IN THE HIGH COURT OF JUDICATURE OF ANDHRA PRADESH : HYDERABAD THURSDAY, THE SIXTEENTH (16TH) DAY OF DECEMBER, TWO THOUSAND AND TEN Present: HON’BLE SRI JUSTICE G.V.SEETHAPATHY Criminal Petition No.2808 of 2009 Between: S.Anad Rao … Petitioner And: State of A.P., rep. by its P.P., & another … Respondents HON’BLE SRI JUSTICE G.V.SEETHAPATHY Criminal Petition No.2808 of 2009 ORDER: This petition is filed under section 482 Cr.P.C. for quashing further proceedings against the petitioner in CC No.147 of 2007 on the file of the Special Judge for Economic Offences, Hyderabad. 2. Heard the learned counsel for the petitioner and the learned counsel for the 2nd respondent. Perused the record. 3. The 2nd respondent herein filed a private complaint before the Special Judge for Economic Offences, Hyderabad against the petitioner and 2 others, alleging the offence under Section 628 of the Companies Act and Section 409 of IPC read with 34 IPC. According to the complainant, he is the Managing Director of Mancherial Cement Company Pvt. Ltd., and holds Rs.2,50,000/- equity shares of Rs.10/- each fully paid up. A.1 to A.3 are the shareholders-promoters and first Directors of the Company. The Company was sanctioned credit facilities by Indian Bank and State Bank of Bikener and Jaipur and was also having account with State Bank of Hyderabad but was not having any account in Andhra Bank, Jubilee Hills branch. A.1 to A.3 were found committing various omissions and commissions detrimental to the interest of the company and therefore, A.1 and A.2 were removed as Directors and A.3 was removed as Chairman, by the Board of Directors on 30.06.2007. It came to the notice of the Company during scrutiny of the bank accounts, that an account is opened in the name of the Company in Andhra Bank, Jubilee Hills branch, without the knowledge or authorization by the company. The record maintained by Andhra Bank shows that the current account was opened on 23.11.2005 and the copy of the Board Resolution purported to be the extract of the minutes of the Board of Directors meeting alleged to have been held on 23.11.2005 was submitted to the bank in order to open the bank account and the said resolution was signed by A.1 to A.3. The complainant further alleges that there was no meeting of the Board of Directors held on 23.11.2005 and no notice of any such board meeting was given and the opening of the above account in Andhra Bank by A.1 to A.3 was not brought to the notice of the company. It is further alleged that the statement purported to be the resolution of the Board of Directors is false statement and A.1 to A.3 submitted the same to Andhra Bank, knowing it to be false, in order to open a bank account authorizing themselves to operate the same in a clandestine manner in order to commit criminal breach of trust with regard to the company’s funds and therefore, A.1 to A.3 are liable for the offence under Section 628 of the Companies Act. The Minutes Book of the Company also shows that no meeting was held between 10.11.2005 and 01.12.2005. The complainant further alleges that a perusal of the statement of account shows that nine instances where cheques were issued from the account of the company either favouring the accused or favouring third parties, known to the accused and having no concern with the company, for a total amount of Rs.1,62,00,000/- , which is misappropriated by A.1 to A.3. The details of the said nine transactions are mentioned in the complaint. The complainant further alleges that in spite of order of injunction granted by the Junior Civil Judge, Mancherial restraining A.1 and A.2 from interfering with the affairs of the company on 02.06.2007, accused have encashed Rs.35,00,000/- from the company account and misappropriated the same. The details of the transaction where under the company account in the bank was operated by the accused and the amounts withdrawn and misappropriated allegedly by the accused are all disclosed in the complaint. 4. Learned counsel for the petitioner would submit that the ingredients of the offence under Section 628 of the Companies Act are not attracted, inasmuch as the resolution of the Board utilized for the purpose of opening the account in Andhra Bank does not answer the description of various documents mentioned in Section 628 of the Companies Act. Section 628 of the Companies Act states as follows: “Section 628: If any return, report certificate, balance sheet, prospectus, statement or other document required by or for the purpose of any of the provisions of this Act, any person makes a statement – (a) which is false in any material particular knowing it to be false or (b) which omits any material fact, knowing it to be material; he shall, save as otherwise expressly provided in this Act, be punishable with imprisonment for a term which may extend to two years, and shall also be liable to fine.” 5. A perusal of the above provision would disclose that in addition to the documents specified therein namely, return, report, certificate, balance sheet, statement or any other document required by or for the purpose of any of the provisions of the Act, is also included therein. 6. The resolution of the Board of Directors is certainly a document required by or for the purpose of any of the provisions of the Act. Section 291 of the Act stipulates general power of the Board and Section 292(1) of the Act lays down the list of various powers conferred on the Board, which shall be exercised only by means of resolution passed at a meeting of the Board. Section 628 stipulates the penalty for false statements, if any person makes a statement, which is false in any material fact knowing it to be false or which omits any material fact knowing it to be material, in any document required by or for the purposes of any of the provisions of the Act. According to the complainant, the document purported to be the resolution of the Board of Directors, used by the accused for opening of the account in the bank, itself is false and fabricated. The document in question is the resolution of the Board of Directors. The said document is one, which is required by the Act or for the purpose of the Act. Section 292 contemplates various situations where such document, namely, resolution of the Board of Directors is required in exercising the powers conferred on the Board. Such powers can be exercised only by means of resolution of the Board of Directors. The contention of the learned counsel for the petitioner that the document is not required by the Act or for the purpose of the Act in the matter of opening the account with the bank is rather far- fetched. Whether such document is required by or for the purpose of the Act is the criterion to consider where such document falls with in the ambit of Section 628 or not. The said document namely, the resolution of the Board may not be required for the purpose of opening of the account in the bank, but still if it is a document required for the purpose of the Act, it answers the description under Section 628 of the Companies Act. The contention of the petitioners that the ingredients of the offence under Section 628 of the Companies Act are not attracted is untenable. The question as to whether or not the document namely, resolution of the Board of Directors pressed into service by the accused is true and whether or not the accused were authorised to open the account and operate the same and whether or not the accused have misappropriated the company’s funds to a tune of Rs.1,65,00,000/- by way of withdrawal on nine occasions under various cheques, as alleged in the complaint, are all matters to be considered on evidence at the time of the trial. Apart from the offence under Section 628 of the Companies Act, the offence under Section 409 IPC is also alleged against the petitioner. 7. A perusal of the averments in the complaint would disclose specific allegations against the petitioner prima-facie attracting the ingredients of the offences i.e., Section 628 of the Companies Act and also section 409 of IPC. It is well settled principle of law that the inherent powers of the court under Section 482 Cr.P.C. have to be exercised with due care, caution and circumspection and cannot be invoked when there are specific allegations prima-facie attracting the ingredients of the offences alleged. In the circumstances, it is held that there are absolutely no valid or sufficient grounds to stall further proceedings against the petitioner in CC No.147 of 2007 on the file of the Special Judge for Economic Offences, Hyderabad, by invoking the inherent powers of the court under section 482 Cr.P.C. 8. In the result, the criminal petition is dismissed. ____________________ G.V.SEETHAPATHY, J Date: 16.12.2010 bss