Madhya Pradesh High Court
M/S Hotline Teletube And Components Ltd ... vs Registrar Of Companies on 12 July, 2023
Author: Anand Pathak
Bench: Anand Pathak
1
IN THE HIGH COURT OF MADHYA PRADESH
AT GWALIOR
BEFORE
HON'BLE SHRI JUSTICE ANAND PATHAK
MISC. CRIMINAL CASE No. 39997 of 2022
Between:-
1. M/S HOTLINE TELETUBE AND COMPONENTS
LTD. 143, SHARDA VIHAR COLONY, NEW HIGH
COURT ROAD, CITY CENTER GWALIOR
(MADHYA PRADESH)
2. ANUJ GUPTA S/O SHRI ANIL GUPTA, 5/17,
SHANTI NIKETAN, NEW DELHI 110021.
3. MAHESH PASRIJA S/O SHRI HARBANS LAL
PASRIJA, 86 WARD NO.4, MEHRAULI NEW
DELHI 110030.
.....PETITIONERS
(BY SHRI ANKUR MODY - ADVOCATE)
AND
REGISTRAR OF COMPANIES, MINISTRY OF
CORPORATE AFFAIRS, SANJAY COMPLEX, 3RD
FLOOR "A" BLOCK JAYENDRAGANJ, LASHKAR
GWALIOR (MADHYA PRADESH)
.....RESPONDENT
(BY SHRI PRAVEEN KUMAR NEWASKAR - ADVOCATE)
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Reserved on : 23-02-2023
Delivered on : 12-07-2023
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This petition having been heard and reserved for orders coming on for
pronouncement this day, delivered the following:-
ORDER
1. The instant petition under Section 482 of the Code of Criminal Procedure, 1973 is directed against the order dated 02-08-2013 2 whereby complaint bearing CC No.7012/2013 was registered as well as the order dated 13.06.2022 whereby an application preferred by the petitioners under Section 468 of Cr.P.C. in the said complaint has been rejected.
2. Brief facts of the case are that petitioner No.1 is a Public Limited Company duly incorporated under the provisions of Companies Act, 1956. Petitioners No.2 and 3 were the directors of the company at the relevant point of time. On 31.07.2013, Respondent/Registrar of the Companies moved a complaint under Section 209-A(8) and (9) of the Companies Act, 1956 (hereinafter referred to as "the Act, 1956") for contravention of Section 209(5) of the Act, 1956 against the petitioners. Vide order dated 02.08.2013 the Court of CJM, Gwalior taking cognizance of the complaint registered the case against the petitioners. On 15.11.2018 the respondent/complainant/Registrar of Companies filed an application for taking additional documents on record which were in the nature of correspondences between it and Regional Director and the Ministry of Corporate Affairs. The documents included a letter dated 31.03.2009 written by ROC/Regional Director inter alia informing that though summons were issued to the directors of the company for inspection of the books of accounts, the same remained unanswered and, therefore, the inspection could not be carried out, thus, they are liable for prosecution under Section 209A (8) and (9) and Section 146 (1) of the Act,1956 and in that regard instructions were solicited.
33. Another letter dated 24.06.2009 was written by ROC,Gwalior to the Regional Director for providing supplementary record suggesting violations of various provisions of the Act, 1956 on account of non filing of the balance-sheet after the year 2007 and on account of non filing of annual return, a third letter dated 25.09.2009 was written by the Regional Director to the ROC, Gwalior instructing for taking appropriate action against the company for the violations reported in the supplementary report and lastly, a letter dated 26.03.2013 was issued by the Ministry of Corporate Affairs directing the Regional Director for lodging prosecution against the company for the violations reported in the supplementary report.
4. The petitioners thereafter moved an application under Section 468(1)
(b) read with Section 469(a) of Cr.P.C. seeking closure of the case on the ground that the prosecution in the light of the above factual documents appears to be barred by limitation and no cognizance could have been taken on a time barred complaint.
5. By way of the impugned order dated 13.06.2022, the the Court of CJM, Gwalior dismissed the application of the petitioner under Section 468(1) (b) read with Section 469(a) of Cr.P.C holding that from the date of sanction received from the Central Government which was received on 25.05.2013 the complaint has been filed within limitation i.e. on 02.08.2013, therefore, the application filed by the petitioners has no substance and accordingly was rejected.
