1969L34 (PLP)

The petitioners are the registered members of the District Cricket Association, Lahore. The Association was incorporated under the Companies Act of 1913 on the 12th of February 1960. The petitioners have moved this application alleging that the respondent‑Association had failed to call the general meet ings of members for the years 1965‑66 and 1966‑67 and, therefore, had committed an offence under section 76 of the Companies Act, and that it has also not maintained the account "books as required under section 130 of the Act. They further alleged that the respondents were liable to be proceeded against under subsection (2) of section 76 and subsection (4) of section 130 of the Companies Act for the defaults committed by them. The respondents denied the allegations of the petitioners. In paragraph 5 of the written statement dated the 8th of October 1967, they explained the circumstances under which the meeting was not held and further stated that a notice was issued for holding a general meeting on the 25th of August 1967, but it could not be held because of the death of Dr. Dilawar Hussain, a reputed Cricketer, and it was postponed by a resolution of the Association seconded by petitioner No. 1 himself. The respondents, however, clearly expressed their intention to hold the meeting. The case was adjourned on the 9th of October 1967 for replication of the petitioners and it was further observed : "The whole dispute In the case is that the general meetings of the company have not been held for the last three years. Mr. Muhammad Akhtar, learned counsel for the respondent, after taking instructions from his client, undertakes that the annual general meeting would be held in this month for which a notice would be given as required by the Articles to all the members. He has also undertaken to give a notice of the meeting in the newspapers. The notices will be given in the two newspapers, i.e. Pakistan Times and Nawa‑i‑Waqt. The proceedings of the meeting will be filed in the Court on the 6th of November, 1967". The meeting was held on the 30th of October 1967.

2. Under subsection (3) of section 76 of the Companies Act, the Court, on the application of any member of the company, has the power to call or direct the calling of a general meeting of the company. The annual general meeting of the Association has been held. They, however, alleged certain irregularities committed in the meeting. I do not feel inclined to go into that question. It was in the presence of the petitioners that an order was passed on the 9th of October 1967 permitting the respondents to hold the general meeting. The petitioners could at that time ask for appointment of an independent Chairman to preside over the meeting. Since the general meeting has been held on the 30th of October 1967, no action under subsection (3) of section 76 is called for.

3. The respondents admittedly did not hold any meeting in the earlier years. The petitioners, therefore, alleged that the company and its Directors are liable under subsection (2) of section 76 and that they are also guilty under subsection (4) of section 130 for having committed default in keeping proper books of accounts. The said provisions are in the following terms :‑ "76 (2). If default is made in holding a meeting in accordance with the provisions of this section, the company and every director or manager of the company who is knowingly and wilfully a party to the default shall be liable to a fine not exceeding five hundred rupees." "130. (4) In the case of a company managed by a managing agent, the managing agent, or where the managing agent is a firm or company, the partner or director of such firm or company and in any other case the director or directors who have knowingly by their act or omission been the cause of any default by the company in complying with the requirements of this section, shall in respect of such offence be liable to a fine not exceeding one thousand rupees." The Companies Act does not provide for any procedure for the trial of the offences under the Act. In the absence of such a provision, the ordinary law of procedure as provided in the Code of Criminal Procedure will be applicable Subsection (2) of section 1 of the Code of Criminal Procedure provides that the procedure contained therein shall not affect any special or local law . . . . . any special jurisdiction or power conferred, or any special form of procedure prescribed, by any other law for the time being in force." The fact, therefore, that a particular act is prohibited by or is an offence under the special law does not exclude the occupation of tape Code : "All Criminal Procedure unless that law also prescribes a special form of procedure for such' offences. In respect of offences under other laws, it is provided in subsection (2) of section 5 of the Code : "All offences under any other law shall be investigated, inquired into, tried and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying Or other wise dealing with such offences." Thus, if a procedure is provided in any special or local enactment for the trial of the offences under that Act that procedure is to be observed. If, however, there is no procedure provided in such an Act for the investigation, inquiry or trial of such an offence, then the one laid down in the Code of Criminal Procedure is to be observed.

4. The High Court, is empowered under section 76(3) to call or direct the calling of a general meeting of the company if a default is made in holding a general meeting of the company within eighteen months from the date of its incorporation and thereafter once at least in every calendar year. The default in calling the general meeting is punish;‑0ble under subsection (2) of section

76. It was argued that since the Court has to determine the question of default, it alone can take cognizance of an offence under subsection (2). I am unable to accept this contention. Subsection (3) empowers the High Court to call the meeting in case of a default in holding the general meeting. It does not mean that if an application is not made for calling of a meeting under subsection (3) action against the company or its directors cannot be taken under section 76(2) for its default. There may be a case in which it is not necessary for the High Court to call the meeting under subsection (3). Where a company holds a general meeting after the statutory period there will be d no necessity for the High Court to Legal a general meeting ; yet for the default the penal liability under subsection (2) will be there. A penal action under subsection (2) of section 76 is not in any way dependent on the determination of the question of default by the High Court.

