was not a deposit made either u/s 58-A or
u/s 58-AA of the Act. Under the circumstances, this Court is of the firm view that the provisions of Section 58-AAA have no application in the
case.
The next contention of the petitioner''s side that at the initial stage of making the deposit, there was no mens rea to cheat cannot also be
countenanced. Whether they have got intention to cheat or otherwise cannot be gone into at the initial stage. If the contention of the petitioner''s
side has got to be accepted, then in all the cases, where the deposits are made and subsequently, the parties are cheated, the defence would come
forward with a plea stating that they had no intention to cheat, and therefore, the criminal proceedings could not be proceeded with. Hence, such
contention cannot be accepted.
The decisions relied on by the learned Counsel for the Hridaya Ranjan Pd. Verma and Others Vs. State of Bihar and Another, , and in Ajay
Mitra v. State of M.P. and Ors., 2003 SCC (Crl.) 703, pointing to the existence of the frame of mind for cheating at the initial stage of deposit,
have no application to the present facts of the case. Thus, this Court is unable to appreciate all or any one of the contentions put forth by the
learned Counsel for the petitioner to quash the proceedings.
In view of the above reasons, this criminal original petition is devoid of merits, and the same is dismissed. However, the petitioner is at liberty
to raise all the contentions both factual and legal before the lower Court at the time of trial. The trial Court is directed to carry on expeditious trial.