6. Being aggrieved by the order taking cognizance and by the order 4 dismissing the application under Section 468(1) (b) read with Section 469(a) of Cr.P.C, present petition under Section 482 of Cr.P.C. has been filed.
7. Learned counsel appearing on behalf of the petitioners had challenged the impugned order mainly on the ground that the same was without application of mind and in view of Sections 468 and 469 of Cr.P.C., the period of limitation is one year for filing of complaint and since the complaint has been filed after expiry of such period from the date of knowledge, the same deserves to be dismissed. It was further argued that as per Section 469 of Cr.P.C., the period of limitation shall commence in case where the commission of the offence was not known to the person aggrieved by the offence, the first day on which such offence comes to the knowledge of such person and admittedly in the instant case from the record of the respondents the first letter written by the Registrar of the Companies to the Regional Director informing about the commission of the offence under Section 209- A(8) and (9) of the Companies Act was dated 31.03.2009. Hence, the complaint was barred by limitation and should have been thrown out at the very first instance. While placing reliance in the matter of Kavi Arora Vs. Registrar of Companies, 2015 SCC Online Delhi 12300, it was argued that there is no provision under the Act, whereby consent/sanction of the Central Government is required for prosecution of the offences under Section 209-A(8) and (9) of the Act, 1956 therefore, the complainant cannot take shelter of Section 470(3) 5 of Cr.P.C. for exclusion of such time taken by the Central Government to give instructions/sanction to the Registrar of Companies. Further reliance first placed in the matter of Partha Ghosh Vs. Registrar of Companies and another passed on 12.12.222 in Criminal Miscellaneous Case No.5763/2014 by High Court of Delhi. He also placed reliance in the matter of State Vs. Seshamal Pandeya and others passed in criminal appeal No.327/1981 decided on 14.03.1986.
8. On the strength of above arguments, learned counsel for the petitioners submitted that the impugned order deserves to be set aside and consequently the order taking cognizance of the complaint also deserves to be set aside.
9. On the other hand, Shri Praveen Kumar Newaskar, learned Deputy Solicitor General appearing on behalf of the Respondents/Registrar of Companies opposes the submissions and states that no infirmity can be culled out from the order passed by the Court below in rejecting the application of the petitioner under Section 468 of Cr.P.C., as the learned Court below had rightly concluded that since the complaint has been filed within limitation from the date of receiving sanction from the Central Government, the same is within limitation. While placing reliance on Section 209-A(6) of the Act, 1956 submitted that since after inspection the report is required to be sent to the Central Government, necessary sanction is required to be obtained prior to filing of the complaint. To bolster his submissions he placed reliance 6 in the matter of Anil Prakash Sahu Vs. Registrar of Companies and others passed on 11.04.2023 in criminal revision No.567/2023 of this Court as well as in the matter of Registrar of Companies Vs. Rajshree Sugar & Chemicals Ltd. & others, AIR 2000 SC 1643.
10. Heard learned counsel for the parties at length and perused the record.
11. The admitted facts which appeared from the record/complaint is that vide letter No.4/28/2008-CLII dated 14.01.2009 Ministry of Corporate Affairs had issued directions for inspection of the petitioner No.1/company on the basis of ROC's report dated 31.03.2008 and the Registrar of Companies in pursuance to the said directions visited the registered office of the company which was found locked and thereafter even after issuance of summons to the Director of the Companies to produce books of accounts and other records, nobody appeared which rendered them liable for prosecution under Section 209A(8) and (9) of the Act, 1956 and in that regard, for the first time a letter was written on 31.03.2009 by Registrar of Companies to the Regional Director, Ministry of Directors, Western Region, Mumbai. The said letter was accompanied by its report. On 24.06.2009 respondent again forwarded a letter to Regional Director, Ministry of Corporate Affairs, Mumbai enclosing a supplementary report of the inspection which was directed by the Ministry and in turn forwarded it to Ministry of Corporate Affairs on 24.06.2009. The said supplementary report was submitted under the directions of Directorate to scrutinized the balance sheet and the records of the 7 company.
