IN THE GUJARAT HIGH COURT 

S. M. Shukla for the petitioner. 

Ashok K. Padia for respondent No. 1. 

S. T. Mehta for respondent No. 2. 

JUDGMENT 

N. J. PANDYA J. - Rule. Mr. Padia waives service. It is very surprising that the court of the Metropolitan Magistrate as well as the City Sessions Court both have been carried away by the argument advanced on behalf of the original accused that in view of the amendment in section 113 of the Companies Act, 1956 (for short "the Act"), punishment can be done to the defaulting respondent under section 113 (2) by the Company Law Board (for short "the Board"). When the argument was based on this taking it to be a question of jurisdiction, the court of the Metropolitan Magistrate, Ahmedabad, accepted the plea that it has no jurisdiction. 

The matter was carried before the learned City Sessions judge, where also this plea was found acceptable. It is indeed surprising that this plea has been advanced, much more so, which should have been accepted. Civil liability or responsibility arising out of a civil nature under a statute is one thing and penalty imposed by that very statute necessarily has to be treated under the Criminal Procedure Code read with relevant provisions of the statute which market that particular act an offence. Once it is an offence, obviously, no civil court can exercise its jurisdiction and the punishment has to be awarded by a competent court established under the Code of Criminal Procedure. It is not to say that the statute, creating an offence may not provide for a forum duly empowered to deal with penal provisions. In the instant case, as one reads the amendment introduced in the year 1986, in the Companies Act in place of what is ordinarily understood to be court namely, a civil court, which until amendment was a district court and in some of the cases even the High Court, the Board came to be introduced for which one may read the definition given in section 2 sub-section (section 10A) of the Companies Act, 1956. It refers to a Board constituted under section 10E. The Board having been constituted under section 10E, sub-section (4)(c) thereof provides for the powers of the Bench of the Board which are those of a civil court and after making reference to the Civil Procedure Code, certain matters are enumerated. If at all, any indication as to the nature of the function of the Board was required, these provisions in the Act themselves make it abundantly clear that it is nothing else but a substitution of a civil court. 

The civil court, ordinarily is to be understood with reference to the Civil Procedure Code and whenever there is a reference to a principal court of original jurisdiction, it would be a District Court and that was originally known in the Act and very rarely the High Court came into the picture as the court of first instance. 

In the year 1988, there came to be brought amendments, one of which was to constitute a Company Law Board and assign it the function that was given to the civil court prior to the amendment. 

In this background, if we turn to sub-section (2) of section 113 of the Companies Act, it is quite clear that the default envisaged in that section pertaining to non-issuance of certificate entails criminal liability in the form of punishment which may extend to Rs. 500 for every day during which the default continues and it being a fine to be imposed by way of punishment, obviously it is within the province of a magisterial court exercising criminal jurisdiction in the area. 

The learned advocate Mr. Padia drew my attention to sub-section (3) of section 113 where the Company Law Board has been given power to issue directions for giving certificates. This is nothing else, but the power originally exercised by a civil court, i.e., the District Court in the nature of passing a decree for specific performance and, therefore, it cannot be read to mean that for exercising penal jurisdiction also, the Board has power. 

The scheme of things that have changed is only with regard to substitution of the court by the Company Law Board in relation to certain civil matters, but so far as the complaints are concerned, or dealing with the default as prescribed under the Companies Act, 1956, are concerned, it was and it continues to remain within the provisions of criminal courts established under the Criminal Procedure Code, 1973, and, therefore, the argument that only the Board can exercise jurisdiction and, therefore, the complaint filed before the Court of the Metropolitan Magistrate has no jurisdiction, is totally baseless. 

In the result, the petition is required to be allowed. It is accordingly allowed. The orders of the courts below are set aside. Rule is made absolute.