Section 627
PRODUCTION
AND INSPECTION OF BOOKS WHERE OFFENCE SUSPECTED
v.
VAMAN
RAO, J.
Section 627 of the Companies Act, 1956 - Offences - Production and inspection of books where offence suspected - Whether section 627 enables special access to public prosecutor or company prosecutor to make an application to a Judge of High Court for an order for production of records from specified officers of company, but it excludes a shareholder from such a privilege - Held, yes - Whether section 627 can be a substitute for issuing a search warrant and can have effect of annulment of section 94 of Cr. PC in respect of investigation, enquiry or trial of offences committed by officers of company in connection with its management - Held, no
Section 93 of the Code of Criminal Procedure,
1973 - Search warrants - Issue of - Respondent, a shareholder, filed a complaint
against company as well as directors of company for their entering into a sham
contract with a partnership firm of which directors were partners without
board’s approval, diverting funds and misappropriating same - Special Judge
issued search warrant under section 93(1)(a) of Cr. PC for recovering minutes
book, financial and other records - Whether since test of probable cause both
as to making out an offence and as to availability of documents sought to be
seized by search, had been made out, impugned order issuing search warrant was
to be held to be in accordance with law - Held, yes
Article 20(3) of the Constitution of India -
Fundamental rights - Guarantee to accused against self-incrimination - Whether
even though accused is in occupation of premises subjected to search and even
if such search result in seizure of documents attributable to personal
knowledge of accused which may have tendency to incriminate him, such search
would leave Constitutional guarantee against self-incrimination available to
accused under article 20(3) unaffected and unviolated - Held, yes
The complainant, a shareholder of the company
SPGL, filed a complaint against the company and its directors for offences
under sections 409 and 411 of the Indian Penal Code (IPC) and for the contravention
of sections 297, 299 and 300 of the Companies Act, alleging that they had
entered into a sham contract with a partnership firm of which they were the
partners, diverted about Rs. 50 lakhs from the company’s account and misappropriated
the same. The firm was located in the same premises as the company. In order to
prove the above offences and to establish that the contract with the firm was
entered into without Board resolutions, the minutes book was needed as also
other documents, vouchers, bank statements etc. The complaint was taken
cognizance of by the Special Judge and a search warrant was issued for
searching the premises of the company.
On a petition under section 482 of the
Criminal Procedure Code the petitioners contended that as the alleged offences
were in connection with management of company’s affairs, an order for search
and seizure of records could only be passed under section 627 and section 94 of
Cr. PC could not be pressed into service; and also that the search warrant
issued under section 93(1)(a) of the Cr. PC was without jurisdiction as summons
or an order under section 91 of the Code could not have been issued against
the accused petitioners, as it violated article 20(3) of the Constitution of
India.
Under section 627, an application can be made
to a Judge of a High Court only by public prosecutor of the State or by the
Central Government or by a company prosecutor appointed under section 624A.
Access to file an application before a Judge is obviously not available to a
shareholder who seeks to prosecute an officer of the company for an offence
committed in connection with the management of the company. It was, therefore,
obvious that the provisions in section 627 did not apply to the facts of the
case inasmuch as in this case a shareholder was seeking to prosecute the
directors of the company.
Even assuming that section 627 has created a
special jurisdiction or conferred a special power or provided for any special
form of procedure for making an application before a Judge of the High Court
for issuing order in the nature of search and seizure or production of the
records within the meaning of section 5 of the Code, it merely implies that
such a special jurisdiction, special power or special procedure can validly be
enforced without infringing the provisions of section 5 of the Code inasmuch
as there is no specific provision which can be said to affect the said special
jurisdiction etc. But the provisions in section 627 cannot have the effect of
abrogating the provision in section 94 of the Code inasmuch as section 627 can
be invoked only when conditions prescribed therein are satisfied and section
627 does not permit a shareholder to make an application to a Judge of High
Court in Chambers. The powers and procedure relating to investigation, enquiry
or trial of offences under the Indian Penal Code shall be in accordance with
the provisions of the Code as contemplated under sub-section (1) of section 4
of Code. Inasmuch as section 627 cannot be construed as a provision enacted
for regulating the manner or place of investigation, inquiring into, trying or
otherwise dealing with the offences under the Companies Act, the provision
under sub-section (2) of section 4 of the Code will come into play and all
provisions in the Code of Criminal Procedure in respect of investigation,
enquiry or trial etc. shall be applicable. Issuing of search warrant is
undoubtedly one of the modes of investigation or enquiry into an offence.
