Madras High Court
M/S. Dalmia Bharat Ltd vs The Assistant Registrar Of Companies on 26 August, 2022
Author: G.K.Ilanthiraiyan
Bench: G.K.Ilanthiraiyan
Crl.O.P.No.16721 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 26.08.2022
CORAM:
THE HONOURABLE MR. JUSTICE G.K.ILANTHIRAIYAN
Crl.O.P.No.16721 of 2021
and Crl.M.P.Nos.9139 & 9140 of 2021
1. M/s. Dalmia Bharat Ltd.,
(Formerly known as Odisha Cement Ltd.)
Rep by its Authorized Signatory,
R.Deepak,
Dalmiapuram,
Thiruchirapalli,
Tamil Nadu – 621 651
2. Yadu Hari Dalmia ...Petitioners
-Vs-
The Assistant Registrar of Companies,
Tamil Nadu, Chennai,
Shastri Bhawan II Floor,
No.26, Haddows Road,
Chennai – 600 006. ... Respondent
Prayer: Criminal Original petition filed under Section 482 of Code of
Criminal Procedure, to call for the records/complaint in E.O.C.C.No.97 of
2019 on the file of the learned Additional Chief Metropolitan Magistrate
Economic offences-II, Egmore, Chennai and quash the same.
For Petitioners : Mr.A.Ramesh, Senior Counsel
For Mr.P.J.Rishkesh
For Respondent : Mr.D.Simon
Central Government Standing Counsel
https://www.mhc.tn.gov.in/judis
Page 1 of 12
Crl.O.P.No.16721 of 2021
ORDER
This petition has been filed to quash the proceedings in E.O.C.C.No.97 of 2019 on the file of the learned Additional Chief Metropolitan Magistrate Economic offences-II, Egmore, Chennai, thereby taken cognizances for the offences under Section 185(2) of the Companies Act, 2013 (herein after referred to as “the Act”), as against the petitioners.
2. The respondent filed complaint under Section 203 of the Act, as against the petitioners and others for the offence punishable under Section 185(2) of the Act. The crux of the complaint is that the petitioners company viz., M/s.Dalmia Bharat Limited was inspected under Section 206 of the Act, by an Officer authorized by the Central Government. He had observed that the company without obtaining the previous approval of the Central Government had made loan to M/s.Dalmia Bharat Sugar & Industries Limited, in which the Directors of the company are interested as common directors. The details of loans given were also furnished in the balance sheet as at 31.03.2014 to 31.03.2015 under the related party transaction. Thus, the provisions of Section 185 of the Act, have been violated by the petitioners company. https://www.mhc.tn.gov.in/judis Page 2 of 12 Crl.O.P.No.16721 of 2021
3. The learned Senior Counsel appearing for the petitioners submitted that the complaint itself barred by limitation and as such it is liable to be quashed. The limitation starts from the date of offence or knowledge and if applying the same principle as contemplated under Sections 468 & 469 of Cr.P.C, the complaint is barred by limitation. Section 469 of Cr.P.C., which provides that the limitation in relation to offence shall commence on the date of offence or the first day on which the offence comes to the knowledge of such person aggrieved by the offence. The respondent violates the very foundation of law of limitation which says that a party cannot be made to suffer harassment after years together of period of expiry of limitation and is against the settle proposition of law.
3.1. In support of his contention, he relied upon the judgment of this Court reported in (2007) 3 CTC 650 in the case of N.Kumar Vs. M.O.Roy, Assistant Director, in which this Court held as follows :-
“9.8. At this juncture, it is relevant to note that there is absolutely no provision available under the Companies Act contemplating prior sanction for initiating prosecution for the offence under Section https://www.mhc.tn.gov.in/judis Page 3 of 12 Crl.O.P.No.16721 of 2021 207 of the Act. The contention of the learned ACGSC to the effect that the Central Government had the knowledge about the commission of the offence only on the basis of the report of investigation dated 01.12.2005 and thereafter, the complaint was filed after obtaining sanction order from the Ministry of Company Affairs dated 01.05.2006 is unacceptable.
