Quashing of complaint by High Court under its inherent powers.

Cr.M.P. 4496 of 1978 - This is a petition filed under S. 482 Crl.P.C. by the accused in C.C. 23771 of 1978 on the file of the II Additional Metropolitan Magistrate, Egmore, Madras to call for the records in that case and quash the proceedings

2. According to the private complaint filed by the complainant, who is the respondent in this petition, he is a shareholder in the India Cements Ltd. and accused 1 to 5, who are petitioner 1 to 5 herein, are the directors of the said public limited company which is having its registered office at Dhun Buildings, No. 175/1 Mount Road, Madras 2. The sixth accused, who is the sixth petitioner herein, is the brother of the first accused and he is the General Manager of the factory of the said company at Sankaranagar, Talaiyuthu, Tirunelveli. The seventh accused, who is the seventh petitioner herein, is the Secretary of the said company. According to the complaint, accused 1 to 7 have entered into a conspiracy at Madras to defraud the funds of the India Cements Ltd. and misappropriate the same through various methods in order to enrich themselves at the expense of the shareholders. The misappropriation was between 1-4-1976 and 31-3-1977 and the amount was Rs. 25, 00, 000/-. A-1 is the managing director and he is in charge of the day to day administration and supervision of the entire company. Subject to the approval of the Board of directors. A. 6 as General Manager is in charge of the administration of the factory at Sankaranagar, working under and taking orders from A. 1. The said Company was incorporated on 21-2-1976 with the object of setting up a cement factory. The company obtained mining lease in 1956 of more than 1000 acres of land in the reserve forest area. As the quality of lime stone from the reserve forest area was not good, the plant had to be stopped soon after the mines were commissioned

3. Agricultural Farms Ltd., according to the complaint, was having lands of choice limestone bearing areas. The main director of this concern was one of the promoters of the India Cements Ltd., namely, late Mr. S. N. N. Sankaralinga Iyer. He and his son, A-1, were directors for a number of years. India Cements, Ltd. had to buy quality limestones from Agricultural Farms Ltd., owned by A-1 and his father. In 1951, a contract was entered into by which Agricultural Farms Ltd., supplied 62 to 65 per cent of India Cements' requirements of limestones up to 30-3-1958. In 1958, a fresh contract was entered into for another 15 years. As India Cements Ltd., has not secured any lands bearing quality limestones, they depend solely on Agricultural Farms Ltd. A number of complaints were sent to the Company Law Board, New Delhi, against the malpractices in purchase of limestones by paying higher rates to Agricultural Farms Ltd. to the detriment of India Cements Ltd. Agricultural Farms Ltd. purchased limestones from suppliers and sold to India Cements Ltd., at an increased rate of Rs. 4 to Rs. 5 per tonne. They also secured a good sum by way of transport charges from the pitsmouth to the crusher of the India Cements Ltd.'s. factory. The lorries engaged by the Company belonged to Abcoy and Company or Contractors who are only benami of 46. Abcoy and Company is a partnership firm; the partners are the wife of A. 6 and her father. The entire gains from the transport go to A. 6 via Abcoy and Company. Agricultural Farms Ltd. has not declared any dividends from its inception. They had all their profits made only through one client namely India Cements Ltd. They were able to pay the tax under the Voluntary Disclosure Scheme for a total income of Rs. 50 lakhs, which was because of the settlement arrived at between the Agricultural Farms Ltd., which had to pay nearly Rs. 1.5 crores as tax liabilities, and the Income-tax authorities. Rs. 1.5 crores represent the income derived by Agricultural Farms Ltd., at the expense of India Cements Ltd. Accused 1 and 6 are responsible for this loan of Rs. 1.5 crores incurred