Section 627 enables special access to public prosecutor of a State, Central
Government and Company prosecutor to make an application to a Judge of High
Court for an order for production of records from the specified officers of the
Company. It excludes a shareholder from such a privilege.
Thus, section 627 was not a substitute for
issuing a search warrant and could not have the effect of annulment of section
94 of Code in respect of investigation, enquiry or trial of offences committed
by the officers of the company in connection with the management of the
company.
Thus, it had to be held that search warrant
was issued in accordance with law.
As regards the contention based on article
20(3) of the Constitution the legal position is that search and seizure pursuant
to search warrant issued under section 93(1)(c) of the Cr. PC cannot be
considered as subjecting the accused to compulsion to incriminate himself. Such
a seizure and search obviously is not directed against the accused with a view
to compel him to do anything like producing a document or making a statement.
In fact, he is expected to do nothing. He can be a mere spectator of search
proceedings. In fact he is free to leave the place and be absent during the
proceedings of search. The mere fact that the accused is in occupation of the
premises which is subjected to search and even if such search resulted in
seizure of documents which may be attributable to the personal knowledge of the
accused which may have the tendency to incriminate him, such search cannot be
held to violate the constitutional guarantee against self-incrimination
available to the accused under article 20(3) of the Constitution of India.
The corporate offices were run in sprawling
premises. There was nothing to show that the accused directors were having
personal custody of the documents sought to be seized during the search. The
petitioner had not furnished any information as to the specific place in the
vast premises of the corporate office where those documents were lying. Under these
circumstances, though the Special Judge had purportedly issued search warrant
under section 93(1)(a) of the Code, the facts and circumstances of the case
appeared to justify the issuance of the general search warrant under section
93(1)(c) of the Code also.
The important allegations as stated in the
complaint against the directors were that they had contravened certain
provisions of the Act which was punishable under the relative provisions and
section 629A. It was obvious that information about such contravention which
included absence of a resolution authorizing the accused to enter into a
contract, omission on the part of the accused to inform their personal interest
in the contract etc. could be secured from the records maintained by the
company like minutes books and the account books. The crucial allegation
against the three directors were that they entered into a sham contract with a
partnership firm and used it as a device for siphoning off the funds of the
company to that firm and ultimately to the three directors. Account books of
the company were the relevant material which would furnish evidence in respect
of this allegation. These documents would obviously be available in the registered
office of the company.
Considering these circumstances, the test of
probable cause both as to making out an offence and as to the availability of
the documents sought to be seized by search must be held to have been made out.
As to the requirement of particularity and
specificity, under sub-section (1)(a) of section 93 a search warrant can be
issued when requirement of section 91 could not have been complied with and a
warrant could be issued to search a specific place belonging to the person
to whom summons could have been issued.
Whereas under section 93(1)(b), search warrant could be issued where the
required document or thing is not known to the court to be in possession of any
person but obviously when the place is known. Search warrant which could be
issued under section 93(1)(c) is apparently an exception to the requirement of
particularity or specificity inasmuch as a general search warrant could be
issued without specifying the particular place or the name of the person in
whose custody the document is said to be lying. The circumstances of the case
would show that there was a justification for issuing a general search warrant
also as contemplated under section 93(1)(c).
Taking any view of the matter, the impugned
order issuing the search warrant must be held to be in accordance with law.