12. Vide letter dated 25.09.2009 issued by Ministry of Corporate Affairs, the Respondent/ROC was advised to issue appropriate show cause notice to the company and its officers and under the Ministry's letter No.1/124/2009-CLII dated 08.09.2009 Respondent/ROC was further advised to exercise powers conferred under Section 209A(5) of the Act, 1956. Thus, from the above, it is clear that the respondent was in clear knowledge of the violation of provisions of Section 209A of the Act, 1956 in the year 2009 itself and show a cause notice appears to have been issued to the petitioners only on 22.05.2013 and thereafter the complaint was filed on 31.07.2013. Thus, definitely the complaint filed by the respondent/Registrar of Companies was beyond the period of one year as provided under Section 468 of Cr.P.C. So far as the offence under Section 209A(8) and (9) of the Act, 1956 is concerned, definitely the same is not a continuing offence as is clear from the very wordings of sub Sections 8 and 9 of Section 209A which are reproduced herein below:-
"(8) If default is made in complying with the provisions of this section, every officer of the company who is in default shall be punishable with fine which shall not be less than five thousand rupees, and also with imprisonment for a term not exceeding one year.
(9) Where a director or any other officer of a company has been convicted of an offence under this section he shall, on and from the date on which he is so convicted, be deemed to 8 have vacated his office as such and on such vacation of office, shall be disqualified for holding such office in any company, for a period of five years from such date."
13. It would be evident that for the default every officer of the company shall be liable for punishment with a fine which shall not be less than Rs.50,000/- and also with imprisonment for a term not exceeding one year and would be disqualified for holding office in any company for a period of five years, if so convicted under the section. It is further pertinent to mention here that the said conviction is different from the convictions, where day to day fine is imposed for everyday's default. Thus, when the offence is not a continuing one, it has to be taken that the offence has taken place on a particular date on which it was committed and not subsequent to the same and the period of limitation cannot be extended by the prosecution as they choose. In the present matter since the knowledge of commission of the offence had already been acquired by the Registrar of Companies in the year 2009, the period of limitation could not have been extended till 2013 and accordingly there is no hesitation in concluding that the present complaint was hopelessly time barred.
14. With regard to the finding of the learned Court below as well as the arguments as advanced by the learned Deputy Solicitor General with regard to the sanction required for filing of the complaint relevant paragraph of the judgment cited by the counsel for the petitioners in the matter of Kavi Arora (supra) required to be taken note of which 9 are reproduced herein-below:-
"51. Thus, the time period taken by the Regional Director to take the decision to direct the Registrar of Companies to launch prosecution cannot be excluded for the purpose of computing the period of limitation as both the Regional Director, i.e. the Central Government as well as the Registrar of Companies was competent to launch prosecution once they had knowledge of the commission of the offences as on 24th June, 2013, i.e. when the inspection reports were filed with either of them. Since for the offences under Section 211(7), 211(3A), (3B) and (3C) of the Act, no consent/sanction for prosecution from the Central Government is required. Section 470(3 Cr.P.C cannot be relied upon by the respondents.
53. Admittedly, Section 211of the Act is punishable with six months imprisonment and fine. Under Section 468 Cr.P.C - no Court shall take cognizance of an offence punishable with imprisonment for a term not exceeding one year from the date of offence or the date of knowledge of the offence. Admittedly, the Inspector submitted his inspection report on 24th June, 2013 and the said complaint was only filed on 18th September, 2014, after the expiry of a year from the date of knowledge of the offence as provided under Section 468(2)(b) Cr.P.C.10
54. It is not mentioned in Section 211(7) of the Act rendering the offence a continuing one and the offence is complete with the failure to take all reasonable steps to secure compliance as respects any account laid before the company and such an offence is committed once and for all as and when one commits the default and the Section does not lay down that the person concerned would be guilty of an offence if he continues to carry on without compliance or that the offence continues until the requirement is complied with. The offence under Section 211(7) of the Act is not in the nature of a continuing offence since the ingredient of continuance of the offence is absent unlike in Sections 113, 162 and 168 of the Act.
56. For the computation of the period of limitation the respondents have placed reliance on Registrar of Companies, Karnataka v. Fairgrowth Agencies Limited, (supra). The said case can be distinguished from the present case as in the present case, both the Central Government as well as the Registrar of Companies had knowledge of the offence on 24th June, 2013 when the Director (Inspection and Investigation) submitted its report. As per Section 621 of the Act, cognizance of any offence, against the Signature Not Verified Company can be taken on the complaint in writing of the Registrar, or of a shareholder of the company, 11 or of a person authorized by the Central Government in that behalf, both the Central Government as well as the Registrar of Companies were competent to prosecute the Company as contemplated under Section 621(1) of the Act, but instead they slept over it and the complaint was filed by the Respondents only on 18th September, 2014 which was beyond the prescribed period of limitation.
