M/S. KAVERI MEAT EXPORTS CO. LTD. v. UNION OF INDIA & ORS

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE S.S.SATHEESACHANDRAN** ## **MONDAY, THE 18TH DAY OF FEBRUARY 2013/29TH MAGHA 1934** ## **WP(C).No. 17053 of 2007 (E)** ## **---------------------------------------** **[S.T.NOS.46/2007 & 47/2007 OF THE ADDITIONAL CHIEF JUDICIAL MAGISTRATE COURT(ECONOMIC OFFICES),ERNAKULAM]** **.................** ## **PETITIONERS:** - **---------------------** **1. M/S. KAVERI MEAT EXPORTS CO. LTD., XII/292, KATTIPARAMBU, KANNAMALY P.O, KOCHI-682 008, REPRESENTED BY MANAGING DIRECTOR, M.G. SAMUEL.** **2. M.G. SAMUEL, S/O. GEEVARGHESE, BADHANI, 18-1636-A, THOPPUMPADY, KOCHI-682 006.** **3. A.S. UMMER, S/O. SULAIMAN, ANDIYAKKATH HOUSE, KAIPAMANGALAM, TRICHUR.** **4. THOMAS JOHN THOMAS, S/O. THOMAS, AMBALATHATTIL HOUSE, CHAMPAKKARA, KARUKACHAL, KOTTAYAM.** **5. P.K. IBRAHIMKUTTY, S/O.KUNJI MOHAMMED, PUTHENPARAMBIL HOUSE, CHENTHRAPPINI, TRICHUR-680 687.** **6. P.A. BADARUDHEEN, S/O. ABDUL RAHMAN, PUTHIYAVEETTIL HOUSE, PERINJANAM P.O., TRICHUR.** **BY ADVS.SRI.SHAIJAN C.GEORGE, SRI.JOHN VIPIN, SMT.S.A.SHERLY, SMT.K.K.THULASI BHAI, SMT.SAJITHA GEORGE.** ## **RESPONDENTS:** **-----------------------** **1. UNION OF INDIA, REPRESENTED BY SECRETARY, MINISTRY OF COMPANY &, LAW, NEW DELHI.** **Prv.** **W.P.(C). NO.17053/2007-E:** **2. ASSISTANT REGISTRAR OF COMPANIES, KERALA COMPANY LAW BHAVAN, B.M.C. ROAD, THRIKKAKARA P.O., KOCHI-682 021.** **R1 & R2 BY ADV. SRI.P.PARAMESWARAN NAIR, A.S.G.** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18-02-2013, ALONG WITH CRL.M.C. NO.2387/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **Prv.** **W.P.(C). NO.17053/2007-E:** ## **APPENDIX** ## **PETITIONERS' EXHIBITS:** - **EXT.P.1: COPY OF THE NOTICE AND THE ANNEXURE TO NOTICE DTD. 10/06/2002.** - **EXT.P.2: COPY OF THE RECEIPT AUTHENTICATED BY THE POSTAL AUTHORITIES EVIDENCING THE SENDING OF NOTICES TO THE 23 MEMBERS DTD. 10/06/2002.** - **EXT.P.3: COPY OF THE LETTER FROM THE R.2.** - **EXT.P.4: COPY OF THE LETTER MENTIONED IN EXHIBIT P3 AS THAT OF K.G. THOMAS DTD. 20/04/2005.** - **EXT.P.5: COPY OF THE LETTER MENTIONED IN EXT.P.3. AS THAT OF MR. JOHN CHERIAN, DTD. 31/03/2005.** - **EXT.P.6: COPY OF THE REPLY LETTER DTD. 18/05/2005 SUBMITTED BY THE P.2.** - **EXT.P.7: COPY OF THE LETTER DTD. 01/12/2006.** - **EXT.P.8: COPY OF THE COMPLAINT IN S.T. 46/2005 BEFORE THE ADDITIONAL CHIEF JUDICIAL MAGISTRATE COURT (ECONOMIC OFFENCES), ERNAKULAM.** - **EXT.P.9: COPY OF THE COMPLAINT IN S.T. 47/2005 BEFORE ADDITIONAL CHIEF JUDICIAL MAGISTRATE COURT (E.O), ERNAKULAM.** - **EXT.P.10: COPY OF THE NOTICE DTD. 20/07/2010 ISSUED BY THE R.2.** - **EXT.P.11: COPY OF THE LEAFLET ISSUED WITH EXT.P.10 SHOW CAUSE NOTICE BY THE R.2.** ## **RESPONDENTS' EXHIBITS: NIL.** ## **//TRUE COPY//** ## **P.A. TO JUDGE** **Prv.** ## **S.S.SATHEESACHANDRAN,J.** ================================ W.P.(C)No.17053/2007 & Crl.M.C.2387/2008 ================================ Dated this the 18th day of February,2013 ## JUDGMENT The Writ Petition and Crl.M.C are filed by common petitioners, of whom first petitioner is stated to be a Company and the rest its Directors. The Company which was engaged in the business of exporting Marine Seafood suffered financial difficulties, and so, when a scheme was introduced as 'Simplified Exit Scheme 2005' enabling defunct companies to strike off their names in the Registrar of Companies, after calling a General Body of its shareholders and getting their approval it applied for striking off its name as per the Scheme. However, sending copies of two complaints given by two former shareholders of W.P.