However, since the relevant records sought to be collected by the impugned
search operation had been produced before the court in compliance with interim
orders, the question of execution of the search warrant issued by the Special
Judge did not arise. The records so produced should be transmitted to the Court
of the Special Judge who should retain them as part of the record in the case
for being used by the parties as permissible under law.
State of Gujarat v. Shyamlal AIR 1965 SC 1251
and V.S. Kuttan Pillai v. Ramakrishnan AIR 1980 SC 185.
B. Adinarayana Rao for the Petitioner. C. Padmanabha Reddy,
C. Praveen Kumar and S. Ravi for the Respondent.
1. This
petition under section 482 of the Code of Criminal Procedure (‘the Code’)
seeks quashing of the order dated 28-1-2000 passed by Special Judge for
Economic Offences in Crl. M.P. No. 139 of 2000 in C.C. No. 3 of 2000 under
which the learned Judge directed the issue of search warrant for searching the
premises of registered office of accused No. 4 - Spectrum Power Generation
Limited for seizing the documents mentioned in the petition. The respondent No.
1 herein is the complainant in the said CC, which was taken on file by learned
Special Judge for the offences under section 409 of the Indian Penal Code (IPC)
and sections 299, 300 and 629A of the Companies Act, 1956.
2. The parties shall be referred to as arrayed
in the complaint.
3. The
complainant in support of his petition for issuance of search warrant has filed
his affidavit. It is stated that the complainant filed a complaint against A1
to A4 for the offences under sections 409 and 411 of IPC and also for the
offences of contravention of sections 297, 299 and 300 of the Companies Act and
the same was taken cognizance and summons were issued to the accused. It is
stated in the affidavit that in order to prove the said offence for
contravention of offences under sections 299 and 300, it is necessary to show
that there was no resolution as required under the Companies Act, which
constitute an offence. For this purpose, the minutes book of Accused No. 4
company for the period November, 1992 to December, 1996 are necessary. Similarly,
it is stated that the cash book of A4 company for the period November, 1992 to
March, 1996 along with the correspondence, vouchers and bank statements were
also necessary to prove the offences under sections 409 and 411 of IPC. It is
stated that cash book of Kris Engineers together with correspondence, vouchers
and bank statements are also necessary to prove the offence against the accused
in the above case. It is stated that these documents are in the custody of the
accused and they may not produce the same without altering or tampering with
the said documents even if summons are issued to produce the same. It is stated
that general search warrant is necessary to search the premises of the
registered office of A4 company
situated at the address given in the affidavit. It is stated that in the same
premises, office of Kris Engineers, registered partnership firm was also
located.
4. On
these allegations, the search warrant has been issued by the learned Special
Judge for causing production of minutes book of Spectrum Power Generation
Limited from 1992 to till to date.
5. Before
taking up the contentions on either side, it may be briefly mentioned as to the
nature of the complaint in which the search warrant has been ordered.
6.
Respondent No. 1 herein is the complainant, who is a shareholder of the
accused No. 4 company and petitioners 1 to 4 herein are accused Nos. 1 to 4
respectively. The sum and substance of the complaint is that A1 to A3 are the
Directors of Accused No. 4 company and they entered into a sham contract with
Kris Engineers, a partnership firm of which A2 and A3 are the only partners
and that the alleged contract with Kris Engineers was entered into in
violation of various provisions of the Companies Act punishable under the
relative provision and section 629A of the Companies Act and this Contract
itself was a mere device for transferring the funds of accused No. 4 company to
Kris Engineers of which A2 and A3 are the partners who in turn have transferred
the said amount to the account of accused No. 1. Thus, the allegation is that
various provisions of the Companies Act have been contravened which constitute
offences and that a sum of Rs. 50 lakhs has been misappropriated by the
accused. It may be stated that the search warrant was issued ex parte before
appearance of the accused in the case. This order issuing the search warrant is
challenged on various grounds.
