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1999 (10) Supreme 233
SUPREME COURT OF INDIA
(From Karnataka High Court)
K.T. Thomas and M.B. Shah, JJ.
H.V. Jayaram -Appellant
versus
The Industrial Credit and Investment Corporation of India Ltd. & Ors. etc. -Respondents
Criminal Appeal Nos. 1353-57 of 1999
(Arising out of SLP (Crl.) Nos. 986-990 of 1999)
With
Criminal Appeal Nos. 1358-62 of 1999
(Arising out of SLP (Crl.) Nos. 1116-20 of 1999)
Decided on 15-12-1999
Counsel for the Parties :
For the Appellant : N.L. Ganapathi and Abhijit Sengupta, Advocates.
For the Respondents in Nos. 2, 3, 7, 8 & 9: Ashok H. Desai, Sr. Advocate, R. Sasiprabhu and Ms. Anjali Chandurkar, Advocates.
For the Respondent No. 1 : Dalip Kumar Malhotra and Rajesh Malhotra, Advocates.
For the Respondents Nos. 5-6 : Parijat Sinha, Advocate.
For the Respondents Nos. 1, 5, 7, 12 in Crl. A. Nos. 1358-62/99 : R. Santhana Krishnan and D. Mahesh Babu, Advocates.
Section 113 inter alia requires that within three months after the allotment of any shares and within two months after the application for the registration of the transfer of any such shares, every company shall deliver, in accordance with the procedure laid down in Section 53, the certificates of all shares allotted or transferred. Sub-section (2) provides punishment if default is made in complying with sub-section (1). Reading Section 113 and 53 together, share certificates are to be delivered in accordance with the procedure laid down in Section 53. A document is to be served either personally or by sending it by post at registered address within India. Sub-section (2) specifically mentions that where a document is sent by post, such service thereof shall be deemed to be effected by properly addressing, prepaying and posting the letter containing the document. Hence, once there is a statutory mode of delivering the document by post and deeming provision of such delivery, the place where such posting is done is the place of performance of statutory duty and the same stands discharged as soon as the document is posted. Hence the cause of action for default of not sending the share certificates within stipulated time would arise at the place where the registered office of the company is situated as from that place the share certificates can be posted and are usually posted. If the addressee is available at the same locality where the registered officer of the company is situated, it is reasonable to think that service of documents may be effected by personally delivering to him. But if the addressee is residing at a distant place it is unreasonable to expect the company to depute somebody to travel upto that distance to personally deliver it to him. The only usual mode which any company would then adopt is to send it to him by post. For such default, as contemplated under Section 113(1), there is no question of any cause of action arising at the place where complainant was to receive postal delivery. What is punishable under sub-section (2) of Section 113 is non-delivery, in accordance with the provision laid down under Section 53, of the certificates of shares within prescribed time. So, if the documents are posted within stipulated time, there would be compliance of Section 113 and that there would not be any offence. (Para 7)
Cause of action for failure to deliver the share certificates or documents within prescribed time would arise where the registered office of the company is situated. Therefore, complaint for the offence punishable u/s 113(2) could be filed only where the registered office of the Company is situated, not where the complainant is residing. (Paras 8, 9 & 10)
JUDGMENT
Shah, J. -Leave granted.
2. The only question involved in these appeals is whether the complaint for the offence punishable under Section 113(2) of the Companies Act, 1956 could be filed only where the registered office of the company is situated or where the complainant is residing.
3. The appellant had lodged criminal cases before the Special Court for economic offences in Karnataka at Bangalore on the allegation that the respondent companies had committed offences punishable under Section 113(2) of the Companies Act. Criminal Petition Nos. 240, 1485, 1548, 1848 and 1849 of 1996 before the High Court of Karnataka at Bangalore challenged the order passed by the trial Court rejecting applications for the discharge on the ground that the Magistrate had no territorial jurisdiction to try the alleged offences. In some cases, companies straightway approached the High Court questioning the order passed by the learned Magistrate issuing summons to them after taking cognizance of the offence. It was pointed out that admittedly the registered offices of the respondent companies are not located in the State of Karnataka but are located either at Bombay or at Gujarat. As against this, the appellant who is a practising advocate contended that he was a permanent resident of Bangalore and letters requesting the company to transfer the shares and to send memorandum, articles of association, balance sheets etc. were sent from Bangalore to the registered offices of the companies and, therefore, cause of action also arose at Bangalore. The High Court after considering the various decisions relied upon by the learned counsel for the parties arrived at the conclusion that under the provision of Section 53 of the Companies Act two modes are prescribed for serving the documents, one to serve personally and the other by post. As the documents were sent to the respondent by post, as requested by him, the cause of action would arise only where the head office is situated. The Court, therefore, arrived at the conclusion that having regard to Section 201 of the Cr. P.C., the Magistrate is required to return the complaint for presentation before the proper court with an endorsement to that effect.
4. The learned counsel appearing on behalf of the appellant (complainant) strenuously contended that the order passed by the High Court is, on the face of it, erroneous because admittedly the appellant is residing at Bangalore. Being purchaser of the shares, he was entitled to get the share certificates at Bangalore and, therefore, cause of action would arise at Bangalore also. For this purpose, he relied upon the decision rendered by Rajasthan High Court in Ranbaxy Laboratories Ltd. v. Smt. Indra Kala1.
5. As against this, learned senior counsel, Mr. Desai submitted that the order passed by the High Court is in accordance with the provision of Section 113 read with Section 53 of the Companies Act. He referred to the decision rendered by the Patna High Court in Upendra Kumar Joshi v. Manik Lal Chatterjee and Ors.2. He submitted that the litigation is frivolous and it should be discouraged.
6. For appreciating the contention raised by the learned counsel for the parties, we would refer to the relevant parts of Sections 53 and 113 of the Companies Act, which are as under :-
"53. Service of documents on members of company.-(1) A document may be served by a company on any member thereof either personally, or by sending it by post to him to his registered address, if any, within India supplied by him to the company for the giving of notices to him.
(2) Where a document is sent by post,-
(a) service thereof shall be deemed to be effected by properly addressing, prepaying and posting a letter containing the document provided that where a member has intimated to the company in advance that documents should be sent to him under a certificate of posting or by registered post with or without acknowledgement due and has deposited with
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