1. Heard the learned Counsel for the petitioners and the learned High Court Government Pleader for the respondents 1 to 4. Perused the impugned order.
2. The petitioners, who are the authorised signatories and Directors of the first petitioner-Company, have sought for quashing of the entire proceedings in LGC(G) No. 24/2017 on the file of the Special Court constituted under the Karnataka Land Grabbing Prohibition Act, 2011 (hereinafter referred to as “KLGP Act” for short). The Special Court has taken cognizance of the offences under Section 4 of the said Act and issued process against the petitioners.
3. It is contended by the learned Counsel for the petitioners that, while lodging the complaint dated 28-12-2016, the Tahsildar has not mentioned the names of any of the Directors of the first petitioner-Company. It is only stated
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that the said Company is represented by its Authorised Officer Sri Jayaram, Manager. There is no specific allegations with regard to the grabbing of the land as such by the complainant to the extent mentioned in the complaint i.e., in Survey No. 1 measuring 6 acres 20 guntas, Survey No. 3 measuring 1 acre 17 guntas, Survey No. 14 measuring 28 guntas and Survey No. 18 measuring 2 acres 25 guntas of Chikkaaluru Rampura Village, Tavarekere Hobli, Bengaluru South Taluk. Inspite of that, the said Special Court has taken cognizance, issued process. The learned Counsel also brought to the notice of this Court the report of the Tahsildar to the Deputy Commissioner dated 7-1-2015 marked at Annexure-E, in which the complainant-Tahsildar has stated that, the Company has been using the said extent of the lands in the said Survey No. as a road to their ingress and egress to the Company and they require some portion of the lands noted above for the purpose of using as a road. Perhaps that act of the company may be without any permission or license or getting the portion of the said lands to them, but they have been using the said property for the benefit of the Company which made the Tahsildar to file a complaint that they are grabbing the said land belonging to the Government.
4. Basing on the above said materials on record, the Special Court has taken cognizance against all the accused persons i.e., the petitioners herein.
5. So far as the petitioners 2 to 4 are concerned, in the order itself, it is mentioned that the accused 1-Company is represented by its Manager Sri Jayaram. The Counsel appearing before the Special Court also submitted that A2 to A4 were not indulged in any activity of the Company. Therefore, their names have to be dropped. Inspite of that, cognizance was also taken against them applying the provision of Section 6 of the said Act, Section 6 of the said Act is almost synonymous of Section 141 of the Negotiable Instruments Act, 1881, which reads thus:
“6. Offences by companies.-(1) Where an offence against any of the provisions of this Act or any rule made thereunder has been committed by a company, every person who at the time of the offence was committed, was in charge of and was responsible to the company for the conduct of business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the offence was committed without his knowledge or that he has exercised all due diligence to prevent the commission of the such offence.
(2) Notwithstanding anything contained in sub-section (1), where any such offence has been committed by a company and it is proved that the offence has been committed with the consent or connivance of or is attributable to any neglect on the part of any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation.-For the purposes of this section.-
(a) “Company, trust, firm, society” means respectively a company defined under the Companies Act, 1956 (Act No.1 of 1956), trust defined under the Indian Trust Act, 1882 (Act No. 2 of 1882), firm defined in the Indian Partnership Act, 1932 (Act No. 9 of 1932), Society defined in the Karnataka Societies Registration Act, 1960 (Karnataka Act 17 of 1960) or other association of individuals; and
(b) “Director” in relation to.-
(i) a company means the director as defined in sub-section (13) of Section 2 of the Companies Act, 1956 and partner means a partner in the firm;
(ii) a society, a trust or other association of individuals, means the person who is entrusted under the relevant provisions of the Act or rules of the society, trust or other association with management of the affairs of the society, trust or other association, as the case may be.”
As could be seen from the order sheet of the Special Court, in none of the dates any further information have been given by the Tahsildar to show that what exactly the role of other Directors of the Company so far as the alleged offences are concerned and further in the complaint dated 28-12-2016 also nothing has been mentioned about the names of the Directors and their role.
6. In this context, it is worth to mention here a decision of the Hon’ble Apex Court in between K.K. Ahuja v. V.K. Vora and Another (2009(80) AIC 202 (SC): 2009(152) Comp. Cas. 520 (SC): V(2009) SLT 429), (2009) 10 SCC 48, wherein the Hon’ble Apex Court has in detail dealing with Section 141 of the Negotiable Instruments Act, with reference to the liability of the Directors of a Company has categorically held that:
“Sections 141 and 138 – Dishonour of cheque – Offence by Company – Vicarious liability of persons of the company – When arises – Essential averments in complaint, requirement of – Held, persons/officers who were in charge of and also responsible for the conduct of business of the company, are vicariously liable for offences of company. Hence, no specific averment in complaint as to the role of each is required. Duly affirmed sworn statement to that effect, may be sufficient. However, complaint against persons/officers, who are either not responsible for conduct of business of the complaint, or were not in charge of the company should be specific as to their position, duties and role in the issue of said dishonoured cheque disclosing consent, connivance or negligence before the Court.”
Therefore, there should be specific allegations with regard to any connivance or consent of the Director in committing such offence. In the absence of such material things in the complaint, merely showing that all the Directors are also responsible and they were indulged in day-to-day affairs of the Company is not sufficient. Therefore, the Special Court has not given any of its opinion with regard to these aspects, whether there is any material to show that the petitioners 2 to 4 are also involved or indulged in committing such offence or they were also responsible for the day-to-day affairs of the Company. In the absence of such materials, merely because they are Directors of the Company, no Court can draw inference as such that they are also liable for the punishment.
7. Under the above said circumstances, I do not find any strong reason to sustain the order so far as petitioners 2 to 4 are concerned. However, there is specific allegations, even in the order passed by the Special Court as well as in the complaint lodged by the complainant that the Company has been using some portion of the Government lands as noted above gainfully for their purpose, without there being any grant, license or lease by the Government. This has to be examined by the Special Court, whether the same amounts to Grabbing of the Land or not, during the course of trial.
8. Hence, I am of the opinion that, the petition is liable to be dismissed so far as petitioner 1 is concerned. Accordingly, I proceed to pass the following:
The petition is partly allowed. Taking of cognizance against petitioners 2 to 4 by the Special Court constituted under the Karnataka Land Grabbing Prohibition Act, 2011, are concerned is hereby quashed. However, the Special Court can proceed in accordance with law against petitioner 1 who is effectively represented by its authorized signatory Mr. Jayaram