7. It
is firstly stated that the first accused being the complainant in another CC
No. 24 of 1994 on the file of the Special Judge for Economic Offences,
Hyderabad attended the court along with his counsel and during his presence the
application for search warrant filed by the complainant was called. The accused
No. 1 having come to know about the case against him, his counsel represented
to the court that notice may be ordered to the accused and they may be
permitted to file counter and may be heard. It is stated that the court passed
over the matter to hear the counsel for the complainant. The first accused’s
counsel waited till 3 p.m. but the matter was not called and neither the complainant
nor her counsel was present. As the learned Judge was in his Chambers, the
first accused’s counsel left the premises and on 29-1-2000 when the first
accused’s counsel verified the court
diary, it came to light that the petition to appoint Commissioner was allowed
but no details have been mentioned in the said diary. On that day, the first
accused’s counsel filed a petition for certified copies and on verification of
the said copies, it came to light the issuance of search warrant in respect of
the documents mentioned therein. This grievance about the order of search
warrant having been issued without hearing the petitioner does not assume any
significance inasmuch as notice was not ordered in the petition and the order
in question was passed ex parte. Mere chance presence of the petitioner’s counsel
in the court and his having mentioned the matter to the judge of which there is
no record does not in itself lead to any infirmity in the order passed.
8. The
order issuing the search warrant is now challenged mainly on the ground that
the learned Special Judge in the facts and circumstances of the case had no
jurisdiction to issue the search warrant and that at any rate the search
warrant issued is contrary to the relevant provisions in the Code of Criminal
Procedure.
9. It
is urged that in view of the provision in section 627 of the Companies Act, it
is a Judge of the High Court who can pass orders for search and inspection of
records or for production of the relevant records from the custody of a company
in the case where an officer of a company is alleged to have committed an
offence in connection with the management of the company’s affairs. Section
627 of the Companies Act is extracted below :
“627. Production and inspection of books where
offence suspected—(1) If, on an application made to a Judge of a High Court in
chambers by the Public Prosecutor of the State or by the Central Government, or
by a company prosecutor appointed under section 624A, it is shown that there is
a reasonable cause to believe that any person has, while he was an officer of a
company, committed an offence in connection with the management of the
company’s affairs, and that evidence of the commission of the offence is to be found in any books
or papers of or under the control of the company, an order may be made—
(i) authorizing any person named therein to inspect the said books
or papers or any of them for the purpose of investigating, and obtaining
evidence of the commission of, the offence; or
(ii) requiring the managing agent, secretaries and treasurers or
manager of the company or such other officer thereof as may be named in the
order, to produce the said books or
papers or any of them to a person, and at a place and time, named in the order.
(2) Sub-section (1) shall apply also in relation to any books or papers
of a person carrying on the business of banking so far as they relate to the
company’s affairs, as it applies to any books or papers of or under the control
of the company, except that no such order as is referred to in clause (ii)
thereof shall be made by virtue of this sub-section.
(3) No appeal shall lie from the decision of a
Judge of the High Court under this section.”
10. On
the basis of this provision, it is contended by Sri B. Audinarayana Rao, the
learned counsel for the petitioner that inasmuch as the accused in this case
are sought to be prosecuted for various offences of contravention of the
provisions of the Companies Act and for misappropriation of company funds,
which are offences in connection with the management of the company’s affairs,
an order in the nature of search and seizure for production of records could
only be passed under section 627 and that section 94 of the Code cannot be
pressed into service in such circumstances.
11. The
learned counsel for the respondents Sri C. Padmanabha Reddy on the other hand
contends that there is nothing in the language of the section 627 of the
Companies Act to show that it abrogates the provisions in section 94 and that a
Judge of the High Court is vested with exclusive jurisdiction to issue warrant
in the nature of search and seizure and production of records from the office
of the company where an officer of a company is sought to be prosecuted for the
offences relating to the management of a company. It is pointed out that
section 627 of the Companies Act does not start with a non obstante clause
which according to the learned counsel is significant inasmuch as certain
provisions in the same part 13 of the Act, where the legislature wanted to
exclude the operation of the other provisions, there is a non obstante clause.
