Madras High Court
Pillaiyar Koil Street vs The Deputy Registrar Of Companies on 4 November, 2022
Crl.O.P.No.9159 of 2013
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 03.08.2022
PRONOUNCED ON : 04.11.2022
CORAM
THE HONOURABLE MR.JUSTICE RMT.TEEKAA RAMAN
Crl.O.P.No.9159 of 2013
and
M.P.Nos.1 and 2 of 2013
1. R.Subramanian,
Managing Director,
M/s.Subhiksha Trading Services Limited,
“Habib Complex”, Cabin “A”,
Flat No.2, 2nd Floor,
No.5, Durgabai Deshmukh Road,
R.A.Puram, Chennai – 600 028.
Now at
Shop 11, Ground Floor (Rear Side),
No.15/1, Thambiah Road,
West Mambalam, Chennai – 600 033.
2. M.Rathinakumar,
Secretary,
M/s.Subhiksha Trading Services Limited,
7A, Rajaji Nagar, Pillayar Koil Street,
Chennai- 600 041.
Now at:
G2-I-Block, Land Marvel Garden,
_____________
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https://www.mhc.tn.gov.in/judis
Crl.O.P.No.9159 of 2013
Pillaiyar Koil Street, Rajaji Nagar,
Thiruvanmiyur, Chennai – 600 041. .. Petitioners/Accused
Vs.
The Deputy Registrar of Companies,
Shastri Bhavan,
Chennai – 600 006. .. Respondent/complainant
PRAYER : This Criminal Original Petition is filed under Section 482 of
Cr.P.C., to quash the complaint in E.O.C.C.No.286 of 2011 on the file of the
learned Additional Chief Metropolitan Magistrate Court, (Economic
Offences-II), Egmore, Chennai.
For Petitioners : Mr.R.Subramanian [P1]
Party-in-person
No appearance [for P2]
For Respondents : Dr.D.Simon
Central Govt. Standing Counsel
ORDER
The Criminal Original Petition is filed to quash the complaint in E.O.C.C.No.286 of 2011 on the file of the learned Additional Chief Metropolitan Magistrate Court, (Economic Offences-II), Egmore, Chennai. _____________ Page No.2/8 https://www.mhc.tn.gov.in/judis Crl.O.P.No.9159 of 2013
2. The petitioners have been accused of an alleged offences under Section 211 read with part IV of Sch.VI of the Companies Act. The allegations made in the complaint are briefly as follows:
(i) That the company, M/s.Subhiksha Trading Services Ltd., of which the petitioners are the Managing Director/Secretary has not complied with the provisions of Section 211 read with part IV of Sch.VI of the Companies Act that the balance sheet of the company as on 31.03.2006, a sum of Rs.70,00,000/- and Rs.6,30,00,000/- are shown as amount receivable from Employees stock Option Scheme Trust towards share capital and share premium.
(ii) That in the board meeting held on 29.03.2006 and 11.01.2007, the company allotted Rs.70,00,000/- equity shares of Rs.1/- each at a premium of Rs.9/- per share and Rs.6,24,226/-
equity shares of Rs.1/- each at a premium of Rs.29/- per share respectively to STS Employees ESOP Trust, without receiving any amount towards share capital and also share premium. The allotment of shares without receiving any amount towards share capital is not in accordance with the provisions of the Companies Act, 1956 and showing the same in the balance sheet as at _____________ Page No.3/8 https://www.mhc.tn.gov.in/judis Crl.O.P.No.9159 of 2013 31.03.2006.
(iii) That a show cause notice dated 31.03.2011 was issued.
(iv) That replies received were not convincing. Hence the prosecution.
(v) That the Regional Director instructed the respondent herein to launch prosecution in and by a letter dated 28.03.2011.
3. The complaint has been taken on file by the learned Additional Chief Metropolitan Magistrate (Economic Offences-II), Egmore, Chennai.
4. The 1st petitioner R.Subramanian, appeared in person and would contend that the alleged offence under Section 211 of the Companies Act, is not a continuing offence and since the complaint has been filed after the period of limitation under Section 468 (2) of the Cr.P.C., the learned Magistrate ought not to have taken cognizance.
5. Per contra, the learned Central Government Standing Counsel appearing on behalf of the respondent would contend that steps have been _____________ Page No.4/8 https://www.mhc.tn.gov.in/judis Crl.O.P.No.9159 of 2013 immediately taken to prosecute.
6. Heard both and perused the records.
7. From the records, the balance sheet was filed with the Registrar of Companies around 30.11.2006. The punishment prescribed thereof is six months imprisonment. Consequently, the limitation under Section 468 of Cr.P.C., is one year. Date of alleged knowledge is 20.07.2009 to 30.10.2009. Complaint is filed on 18.04.2011.
8. Whether the offence under Section 211 of the Companies Act, is a continuing offence or not is no longer res integra. In the decision reported in 2002 (1) CTC 321 [C.K.Ranganathan, Managing Director, Cavinkare Ltd., Vs. Registrar of Companies, Government of India, Ministry of Law & Justice & Company Affairs], it is held as under:
“9. Section 211(2) of the Companies Act requires every company to give a true and fair view of the profit and loss of the company for the financial year and shall comply with the requirements of Part-II of _____________ Page No.5/8 https://www.mhc.tn.gov.in/judis Crl.O.P.No.9159 of 2013 Schedule VI and the offence of the breach thereof is complete with the failure of the person concerned to take all reasonable steps to secure compliance by the company as respects any counts laid before the company with the provisions of the section as to the matters to be stated in the accounts. Such an offence is committed once and for all as and when one commits the default. It gives rise to a single default and to a single punishment. The provision does not contemplate that the obligation to secure compliance continues from day to day until the compliance is actually met nor does it provide that continuation of business without securing compliance becomes a continuing offence. Hence, the offence under Section 211(7) of the Companies Act is not a continuing offence and there is a period of limitation for taking cognizance of such offence.” Hence, the period of limitation of six months has to be calculated and further at paragraph no.13 of the above cited judgment, it is held as follows:
“13. Since the offence under Section 211(7) of Companies Act is not a continuing one, the learned Magistrate ought not to have taken cognizance of the offence in the present case after the expiry of the period of limitation in view of the bar under Section 468 of Cr.P.C., and the proceedings are liable to be quashed.” _____________ Page No.6/8 https://www.mhc.tn.gov.in/judis Crl.O.P.No.9159 of 2013
9. Therefore, on the above factual matrix, I find that the complaint has been filed beyond the period of limitation and in view of the decision cited supra, this Criminal Original Petition is allowed and the complaint in E.O.C.C.No.286 of 2011 on the file of the learned Additional Chief Metropolitan Magistrate Court, (Economic Offences-II), Egmore, Chennai, stands quashed. Consequently, connected Miscellaneous Petitions are closed.
04.11.2022 Internet : Yes Index : Yes/No ars/nvi To The Deputy Registrar of Companies, Shastri Bhavan, Chennai – 600 006.
_____________ Page No.7/8 https://www.mhc.tn.gov.in/judis Crl.O.P.No.9159 of 2013 RMT.TEEKAA RAMAN,J., ars order in Crl.O.P.No.9159 of 2013 and M.P.Nos.1 and 2 of 2013 04.11.2022 _____________ Page No.8/8 https://www.mhc.tn.gov.in/judis