Point of Law : No proceedings could have been initiated by a Shareholder by himself under Section 447 of the Act and that the requirement under Sub-Section (6) of Section 212 of the Act was required to be complied with. [Para 15.1]

ORDER :

1. The petitioner is before this Court seeking for the following reliefs:

a. Call for the entire records in C.C.No.561/2016 pending on the file of the learned Principal Civil Judge and JMFC, Mulabagal;

b. Allow this petition and quash the entire proceedings in C.C.No.561/2016 on the file of the learned Principal Civil Judge and JMFC, Mulabagal.

c. Issue any other order and grant such other and further reliefs as this Hon'ble Court deems fit in the facts and circumstances of the case, in the interest of justice.

2. The petitioner is the accused in P.C.R.No.54/2015 which had been filed by the respondent/complainant herein. The petitioner and the respondent are the directors of the company called "MG 6 Wholesale Market (India) Pvt. Ltd." (hereinafter for brevity referred to as 'Company')

3. The petitioner is stated to be owning 55% of the share capital and the respondent is holding 45% of the share capital in the Company. There are various allegations that have been made as regards the petitioner having defrauded both the Company and the complainant and it is in that background that the aforesaid private complaint, was filed.

4. The factual aspects may not be relevant for being discussed in the present matter since what arises is only a point of law after reference to the arguments advanced by both the learned counsel.

5. The Learned Magistrate, after recording the sworn statement, had issued the process after registering the complaint in Register-III.

6. Sri. V.Lakshminarayana, learned Senior Counsel appearing for the petitioner, would submit that:

6.1. The allegations which have been made against the petitioner are for an alleged offence under Section 447 of the Companies Act, 2013 (for short, ‘the Act’).

6.2. Section 447 of the Act is reproduced hereunder for easy reference:

447. Punishment for fraud:-Without prejudice to any liability including repayment of any debt under this Act or any other law for the time being in force, any person who is found to be guilty of fraud, shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud:

Provided that where the fraud in question involves public interest, the term of imprisonment shall not be less than three years. Explanation-For the purpose of this Section -

(i) “fraud” in relation to affairs of a company or any body corporate, includes any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the company or its shareholders or its creditors or any other person, whether or not there is any wrongful gain or wrongful loss;

(ii) “wrongful gain” means the gain by unlawful means of property to which the person gaining is not legally entitled;

(iii) “wrongful loss” means the loss by unlawful means of property to which the person losing is legally entitled.

6.3. By referring to Section 439 of the Act, he submits that all offences under the Act are deemed to be non-cognizable, except those covered under Sub-section 6 of Section 212 of the Act. Section 439 of the Act is reproduced hereunder for easy reference:

439. Offences to be non-cognizable.-(1) Notwithstanding anything in the Code of Criminal Procedure, 1973 (2 of 1974), every offence under this Act except the offences referred to in sub-section (6) of section 212 shall be deemed to be non-cognizable within the meaning of the said Code.

(2) No court shall take cognizance of any offence under this Act which is alleged to have been committed by any company or any officer thereof, except on the complaint in writing of the Registrar, a shareholder of the company, or of a person authorised by the Central Government in that behalf:

Provided that the court may