Attention is invited to sections 624, 624A, 624B of the Companies Act in this
regard.
12. Absence
of non obstante clause may not always be conclusive to determine the question
but is a relevant circumstance in interpreting the provision.
13. Here,
a reading of section 627 of the Companies Act would make it clear that under
this provision, an application can be made to a judge of a High Court only by
public prosecutor of the State or by the Central Government or by a company
prosecutor appointed under section 624A of the Companies Act. Access to file an
application before a Judge is obviously not available to a shareholder who
seeks to prosecute an officer of the company for an offence committed in
connection with the Management of the company. It is therefore obvious that the
provisions in section 627 of the Companies Act do not apply to the facts of the
case inasmuch as in this case a shareholder is seeking to prosecute the
directors of the company. It may be mentioned that even assuming that section
627 has created a special jurisdiction or conferred a special power or provided
for any special form of procedure for making an application before a judge of
the High Court for issuing order in the nature of search and seizure or production of the records within the meaning
of section 5 of the Code, it merely implies that such a special jurisdiction,
special power or special procedure can validly be enforced without infringing
the provisions of section 5 of the Code inasmuch as there is no specific
provision which can be said to affect the said special jurisdiction etc. But
the provisions in section 627 cannot have the effect of abrogating the
provision in section 94 of the Code inasmuch as section 627 can be invoked only
when conditions prescribed therein are satisfied and section 627 does not permit a shareholder to make an
application to a Judge of High Court in chambers. The powers and procedure
relating to investigation, enquiry or trial of offences under the Indian Penal
Code shall be in accordance with the provisions of the Code as contemplated
under sub-section (1) of section 4 of the Code. Inasmuch as section 627 cannot
be construed as a provision enacted for regulating the manner or place of
investigation, inquiring into, trying or otherwise dealing with the offences
under the Companies Act, the provision under sub-section (2) of section 4 of
the Code will come into play and all provisions in the Code in respect of
investigation, enquiry or trial etc. shall be applicable. Issuing of search
warrant is undoubtedly one of the modes of investigation or enquiry into an
offence. Section 627 enables special access to public prosecutor of a State,
Central Government and Company prosecutor to make an application to a Judge of
High Court for an order for production of records from the specified officers
of the Company. It excludes a shareholder from such a privilege.
14. In
the result, I have no hesitation in holding that section 627 is not a
substitute for issuing a search warrant and cannot have the effect of annulment
of section 94 of the Code in respect of investigation, enquiry or trial of
offences committed by the officers of the company in connection with the management
of the company.
15. It
is further contended by Sri B. Audinarayana Rao, the learned counsel for the
petitioner that the order issuing the search warrant is without jurisdiction
for another reason and amounts to abuse of process of the court. It is
contended that under section 91 of the Code whenever any court or any
officer-in-charge of a police station considers that the production of any document or other thing is necessary
or desirable for the purposes of any investigation, inquiry, trial or other
proceedings under this code by or before such Court or officer, such court may
issue a summons, and such officer a written order, to the person in whose
possession or power such document or thing is believed to be, requiring him to attend and produce
it, or to produce it, at the time and place stated in the summons or order. It
is contended that such summons could not be issued in respect of documents in
the custody of an accused as held by the Supreme Court. The contention is where
summons could not be issued under section 91, search warrant under section
93(1)(a) of the Code cannot be issued on the ground that summons or orders
issued under section 91 were not likely to be complied with.