5. It is provided in subsection (1) of section 278 that "no Court inferior to that. of a Magistrate of the first class shall try any offence against this Act." Subsection (3) of section 278 says: "Notwithstanding anything in the Code of Criminal Procedure, 1898, every offence against this Act shall, for the purposes of the said Code, be deemed to be non‑cognizable." On a plain reading of this section, it appears ;hat the framers of the law did not exclude the operation of the Code of Criminal Procedure except for limited purposes, namely, (a) that an offence under the Companies Act will not be triable by a Court inferior to a Magistrate of first clans; and (b) that the offences under the Act shall be non‑cognizable. The jurisdiction of the criminal Courts, is, therefore, not excluded expressly or by necessary intendment. Sections 28 and 29 of the Code of Criminal Procedure deal with the description of offences cognizable by the Courts. An offence under the Pakistan Penal Code, subject to the provisions of the Code of Criminal Procedure, is triable by the High Court, the Court of Session or any other Court which is specified in the eight column of the Second Schedule. It is provided in section 193 of the Code of Criminal Procedure that a Court of Session shall not take cognizance of any offence as a Court of original jurisdiction unless the accused has been committed to it by a Magistrate duly empowered in that behalf. Similarly, under section 194, the High Court is empowered to take cognizance of an offence upon a commitment made to it. The High Court, therefore, cannot take cognizance of an offence under tile Pakistan Penal C.3Je ore a complaint or police report as a Magistrate can do under section

190. This, however, does not affect the jurisdiction of the High Court under clauses 15 to 17 of the Letters Patent.

6. Section 29 of the Code specifies the Courts by which offences other than these under the Pakistan Penal Code can be tried. It reads "29.‑(1) Subject to the other provisions of this Code, any offence under any other law shall, when any Court is mentioned in this behalf in such law, be tried by such Court. (2) When no Court is so mentioned, it may be tried by the High Court or subject as aforesaid by any Court constituted under this Code by which such offence is shown in the eighth column of the Second Schedule to be triable." Thus, if a Court is mentioned in a special or local enactment, by which the offence is created, to have the jurisdiction to try the offence, it is only that Court which can try the offence. If a Court is not specified in the Act, the offences created by the Act can be tried by the High Court or by any Court specified in this behalf in the Second Schedule to the Code. The Companies Act does not specify any such Court. The offences, therefore, can be tried either by the High Court or by any Court constituted under the Code of Criminal Procedure as shown in the eighth column of the Second Schedule. According to the Schedule an offence punishable with imprisonment for one year and upwards, but less than three years, can be tried by a Magistrate of second class, and in case an offence is punishable for imprisonment for less than one year, or with fine only, it can be tried by a Magistrate of Third Class. Section 278 of the Companies Act, since it provides that no Court inferior to that of a Magistrate of the First Class shall try any offence against the Act, expressly over-rides the entries in the Second Schedule whereby a Magistrate of Second or Third Class can also try such offences. The jurisdiction of the Magistrates of the First Class to try the offences under the Companies Act is clearly retained. A Magistrate of First Class is, therefore, competent to try the offences by virtue of section 278 of the Companies Act, read with section 29 of the Code of Criminal Procedure.

7. It is also provided in section 29 that when no Court is specifically mentioned to try an offence created under the Act other than the Pakistan Penal Code it may be tried by the High Court. Subsection (2) of section 29 of the Code of Criminal Procedure, giving jurisdiction to High Court to try such offences, does not contain the words "subject to the other provisions of the Code". A question arises whether the High Court can take cognizance of an offence on a complaint made to it without following the procedure laid down in the Code for invoking the jurisdiction of the High Court. The Companies Act does not provide for the manner, place or offences under the Act. The inquiry and the trial of the offences under the Act, therefore, had to be in accordance with the provisions of the Code of Criminal Procedure. Under section 194 of the Code of Criminal Procedure, as I have already mentioned, the High Court can try a case if it is committed to it. The High Court may also try under subsection (2) of section 194, s case at the instance of the Advocate. General when he, after having obtained previous sanction of the Government, places an information before it containing a definite statement of the charge. It may also try an offence of which a Magistrate has taken cognizance, but the High Court has transferred the trial to itself under section

526. The High Court can try an offence under subsection (2) of section 29 subject to the provisions of section 5(2) of the Cr. P. C., and unless a case is committed to the High Court, it cannot on a complaint made to it try an offence under the Act. The precise question as to the jurisdiction of the High Court to try an offence under the Companies Act was considered by a Full Bench of Allahabad High Court in Harish Chandra v. Kavindra Narain Sinha (A I R 1936 All. 830) and it was held : "There is absolutely no conflict between the provisions of sections 5 and 29 of the Code. The mere fact that section 29 empowers High Court to try an offence under any other law than the Penal Code does not show that the High Court can take cognizance of the offence straight off, try the accused and convict and punish him without following the procedure laid down in the Code. So in the case of an offence due to contravention of the provisions of section 85, Companies Act, the High Court has no jurisdiction to take cognizance of and try any such offence and impose the fines prescribed by the Companies Act. The High Court would have jurisdiction to try the accused only if the case is committed to the High Court under section 194(1), Criminal Procedure Code, or if proceedings are started on an application of the Advocate-General under section 194(2) or are transferred to it under section 526, Criminal P. C. It would not have jurisdiction to try the accused merely on an application made under section 85, Companies Act."

8. For the foregoing reasons, I hold that the application made to this Court under section 76(2) or section 130 of the Companies Act for taking penal action against the respondents is misconceived.

9. The Association has held the general meeting with a notice to all the members. I see no purpose in calling another general meeting to consider the same question over again. No further action is called for by this Court. There shall be no order as to costs. K.B. A. Application dismissed.