Document Fragment View

Matching Fragments

4. As per the complaint, the accused, namely, the petitioner herein, has failed to comply with the statutory requirements of Section 211(3) read with Schedule VI, Part II, Clause 2(b) of the Act and hence liable for prosecution under Section 211(7) of the Act. The relevant portion in the complaint is extracted below :

"7. As per Schedule VI, part II, Clause 2(b) under the provisions of Section 211(2) of Companies Act, the profit and loss account of the company shall disclose every material feature including credits and debts or expenses in respect of non-recurring transactions or transaction of an exceptional nature and as per Schedule VI, Part II, Clause 3(x)(i), the profit and loss account shall disclose the miscellaneous expenses separately.
8. As the P&L account for the year ending 31st March, 1997 has not disclosed separately the other income of Rs. 4,46,806.24 and the Profit or Sale of Trade Mark amounting to Rs. 1,00,000 and the Miscellaneous Expenses of Rs. 59,790.74 separately a show-cause notice under Section 211(7) of Companies Act, 1956 was issued to company with copy to the accused managing directors and company vide this office letter dated 9th February, 1999."

5. The offence under Section 211(7) of Act is punishable with imprisonment for a term which may extend to six months or with fine which may extend to Rs. 10,000 or with both and as such, under Section 468(2)(b) of the Cr. PC, the period of limitation is one year. The relevant part of Section 469(1) of the Cr. PC relating to the commencement of the period of limitation is as follows:

According to the respondent, the offence alleged against the petitioner is a continuing offence and if it is so, a fresh period of limitation shall begin to run at every moment of the time during which the offence continues.

6. The petitioner filed a balance sheet as on 31st March, 1997 and the profit and loss account for the period ending 31st March, 1997 in the office of the respondent. According to the respondent, on technical scrutiny of the profit and loss account, it was noticed that a sum of Rs. 1,44,71,902 was shown as other expenses in scheduled 'J' and the break-up of the said expenses was not furnished and the respondent called for the same in his letter, dated 21st December, 1998. The petitioner furnished the breaking figures in his letter, dated 28th December, 1998, pursuant to which, the respondent issued show-cause notice, dated 9th February, 1999, calling upon the petitioner to show-cause as to why prosecution under Section 211(7) of the Act for contravention of Section 211(2) read with Schedule VI of the Act should not be initiated against the petitioner. The petitioner gave explanation, dated 20th February, 1999. Thereafter, the respondent issued another show cause notice, dated 9th August, 1999, for which the petitioner submitted his explanation, dated 20th September, 1999. Not satisfied with the explanation of the petitioner, the respondent has lodged the present complaint on 10th April, 2000.

9. Section 211(2) of the 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 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 accounts 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 continuance of business without securing compliance becomes a continuing offence. Hence, the offence under Section 211(7) of the Act is not a continuing offence and there is a period of limitation for taking cognisance of such offence.