16. The
impugned order passed by the learned Special Judge would show that it is
purported to have been issued on the finding that the learned Judge had reason
to believe that the persons against whom search warrant was to be issued were
not likely to produce the documents mentioned in the petition if a summons under
section 91 for production of records was issued. This observation obviously
entails that the search warrant has been issued under section 93(1)(a) of the
Code which reads as follows :
“93. When search-warrant may be issued—(1)(a)
Where any court has reason to believe that a person to whom a summons or order
under section 91 or a requisition under sub-section (1) of section 92, has
been, or might be, addressed, will not or would not produce the document or
thing as required by such summons on requisition, or”
17. Section
91 empowers any court or police officer or officer-in-charge of a police
station, when it is considered that the production of any document or other
thing is necessary or desirable for the
purposes of any investigation, enquiry, trial or other proceedings under the
criminal procedure code by or before such Court or officer, to issue a summons
or a written order to the person in whose possession or power such document or
thing is believed to be, requiring him to attend and produce it, or to produce
it at the time and place stated in the summons or the order.
18. The
contention is that search warrant issued under section 93(1)(a) is illegal
inasmuch as summons or an order under section 91 could not have been issued
against the petitioners who are the accused as it violates article 20(3) of the
Constitution of India. This contention is supported by the judgment of the Supreme
Court in the case of State of Gujarat v. Shyamlal. It has been clearly held in
this case that section 94 of CR. PC, 1898, equivalent of which is section 91,
does not apply to an accused.
19. However,
after the impugned order was passed, it is relevant to note that along with
this petition for quashing the said order under which the learned Special Judge
ordered search warrant, another criminal petition i.e., Crl. P. No. 874 of 2000 has been filed in
this court for quashing the proceedings in the relative C.C. No. 3 of 2000 on
the file of the Special Judge for Economic Offences, Hyderabad, which has been
separately disposed of. It has been held in the said criminal petition seeking
quashing of the criminal proceedings against the petitioners that as far as
Spectrum Power Generation Limited, which
has been arrayed as accused No. 4 is concerned, there is no material to
proceed against the said company for the offences alleged in the complaint and
the criminal proceedings in respect of that company - A4 have been quashed.
20. Thus,
as of now, when this question has come up for consideration, it has to be
proceeded on the assumption that the company-A4 is no longer an accused in the
relative criminal proceedings.
21. It
has therefore become necessary to examine the validity of the order of the
learned Magistrate issuing search warrant in the light of the fact that it is directed
against the company which was arrayed as accused No. 4 which can no longer be
deemed to be an accused in that case. The affidavit filed on behalf of the
petitioner in support of issuance of search warrant specifically prays the
court to issue a search warrant for causing production of the documents
mentioned therein ‘by searching the premises of the registered office of
Spectrum Power Generation Limited’. Thus, in substance the search warrant was
sought against the said company for searching its premises. Inasmuch as it has
been held that there is no material to proceed against the company which is
arrayed as accused No. 4 in respect of the alleged offences, the lack of power
under section 91 for issuance of summons or order for production of documents
in question as against the said company (A4) cannot be pleaded as a ground for
invalidating the search warrant issued.
22. It
is pertinent to mention here that documents relating to the said company - SPGL
sought to be produced by search are the minutes book for the period from 1992
to till to date and cash book of the said company from November, 1992 to March,
1996 together with corresponding vouchers. Petitioners 1 to 3 (Accused Nos. 1
to 3) who are said to be the managing director and directors of the company
cannot be said to have personal custody of these documents nor is there any
such allegation in the affidavit filed on behalf of the petitioner. Thus, the
contents of the affidavit of the petitioner and the circumstance relating to
the custody of documents of an incorporated company would show that the search
warrant was in fact sought to be directed against the company as such and not
accused Nos. 1 to 3 and inasmuch as the said company is not an accused in view
of the quashing of the proceedings against the said company, the search warrant
must be deemed to have been issued against the company for production of the
documents in its custody and not against Al to A3. The order of the learned
Special Judge specifically directs the search of the premises of the company
(Accused No. 4) as seen from the following in para 2 :
“Sri M. Jagadish Kumar, Advocate is appointed
as Commissioner to search the premises of the registered office of M/s.
Spectrum Power Generation Ltd. (A4) situated at premises No. 6-28 and 6-29,
near LB Nagar Municipal Office, Saroornagar, Hyderabad. . . .”
