N. P. Singh, J. - (1.) The appellants on the relevant date, were managing director and directors of a Public Limited Company registered as M/s. Bihar Cable and Wire Industries Limited (hereinafter referred to as "the Company"). A case was instituted by the Central Bureau of Investigation (hereinafter referred to as "the CBI") against the appellants and others on basis of a complaint made by the Deputy Secretary, Ministry of Industrial Development and Company Affairs, Government of India. It was alleged that after the registration of the company aforesaid as a Public Limited Company, the appellants as managing director and directors issued prospectus inviting public subscriptions of 42,000 equity shares and 3,000 preference shares. It was given out by the appellants to the investors that application was being made to the Calcutta Stock Exchange for enlisting the shares of the company for official quotation. Such application which was made on behalf of the company was rejected by the stock exchange. In spite of the rejection the share money collected from different investors was held by the appellants and none of the share-holders were either informed or were repaid. It was also alleged that money lying in the bank, on account of the share applications, were transferred to another account of the Company. The circumstances were pointed out in the complaint made to the CBI as to how the acts of the appellants clearly indicated their dishonest intentions to convert the share application money for their own benefit, and as such they had committed the offence under Section 409 read with Section 405 of the Penal Code.
(2.) After investigation of the allegations made in the complaint aforesaid the CBI submitted a charge-sheet against the appellants along with some others for their trial for the offence under Section 409 of the Penal Code. When the Special Judicial Magistrate, CBI Cases, Patna, rejected the prayer of the appellants to discharge them, validity of that order was questioned by filing an application under Section 482 of the Code of Criminal Procedure. The High Court rejected the said application.
(3.) The criminal proceeding pending against the appellants has been challenged saying that it amounted to an abuse of the process of Court because instead of invoking the different provisions of the Companies Act which are meant to cover such situations and to protect the interest of share-holders, a prosecution has been launched against the appellants before a Criminal Court for offences under the Penal Code. It was pointed out that in view of Section 69 of the Companies Act all moneys received from the applicants for shares have to be deposited and kept in an account and in event the shares are not issued the moneys so received have to be repaid with interest. Reference was also made to Section 73 of the Act which requires every company intending to offer shares or debentures to the public for subscriptions by the issue of prospectus has to make an application before such issue to one or more recognised stock exchanges for permission for shares or debentures intended to be so offered to be dealt with in the stock exchange. All moneys received from applicants in pursuance to the prospectus, has to be kept in a separate bank account until the permission is granted and where permission is not granted such money has to be repaid within time, in the manner specified and if default is made in complying with the same the company and every officer of the company who is in default is liable to be punished with a fine which may extend to Rs. 5,000/-. In other words, the provisions of the Companies Act take care of the investors and they put restrictions on the misbehaviour of the promoters and the directors of the Company and for any lapse on their part in such matters, they cannot be summoned to stand trial for offences under the Penal Code.;