(C)17053 & 2387/2008 2 the Company Registrar of Companies sought comments informing that the application made for striking the name of the Company in view of such complaints are kept pending. Though a reply was given informing that the allegations raised in the complaints are baseless, without conducting an inquiry Registrar of Companies turned down the application of the Company issuing Ext.P7 communication. Two criminal complaints were also filed against the Company and its Directors by the Assistant Registrar of Companies imputing violation of some provisions of the Companies Act in having not filed annual returns of the Company, before the jurisdictional Magistrate. Copies of such complaints are produced in the Writ Petition as Exts.P8 and P9. Writ Petition has been filed for quashing Ext.P7 order passed by the Registrar of Companies dismissing the application of the Company moved under Simplified Exit Scheme 2005, and also, Exts.P8 and P9 complaints filed by the second respondent against the Company and its Directors . W.P.(C)17053 & 2387/2008 3 In the Crl.M.C whereunder Ext.P7 is produced as Annexure G, and copies of two complaints Annexure J and K, quashing of those annexures are sought invoking the inherent powers of this Court under section 482 of the Code of Criminal Procedure. 2. I heard the learned counsel for petitioners and also Additional Solicitor General, who appeared for the respondents. 3. Learned counsel for petitioners referring to Section 560 of the Companies Act contended that Registrar of Companies has not complied with the procedural requirements of conducting an inquiry on the application moved by petitioners for striking off the name of the Company under the Simplified Exit Scheme 2005 and as such Ext.P7 order rejecting that application is liable to be set aside. Reliance is placed by the counsel on two reported decisions namely **Calculating & Business Machines (Pvt.) Ltd and others v. State of Bihar and Others(1983(54) Company Cases 100) and Bassanti Cotton Mills (1998)Pvt. Ltd and another v.** W.P.(C)17053 & 2387/2008 4 **Nirendranath Kar and Ors (2011 CLC 844)** to contend that Ext.P7 order passed by the Registrar of Companies without following the procedure mandated under section 560 of the Companies Act and also without conducting an inquiry affording opportunity to the petitioners to substantiate their case for striking off the Company under the Scheme has to be interfered with and set aside by this court invoking its extraordinary jurisdiction. While the application of the Company under the Simplified Exit Scheme was pending consideration, which was later improperly turned down, criminal proceedings were initiated against the Company. Since an inquiry on the application for exit of the Company awaited decision criminal proceedings were initiated are illegal and as such, they are liable to be quashed, contends the counsel. Submission of the counsel as above is on the premise that if the name of the Company is struck off, under the Scheme no penalty can be imposed against the Company and its officers for not having filed the returns of W.P.(C)17053 & 2387/2008 5 the Company. Per contra, learned Additional Solicitor General appearing for the respondents contended that there is no merit in the challenge raised against Ext.P7 order dismissing the application of the Company under the Simplified Exit Scheme, and also over the complaints filed under Ext.P8 and P9 for the violation of the provisions of companies Act in not filing returns of the Company as statutorily mandated. So far as the criminal proceedings are concerned whatever defences available to the petitioners can be raised before the jurisdictional Magistrate, is the further submission of the counsel. Ext.P7 order was passed finding that the Company on the facts and circumstances involved cannot seek for striking off its name under the Scheme, submits the counsel. 4. As if Section 560 of the Companies Act and also the 'Simplified Exit Scheme 2005' provided an indefeasible right to a Company to strike off its name moving an application, Ext.P7 order passed by ## W.P.