23. This
makes it abundantly clear that the search warrant was in fact directed against
the company for search of the premises of its registered office. The learned
Special Judge has recorded his finding of satisfaction for existence of grounds
for issuing search warrant in the
following words :
“The material on record disclose that this
court has reason to believe that the persons against whom search warrant to be
issued are not likely to produce the documents mentioned in the petition which
are in their possession by invoking the provisions of section 91 of CR. PC. I
am satisfied that the issue of search warrant is necessary and the requirement
of the law for the issue of warrant are present. Hence issue search warrant as
required.”
24. In
the light of what has been mentioned above as to the contents in the affidavit
filed on behalf of the petitioner and the order passed by the learned Judge as seen
from paras quoted above, the recording of the reasons by the learned Judge to
believe that the persons against whom search warrant has been issued were not
likely to produce the documents mentioned in the petition had summons been
issued must be deemed to refer to the SPGL, then arrayed as accused No. 4,
inasmuch as the warrant itself was directed against the said company.
25. It
is true that when the impugned order was passed by the learned Special Judge,
the said company was very much arrayed as accused No. 4 before him and in that
view of the matter, it is possible to contend that the order passed by the
learned Special Judge was illegal as it could be said to have been issued on
the basis that summons could have been
issued under section 91 against accused No. 4 also which in the light of
the judgment of the Supreme Court cited above could not have been done as it
violates article 20(3) of the Constitution of India. But, this distinction
loses its significance in view of very clear conceding on the part of the
learned counsel for both the parties during the hearing of the two connected
criminal petitions that there was no material to proceed against accused No. 4
and that cognizance of offence as against accused No. 4 was unwarranted and in
view of quashing of proceedings by this court against accused No. 4.
26. The
validity of the order has to be examined in the light of the findings arrived
at by this court and not necessarily on the facts as erroneously assumed by the
trial court. Thus, it has to be held that search warrant was issued in accordance with law.
27. The
learned counsel for the respondents Sri S. Ravi, further, urges that though the
learned Special Judge is purported to have issued search warrant under section
93(1)(a) inasmuch as the grounds cited in support of the order is that if
summons under section 91 were to be issued, it was likely that they would not
be complied, but on facts it is urged that the impugned order can be sustained
in the light of the provisions under section 93(1)(c) also.
28. The
contention is that the affidavit filed by the petitioner in support of the
petition specifically mentions in para 7 that a general search warrant is
necessary to search the premises of the registered office of accused No. 4
company. Thus, the petitioner prayed for issuance of search warrant under
section 93(1)(c) also. Under section 93(1)(c), the court may issue a search warrant
when it considers that the purpose of enquiry, trial or other proceedings under
the code will be served by general search or inspection to search, seize and
produce the documents mentioned by the petitioner.
29. It
has been held by the Supreme Court in the case of V.S. Kuttan Pillai v.
Ramakrishnan that when such a general search warrant was issued, in execution of it, the premises
even in possession of the accused can be searched and the documents can be
seized irrespective of the fact that the documents may contain some statements
made by the accused upon personal knowledge, which when proved may have the
tendency to incriminate the accused.
30. Thus,
the legal position is that such a search and seizure pursuant to search warrant
issued under section 93(1)(c) cannot be considered as subjecting the accused to
compulsion to incriminate himself. Such a seizure and search obviously is not
directed against the accused with a view to compel him to do anything like
producing a document or making a statement. In fact, he is expected to do
nothing. He can be a mere spectator of search proceedings. In fact, he is free
to leave the place and be absent during the proceedings of search. The mere
fact that the accused is in occupation of the premises which is subjected to
search and even if such search resulted in seizure of documents which may be
attributable to the personal knowledge of the accused which may have the
tendency to incriminate him, such search cannot be held to violate the
constitutional guarantee against self-incrimination available to the accused
under article 20(3) of the Constitution of India.
31. The
facts in the case of V.S. Kuttan Pillai (supra) are that a search warrant was
issued for searching the premises used as an office by an institution. The
Supreme Court observed that the place will be in possession of an institution.