It is relevant to note that as early as on 23.10.2003 itself the Government passed an order to investigate into the affairs of the company by appointing Mr.Sharad Krishan Sharma as Inspector to investigate into the affairs of the company, viz., DSQ Software Limited. Therefore, the Government could have had the knowledge even as early as in the year 2003 itself about the alleged commission of the offence by the said company under Section 207 of the Act as per the document dated 23.10.2003 produced by the learned ACGSC. As already pointed out, there is no provision available under the Companies Act contemplating the prior sanction for initiating prosecution for the offence under Section 207 of the Act. It is also rightly contended by the learned senior counsel for the petitioner that the knowledge of the alleged commission of the offence under the Companies Act must have come to the notice of https://www.mhc.tn.gov.in/judis Page 4 of 12 Crl.O.P.No.16721 of 2021 the Central Government on 19.09.1996, viz., the date of declaration of dividend.” 3.2. The learned Senior Counsel also relied upon another judgment of this Court reported in 2014 SCC OnLine Mad 10637 in the case of Brajesh Sharma & ors Vs. M.O.Roy, which held as follows:-
“7. Of course as per Section 470 of Cr.P.C., as stated in paragraph 6 of the counter, the period spent on stay order has to be excluded while computing the period of limitation. In this case, the stay was ordered on 23.10.2003 and it was vacated on 27.04.2005. This period has to be necessarily excluded while computing the period of limitation. But after 27.04.2005, the complaint was not filed within six months, the reason stated is that some time was taken to complete the investigation and to get permission from the Central Government.
8. The learned counsel appearing for the respondent would submit that this period has to be 5 excluded while computing the period of limitation as per Section 470(3) of the Code of Criminal Procedure. For better understanding, let us look into the said provision, which reads as follows:
“Section 470(3): Where notice of prosecution for an offence has been given, or where, under any https://www.mhc.tn.gov.in/judis Page 5 of 12 Crl.O.P.No.16721 of 2021 law for the time being in force, the previous consent or sanction of the Government or any other authority is required for the institution of any prosecution for an offence, than, in computing the period of limitation, the period of such notice or, as the case may be, the time required for obtaining such consent or sanction shall be excluded. Explanation.—In computing the time required for obtaining the consent or sanction of the Government or any other authority, the date on which the application was made for obtaining the consent or sanction and the date of receipt of the order of the Government or other authority shall both be excluded.”
9. Referring to the said provision, the learned counsel submitted that in the instant case, the 6 Central Government gave permission only on 01.05.2006 and the complaint was launched within six months from the said date and thus the complaint is not barred by limitation.
10. In my considered opinion, the said contention cannot be accepted at all. The consent or sanction as has been referred to in sub-clause 3 of Section 470 of Cr.P.C. relates to consent or sanction which is obtained under the Statute itself. Here in this https://www.mhc.tn.gov.in/judis Page 6 of 12 Crl.O.P.No.16721 of 2021 case, to prosecute a person for offence punishable under Section 629(A) of the Companies Act, neither any consent nor any sanction from the Central Government is required. It may be true that on the administrative side permission is obtained from the Central Government to launch prosecution, but that permission cannot be equated to a consent or sanction to be obtained statutorily as referred to under sub-section 3 of Section 470 of the Cr.P.C.
Therefore, this period cannot be excluded at all from the period of limitation. If it is done, obviously the complaint is barred by limitation because the complaint was not launched within six months atleast from 27.04.2005, the day when stay order was vacated.” Therefore, he prayed for quashment of the present proceeding.
4. Per contra, the learned Standing Counsel appearing for the respondent filed counter and submitted that in lieu of various complaints against the petitioners received by the respondent, an inspection under Section 206(5) of the Act was initiated by communication dated 01.07.2016 by the Ministry of Corporate Affairs. During the inspection, it was found that the petitioners did not act in due compliance of the https://www.mhc.tn.gov.in/judis Page 7 of 12 Crl.O.P.No.16721 of 2021 provisions of Section 185 of the Act. Therefore, they liable to be punished under Section 185(2) of the Act. Thus, the respondent issued show cause notice on 14.06.2018 and on receipt of the reply found that it was not satisfactory. Therefore, the respondent lodged the impugned complaint before the concerned Court for the offence punishable under Section 185(2) of the Act. It is a compoundable offence, but neither the petitioners nor other accused persons took any steps to compound the said offence, even though the petitioners are well aware of the offence committed by them.