(C)17053 & 2387/2008 6 the Registrar of Companies turning down such request has been challenged in the Writ Petition and also Crl.M.C. Such a challenge against Ext.P7 order, needless to point out would not lie in the Crl.M.C moved by petitioners. Even in the Writ Petition the petitioners have no case that the Company has defunct, but, only that due to some unexpected events they could not pull on day to day affairs. Further more, it is also noticed when the petitioners applied under the Scheme for striking out the name of the Company some complaints against the Company filed by its shareholders were pending before the Registrar. Ext.P7 passed by the Registrar of Companies dismissing the application of petitioners would show that in view of the nature of the complaints against the Company and also litigations pending against it, its application has been rejected. In Ext.P7 order itself petitioners were warned that if they failed to file necessary returns prosecution proceedings will be initiated against the Company and its W.P.(C)17053 & 2387/2008 7 officers. Ext.P7 order is dated 30.11.2006. After Ext.P8 and P9 complaints were filed by the Assistant Registrar of Companies, petitioners have filed the above Writ Petition and also the Crl.M.C. Petitioners have not produced any material to disclose what are the relevant factors to be looked into in considering the application moved by a defunct Company under Simplified Exit Scheme 2005. I find from the statements made in the Writ Petition that the Company had obtained a loan from the Kerala State Financial Corporation for carrying out its business. When such be the case, whatever be the Scheme enabling the Company to strike off its name as a defunct Company rights of the secured creditors, if any, have to be protected and taken care of before passing final orders whether it be under a Scheme or under section 560 of the Companies Act. Decisions relied by the counsel, both of them, have no application to the facts of the case. In **Calculating & Business Machines (Pvt) Ltd** case, on the facts and circumstances presented W.P.(C)17053 & 2387/2008 8 in that case, it is seen, conviction entered against the Company and its Officers with respect to criminal prosecution for not filing a final return was quashed. The decision has no bearing over any question over the rejection of an application under Simplified Exit Scheme. As already stated the Scheme applicable to a defunct Company, and that too subject to satisfaction of the Registrar that its name can be struck off. In **Basanti Cotton Mills (supra)** an order passed by the Registrar striking off the name of the Company was challenged by some shareholders, who had almost the entire share holding of the Company. Without giving them notice and hearing them, the Registrar passed the order to strike off the Company on the application moved by two Directors of the Company. In that context, after examining the facts and circumstances, the High Court found that the order passed by the Registrar was unsustainable, and the case was remitted for fresh consideration. In the present Writ Petition, petitioners have not even W.P.(C)17053 & 2387/2008 9 stated when they moved the application the Company was defunct, nor of its liability to secured creditors, if any, or the litigation pending against the Company. 5. There is no merit in the Writ Petition. Similar is the case over the challenges made against Exts.P7 and P8 complaints, which have been initiated against the Company and its officers for non-filing of annual returns. Whatever defence available to the accused persons against their prosecution on the complaints, no doubt, can be raised by them before the Magistrate concerned. Both Writ Petition and Crl.M.C are dismissed. ## S.S.SATHEESACHANDRAN JUDGE tpl/- W.P.(C)17053 & 2387/2008 10 tpl/- M.SASIDHARAN NAMBIAR, J. --------------------W.P.(C).NO. /06 --------------------- JUDGMENT tpl/- M.SASIDHARAN NAMBIAR, J. --------------------W.P.(C).NO. /06 --------------------- JUDGMENT SEPTEMBER,2006