The office bearers of the institution which was a ‘Sabha’ were accused of an
offence and the documents and the books of account were required for the
purpose of trial against the office bearers of the institution. It was observed
that the office premises could not be said to be in possession of the
individual accused but stricto senso it would be in possession of the
institution. Books of Account and other documents of the institution could not
be said to be in personal custody of the office bearers of the institution but
it must be held to be in possession of
the institution and lying in the office of the institution. It has been held
that search of an institution under the authority of a general search warrant
can easily be sustained under section 93(1)(c).
32. The
description of the premises of the nature of the institution referred to by
the Supreme Court in the above case is equally applicable to a corporate
office. It may be mentioned that the corporate offices are run in sprawling
premises. There is nothing to show that A1 to A3 were having personal custody
of the documents sought to be seized during search. The petitioner has not
furnished any information as to the specific place in the vast premises of the
corporate office where those documents were lying. Under these circumstances,
though the learned Special Judge has purportedly issued search warrant under
section 93(1)(a), the facts and circumstances of the case appear to justify the
issuance of the general search warrant under section 93(1)(c) also.
33. The
important allegations as stated in the complaint against the accused 1 to 3 are
that they have contravened certain provisions of the Companies Act which is
punishable under the relative provisions and section 629A of the said Act. It
is obvious that information about such contravention which includes absence of
a resolution authorizing the accused to enter into a contract, omission on the
part of the accused to inform their personal interest in the contract etc.
could be secured from the records maintained by the company like minutes books
and the accounts books. The crucial allegation against the petitioners-accused
1 to 3 are that they entered into a sham contract with Kris Engineers and used
it as a device for siphoning the funds of the SPGL Company to Kris Engineers
and ultimately to A1 to A3. Account books of the company are relevant material
which would furnish evidence in respect of this allegation. These documents
would obviously be available in the registered office of the company.
34. Considering
these circumstances, the test of probable cause both as to making out an
offence and as to the availability of the documents sought to be seized by
search must be held to have been made out. As to the requirement of
particularity and specificity, under sub-section (1)(a) of section 93, a
search warrant can be issued when requirement of section 91 could not have been
complied with and a warrant could be issued to search a specific place
belonging to the person to whom summons could have been issued. Whereas under
section 93(1)(b), search warrant could be issued where the required document or
thing is not known to the court to be in possession of any person but
obviously when the place is known.
Search warrant which could be issued under section 93(1)(c) is apparently an exception to the requirement of
particularity or specificity inasmuch as a general search warrant could be
issued without specifying the particular
place or the name of the person in whose custody the document is said to be
lying. The circumstances of the case as noted above would show that there was a
justification for issuing a general search warrant also as contemplated under
section 93(1)(c).
35. Taking
any view of the matter, the impugned order issuing the search warrant must be
held to be in accordance with law.
36. It
may however be noted that the above findings must be held to be only for the
purpose of record inasmuch as the order issuing the search warrant is
specifically challenged. It is necessary
to mention here that after this petition was filed, this court passed an
interim order staying the execution of the search warrant. Under the interim
orders, the respondents were directed to produce the relevant records into this
court. In fact, that order has been complied with and the relevant records
which were sought to be collected by the impugned search operation have been
produced before the court and are lying in the custody of the Registrar
(Judicial) of this Court. Under the circumstances, the question of execution of
the search warrant issued by the learned Special Judge which has been stayed
under the interim orders of this court does not arise.
37. Under
these circumstances, it is directed that the records produced in pursuance of
the interim orders dated 31-1-2000 in Crl. M.P. No. 387 of 2000 which are now
lying in the custody of the Registrar (Judicial) shall be transmitted under a
sealed packet to the court of Special Judge for Economic Offences, Hyderabad
and the learned Special Judge shall retain the documents as part of the record
in the case and it shall be open to the parties to seek the use of these
documents in such a manner as is permissible under law during the trial of the
case.
38. With this direction, this
petition is closed.