On 14th January 2020, the High Court at Bombay in its decision rendered in the case of Sanjeev S. Malhotra v. The State of Maharashtra & Anr., analysed the provisions under the Code of Criminal Procedure, 1973 (“CrPC”) for issuing summons on corporate bodies.
Brief Facts:
After investigation was completed, Sudarshan Overseas Ltd. (‘Accused Company’) along-with other accused, were chargesheeted for offences punishable under Sections 120-B r/w 420, 467, 468 and 471 of the Indian Penal Code, 1860 as well as under Section 13(2) r/w 11 and 13(1) of the Prevention of Corruption Act, 1988. Sanjeev Malhotra (‘Petitioner’) was arraigned as Accused no.2.
The instant Criminal Writ Petition was filed by the Petitioner against the order of the Trial Court whereby the Trial Court had rejected the application filed by the Petitioner to secure the presence of the Accused Company to record its plea for the charges levelled against it.
It is the case of the Petitioner that he resigned from the Accused Company in April 2008 and subsequently, from September 2008, Parmender Rana came to be appointed as Managing Director of the Accused Company. According to the case of the prosecution, the offence took place from April to October, 2008 when bogus invoices were issued by the Accused Company.
Subsequently, when the charge was framed against the Petitioner and his plea was recorded, an application for securing the presence of the Accused Company to answer the charge levelled against it was filed. The Trial Court rejected the said application with a direction to the Petitioner and the Accused no.3 to remain present for recording the plea and to answer the charge on behalf of the Accused Company.
Issue:
The issue which arose for consideration before the High Court at Bombay was whether the Court can decide who will represent a corporate body when it is arraigned as an accused.
Decision:
The High Court at Bombay observed that the Accused Company is a distinct entity than it’s directors and Section 63 of the CrPC deals with the procedure for issuing summons on corporate bodies. The High Court at Bombay also observed that the CrPC contemplates procedure for trial of offences against a company when it is arraigned as accused as mentioned under Section 305 of the CrPC.
Sections 63 and 305 of the CrPC are reproduced below for ready reference:
“63. Service of summons on corporate bodies and societies - Service of a summons on a corporation may be effected by serving it on the secretary, local manager or other principal officer of the corporation, or by letter sent by registered post, addressed to the chief officer of the corporation in India, in which case the service shall be deemed to have been effected when the letter would arrive in ordinary course of post.”
“305. Procedure when corporation or registered society is an accused - (1) In this section “corporation means an incorporated company or other body corporate, and includes a society registered under the Societies Registration Act, 1860 (21 of 1860).
(2) Where a corporation is the accused person or one of the accused persons in an inquiry or trial, it may appoint a representative for the purpose of the inquiry or trial and such appointment need not be under the seal of the corporation.
(3) Where a representative of a corporation appears, any requirement of this Code that anything shall be done in the presence of the accused or shall be read or stated or explained to the accused, shall be construed as a requirement that that thing shall be done in the presence of the representative or read or stated or explained to the representative, and any requirement that the accused shall be examined shall be construed as a requirement that the representative shall be examined.
(4)Where a representative of a corporation does not appear, any such requirement as is referred to in subsection (3) shall not apply.
(5) Where a statement in writing purporting to be signed by the managing director of the corporation or by any person (by whatever name called) having, or being one of the persons having the management of the affairs of the corporation to the effect that the person named in the statement of this section, is filed, the Court shall, unless the contrary is proved, presume that such person has been so appointed.
(6)If a question arises as to whether any person, appearing as the representative of a corporation in an inquiry or trial before a Court is or is not such representative, the question shall be determined by the Court.”
Thus, analysing the aforementioned provisions of the CrPC, the Court observed that on receiving summons issued by the Trial Court, the Accused Company may appoint a representative for the purpose of trial and such appointment can be made on a simple letter even without the seal of the corporation and when such representative appears before the Court for answering the chargesheet, anything which is done in the presence of such representative, can be construed as a thing done in the presence of the company. It further clarified that even a statement of the Accused Company under Section 313 of the CrPC can be recorded by examining such a representative.
While observing the above, the Court thus, held that for prosecuting a company as accused, the Court is required to issue process against the company after which, it is only the accused company, that has the choice to nominate its representative to answer the charge. In view thereof, the impugned order directing the Petitioner to answer the charge levelled against the Accused Company by signing the plea on behalf of the Accused Company was set aside.
This update has been contributed by Murtaza Kachwalla (Partner) and Aashdin B. Chivalwala (Senior Associate).
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