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Criminal Reference No. 411 of 1957, decided on 15th July 1958.

, S.494‑District Magistrate sending letter to trial Court stating he has allowed withdrawal of case‑Disapproved.

, S. 494‑Public Prosecutor in application for withdrawal giving no reasons--- Government's instructions not a sufficient reason to induce consent of Magistrate.

, S. 281 (3)‑Whether and when applicable to company itself.

Section 281 of the Companies Act, 1913, applies in terms only to officers of the company and not to the company itself, but if the agent of the company is held to have acted honestly and reasonably, then the company which only acts through its agents must also be deemed to have acted similarly and section 281 would be equally applicable to the company itself.

H. T. Ramond, P. P.‑for Appellant.

Mahmood for Respondents Nos. 1 and 2.

Dates of hearing: 13‑6‑58 and 15‑7‑58.

---‑ This is a reference by the learned Sessions Judge, Karachi drawing our attention to the fact that the Sub -Divisional Magistrate, Nazimabad allowed the withdrawal of the prosecution for an offence under section 277 (1) of the Companies Act against the accused.

The Public Prosecutor, in applying for the consent of the Court to the withdrawal of the case, has stated that he had been instructed accordingly by Government. The Magisterial record contains a copy of an order of the District Magistrate which has been addressed to the S. D. M. Nazimabad in which the District Magistrate states he has read a letter from the Under Secretary to the Government of Pakistan, Ministry of Commerce, Karachi requesting that the prosecution should be withdrawn, and has read a letter from the Registrar, Joint Stock Companies, Karachi. It is of course wrong that the District Magistrate should send a letter to the S. D. M. stating that he has allowed the withdrawal of the case. It is true that a copy was also sent to the Under Secretary to the Registrar, Joint Stock Companies and the A. P. P., and we presume that the District Magistrate did not intend to take away the judicial discretion of the trial Magistrate. The A. P. P. in his application for withdrawal gave no reasons for his application except that he had so been instructed by Government. This again was a mistake. The mere fact that he had been instructed by Government was not a sufficient reason to induce the consent of the Magistrate. This application was dated the 2nd of February 1957 and the Magistrate adjourned the case in order that the A. P. P. might move the District Magistrate for withdrawal. Then on the 13th May the A. P. P. repeated the application under sec tion 494, Cr. P. C. stating that the State does not wish to proceed with the matter and that the District Magistrate had allowed the withdrawal as had been intimated by the District Magistrate to the Court. The learned Magistrate then passed an order stating

"It is a matter relating to the Companies Act. The offence is not a crime."

He accordingly consented to the withdrawal. The matter, how ever, does not rest there. There is on record the statement of the Branch Secretary, who was one of the two accused, and he has stated that the company was established first in East Pakistan and had filed all the necessary documents there, that in 1952 it opened a branch office at Karachi and in 1954 it made the Karachi office its principal office and this was notified to the Registrar, Joint Stock Companies. No reply to this letter or action thereupon was taken by the Registrar. Again in 1955 he notified the Registrar of the change of the address of the principal place of business, and it was not till March 1956 that the Registrar inquired if the company was registered at Karachi, and by notice dated 12th April 1956 called upon them to show cause why a prosecution should not be instituted. The Branch Secretary continued that they have been under the impression that the law in India that if a certificate of filing has been obtained in one Province it is not necessary to obtain another certificate on establishing a place of business in another province and that they believe that the same was the law in Pakistan.

We see no reason why the Magistrate should not have acted upon this letter. In other words, he considered that, as section 281 states, he could give relief against an action which was neither dishonest and unreasonable and that he had justification in allow ing the withdrawal of the case.

Section 281 applies in terms only to officers of the company and not to the company itself, but we think that if the agent of the company is held to have acted honestly and reasonably, then the company which only acts through its agents must also be deemed to have acted similarly and that would be a sufficient reason to allow the withdrawal of the prosecution under section 494. Cr. P. C.

The learned Sessions Judge has stated that the A. P. P. by mentioning the fact that the withdrawal had been allowed by the District Magistrate had acted with grave impropriety. . If the motive of the A. P. P. was to influence the trial Court by insinu ating that the District Magistrate wished the trial Court to proceed in this way, then an impropriety does occur. But the A. P. P. may also have been actuated by the motive that he wished to show that he had followed the ordinary course of business viz. that he had consulted the District Magistrate before the withdrawal of the case. We understand that Public Prosecutors have standing instructions that they should always consult the District Magistrate, who is, we think the client, of the Public Prosecutors and the Public Prosecutors therefore mention the fact that they have consulted the District Magistrate.

K. B. A. Reference answered.

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