The Calcutta High Court has clarified that the representation of a company during an inquiry or trial must not be confused with the liability of a company in case the offence is committed by the company. The Court thus ruled that the complainant is not empowered to compel the petitioner to represent the accused company when the company is a juristic person, and on the date of launching the prosecution, the petitioner had severed all ties with the accused company.
Essentially, the Court explained that when a company went into liquidation during the pendency of proceedings or before that, it is the official liquidator and not the Director, who is legally entitled to represent the company, but the liability of the Director, in committing the offence, shall remain in accordance with PMLA and his exemption will be restricted only from the liability to represent the company who has been arrayed as an accused.
The Court pointed out that the petitioner cannot be compelled to plead on behalf of the accused company under Section 246(2) of the CrPC, and the petitioner also cannot be compelled to answer the questions under Section 311 CrPC unless he is appointed by the company/accused to represent in an inquiry or trial.
In a specific case where no summons has been issued or served at the registered office of the Company, the Court stated that Section 70 of the PMLA is in no way in conflict with Section 305 of CrPC or Section 141 of the NI Act, and it is the corporation within the meaning of Section 305 CrPC and as such the said company alone can appoint a representative for facing the prosecution.
A Single Judge Bench of Justice Ajoy Kumar Mukherjee reiterated the established legal principle that a company is a separate and distinct legal person from its directors and shareholders. The Bench observed that neither the prosecution nor the court can compel a particular person to represent a company. It is the prerogative of the company, upon being summoned, to nominate a person of its choice to represent it in the proceedings.
On the interplay between PMLA and CrPC, the Bench rejected the ED’s argument that the PMLA, being a special statute, overrides the CrPC on the matter of representation. The Bench drew a clear distinction between the liability of a director for an offence committed by the company and the procedural requirement of representation of the company during trial.
Briefly, the petitioner, Suman Chattopadhyay, was arraigned as accused in a complaint case initiated by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act, 2002 (PMLA). He was also named as the director representing two companies: Disha Production and Media Private Limited, and Akdin Media Private Limited.
The petitioner’s primary grievance was being compelled to represent the accused, i.e., Disha Production & Media, despite having no association with the company since his resignation from its directorship. He argued that a company is a separate juristic entity and cannot be represented by a specific individual unless duly authorised by the company itself under Section 305 of the Code of CrPC. The ED, however, alleged that the petitioner was directly involved in the concealment and layering of proceeds of crime from the Sarada Group of companies through his companies, Disha and Akdin.
Appearances:
Advocates Somopriya Chowdhury, Koushik Dey, Iram Hassan, S. Sarawgi, and M. Majumder, for the Petitioner
Advocates Debjani Roy and Steven S. Biswas, for the Respondent