57. In response to the same the petitioners have placed reliance on Webcity Infosys Ltd. v. Registrar of Companies (Delhi and Haryana) (supra) wherein it has been held by the Court that "Limitation has to commence when actionable knowledge is gained by the competent authority". The Competent Authority in the present case includes the ROC and admittedly actionable knowledge was gained by the ROC on 24th June, 2013 when the Director (Inspection & Investigation) submitted its report to both the Regional Director (Central Government) as well as the ROC.
58.xxxx
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63. The said plea of the petitioners is correct in law as an offence under Section 211 is not a continuing offence and is 12 complete the moment the Balance Sheet in question is issued by the Company unlike offences under Section 113,162 and 168 of the Companies Act, 1956 which are continuing in nature. Reliance is placed on C.K. Ranganathan v. Registrar of Companies-2003 (4) SCL 500 (Mad) wherein it was held as under-
"13. Since the offence under Section 211(7) of the Act is not a continuing one, the learned Magistrate ought not to have taken cognisance of the offence in the present case after the expiry of the period of limitation in view of the bar under Section 468 of the Cr. PC and the proceedings are liable to be quashed."
64. As per the complaint, the Regional Director by his letter dated 2nd June, 2014 directed the respondent No. 1 to lodge prosecution. However, despite issuance of the said instruction, two show-cause notices dated 17th June, 2014 and 21st August, 2014 were issued by the respondent No. 1 to the Company and its various officers. The said show- cause notices were duly replied to vide replies dated 5th August, 2014 and 1st September, 2014 respectively. The Company also wrote a letter dated 13th August, 2014. The reference of replies as well as the letter dated 1 st September, 2014 does not even find a mention in the complaint. The explanation only given by the counsel for the respondents is 13 that admittedly complaint do not mention about the replies given by the petitioners. However, the same are annexed with complaint.
65. The offences in the present case are not continuing in nature, limitation commenced as per Section 469(1)(b) Cr.P.C. when actionable knowledge was gained by the competent authority i.e. when the Registrar of Companies had knowledge of the commission of the alleged offences, i.e. 24th June, 2013 when the Registrar of Companies received the report of the Inspector and ran out on 23rd June, 2014 and thus the complaint, which was admittedly filed on 18th September, 2014 was hopelessly barred by limitation. There is no provision under the Act whereby any consent/sanction of the Central Government is required for prosecution of the offences under Section 211(7), 211(3A), (3B) and (3C) of the Act. Therefore, the complainant cannot take shelter of Section 470(3) Cr.P.C. for exclusion of such time taken by the Central Government to give instructions to the Registrar of Companies.
66. The complaint is based on the inspection report of the officer. Consequently, in the present case, there is no issue of fact at all with regard to the date of knowledge of the offence to the Registrar of Companies. The complaint is, therefore, time barred.
1467. The impugned summoning orders and other proceedings emanating from the said orders against the petitioners are accordingly quashed."
15. Apart from the finding given in the above enunciation, no other provision under the Act, 1956 is available which mandates prior sanction of the Central Government for prosecution of the offence under Section 209A (8) and (9) of the Companies Act, 1956, therefore, there is no reason to take a different view as that has been taken in the matter of Kavi Arora (supra). This finding also finds strength from the provisions as contained in Section 621 of the Act, 1956, wherein Registrar is one of the parties on whose complaint the Court shall take cognizance of the offence under the Act, 1956. Thus, the ground for rejection of the application filed by the petitioners for dismissing the complaint that the same was filed within limitation from the date of sanction appears to be per se illegal. The judgments cited by the counsel for the respondents move in different factual realm, therefore they are of no assistance to the cause of respondent.
16. Thus, the petition succeeds and is hereby allowed. The impugned orders dated 13.06.2022 and 02.08.2013 (order of cognizance) are hereby set aside and the complaint against the petitioner is hereby quashed.
(Anand Pathak) Judge Anil* ANIL KUMAR CHAURASIYA 2023.07.12 16:30:05 +05'30'