The distinction between criminal acts and civil disputes under the Companies Act, and the requirement for due procedure in addressing disputes.

ORDER :

1. This Criminal Petition is filed by the petitioners/A1 to A5 to quash the proceedings in Crime No.18 of 2019 on the file of Central Crime Station, Hyderabad registered for the offences under Sections 406, 420, 468 r/w 120-B IPC.

2. The 1st respondent, is the shareholder and additional director, who subscribed 5000 shares of the company in M/s.Mathsya Giri Lakshmi Narasimha Power Private Limited/A1 company. The company was developed as ‘Combined Cycle Power Plant’ for generating electricity. A2, who is the husband of A3 are directors. A4 and A5 are parents of A2. The company purchased land in Sy.No.273 admeasuring Acs.14.01 gts situated at Manimadhe village, Shaligauraram Mandal, Nalgonda District on 16.03.2011. Another property of Acs.12.21 guntas was purchased in the same village on the very same day. The name of the company was reflected in the total extent of Acs.26.22 guntas. The allegation in the complaint is that resolution dated 06.02.2017 was fabricated to defraud the company and its shareholders. In the said resolution, A2 has authorized himself to sell the landed property. The complainant, who is 50% shareholder was kept in dark regarding the decisions taken by A2. The Board resolution refers to the presence of the complainant during board meeting, however, the complainant was not aware of the meeting. The inclusion of A3 to A5 as Directors was only for the purpose of illegally selling the company’s property. The property was sold to A6.

3. On 24.04.2017, A2 mutated his name in the pattadar pass books and title deeds as against company’s name for his personal gains. A2 further got mutated his name in the passbook.

4. The said land was sold on 09.05.2017 for Rs.1.00 Crore and the said proceedings were collected by A2 in the form of demand drafts. After purchase of the land, the name of A6 was mutated in the revenue records. The complainant was not aware of any of the transactions and deliberately A2 with fraudulent intention has fabricated the board resolution and sold away the property. Further allegation is that on 08.05.2017, the address of the company was changed on the basis of a letter given by A4.

5. The said complaint was registered by the CCS, Hyderabad for the offences under Sections 406, 420, 468 r/w 120-B IPC.

6. Learned counsel appearing for the petitioners would submit that A2 lodged a complaint with the ROC on 22/03/2018 making allegations against the defacto complainant. The defacto complainant had filed annual returns and balance sheets with the ROC without the consent of other Board of Directors. The disputes if any are purely civil in nature and offences if any are under the Companies Act. The police does not have jurisdiction to register and file the complaint. Learned counsel further argued that the entire amount was credited to the company’s account. Civil suit was also filed for cancellation of the sale deed No.1134 of 2017 dated 09.05.2017. The civil suit was filed by the defacto complainant, company and the other director against these petitioners.

7. On the other hand, learned counsel appearing for the 1st respondent/defacto complainant would submit that fabrication of board resolution is criminal offence punishable with cheating and forgery. On the basis of the said fabricated resolution, land was sold. It amounts to misappropriating the company assets. Accordingly investigation has to go on.

8. The defacto complainant alleged that without his knowledge, the property of the company was sold. The present criminal complaint was filed on 14.01.2009. On 22.03.2018, a complaint was filed with the ROC by the 2nd petitioner/A2 against the defacto complainant and others for fabricating annual returns, balance sheets, profit and loss account etc., without any approvals from the Directors and shareholders. The annual general meeting for the years 2014-15, 2015-16, 2016-17 and 2017-18 were also fabricated. The said acts of the defacto complainant amounted to offence under Sections 92, 137, 448 and 44