4.1. He further submitted that after inspection, a report was sent to the Ministry of Corporate Affairs comprising the observations made by the Inspecting Officer after examining the relevant documents and reply of the petitioners under due procedure of law. Thereafter, the show cause notice was issued as contemplated under Section 185 of the Act, on 14.06.2018. On receipt of the same, the petitioners company had sent reply dated 22.06.2018. According to the provision under Section 470 of Cr.P.C., the bar on limitation elucidated in Section 468 of Cr.P.C., may be excused if the prosecution exceed the limitation period due to the requirement of sanction or consent from concerned authority. In the https://www.mhc.tn.gov.in/judis Page 8 of 12 Crl.O.P.No.16721 of 2021 present complaint, the respondent lodged complaint after obtaining sanction as such there is a delay. Therefore, the complaint is maintainable and not barred by limitation. Hence, he prayed for dismissal of the present petition.
5. Heard Mr. A.Ramesh, learned Senior Counsel appearing for the petitioners and Mr.D.Simon, learned Central Government Standing Counsel appearing for the respondent.
6. The only point raised in this case for consideration is that whether the complaint lodged by the respondent is barred by limitation or not? In the present case the show cause notice was issued on 14.06.2018 for which the petitioners sent reply on 22.06.2018. Thereafter, the respondent lodged complaint on 12.04.2019.
7. This Court repeatedly held in various judgments that there is absolutely no provision available under the Act contemplating prior sanction for initiating prosecution of the offence under the Act. According to the respondent, there was a delay for obtaining sanction from the authority concerned and as such the complaint was lodged belatedly. https://www.mhc.tn.gov.in/judis Page 9 of 12 Crl.O.P.No.16721 of 2021
8. Further the respondent had knowledge about the commission of the offence by the petitioners company as early as on 14.06.2018. Since, there is no provision available under the Act contemplating the prior sanction for initiating prosecution for the offence under the Act, the knowledge of the alleged commission of offence must have come to the notice of the Central Government. The consent or sanction as has been referred to in sub-clause 3 of Section 470 of Cr.P.C., relates to consent or sanction which is obtained under the Statute itself.
9. Further in the present case, under the Act neither any consent nor any sanction from the Central Government is required to prosecute the petitioners. The administrative side permission cannot be equated to a consent or sanction to be obtained statutorily as referred to under sub-section 3 of Section 470 of the Cr.P.C., Therefore, the period for obtaining sanction cannot be excluded at all from the period of limitation. The present complaint was filed on 12.04.2019 viz., after the period of six months. Thus, the complaint is barred by limitation, since the complaint was not launched within a period of six months. Hence, the present complaint cannot be sustained as against the petitioners and the impugned proceeding is liable to be quashed. https://www.mhc.tn.gov.in/judis Page 10 of 12 Crl.O.P.No.16721 of 2021
10. Accordingly, this Criminal Original Petition is allowed and the proceedings in E.O.C.C.No.97 of 2019 on the file of the learned Additional Chief Metropolitan Magistrate Economic offences-II, Egmore, Chennai, is hereby quashed. Consequently, connected miscellaneous petitions are closed.
26.08.2022 (3/9) Internet: Yes Index : Yes/No Speaking/Non Speaking order rts https://www.mhc.tn.gov.in/judis Page 11 of 12 Crl.O.P.No.16721 of 2021 G.K.ILANTHIRAIYAN. J, rts To
1. The Additional Chief Metropolitan Magistrate Economic offences-II, Egmore, Chennai
2. The Assistant Registrar of Companies, Tamil Nadu, Chennai, Shastri Bhawan II Floor, No.26, Haddows Road, Chennai – 600 006.
3. The Public Prosecutor, High Court, Madras.
Crl.O.P.No.16721 of 2021 and Crl.M.P.Nos.9139 & 9140 of 2021 26.08.2022 (3/9) https://www.mhc.tn.gov.in/judis Page 12 of 12