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Case Law Details

Case Name : Partha Ghosh Vs Registrar of Companies (Delhi High Court)
Appeal Number : CRL. M.C. No. 5763 of 2014
Date of Judgement/Order : 12/12/2022
Related Assessment Year :

Partha Ghosh Vs Registrar of Companies (Delhi High Court)

Delhi High Court held that in view of provisions of section 469 of the Code of the Criminal Procedure, 1973, complaint filed after expiry of six months is barred by limitation.

Facts-

The instant petition under Section 482 of the Code of the Criminal Procedure, 1973 is directed against the complaint bearing CC No.171/3 of 2014 pending in the court of Additional Chief Metropolitan Magistrate, Tis Hazari Courts, Delhi and order of summoning dated 10.07.2014.

The petitioner is a partner at Price Water House, Chartered Accountants, which is a Statutory Auditor of M/s Religare Finvest Limited. On 10.07.2014, a complaint was filed against the petitioner before the court of the learned ACMM u/s 233 of the Companies Act, 1956, for the commission of an offence under Sections 227(2) and 227(3)(d) of the Companies Act, 1956.

According to the complaint, the MCA directed for inspection of the books of accounts and other records of the Company u/s. 209(A) of the Companies Act 1956 on 16.01.2013. The inspection of the books of accounts of the Company was carried out by the Assistant Director (Inspection) in April 2013.

On 22.05.2013, the inspecting officer asked the petitioner to explain the violations found in the inspection so conducted. The petitioner failed to furnish any reply till the submission of the inspection report.

On 24.06.2013, an inspection report was submitted which was later on forwarded to the MCA by Regional Director. Vide letter dated 21.03.2014, MCA directed the complainant i.e. ROC to file the instant complaint. Accordingly, the complaint was filed on 10.07.2014.
It is mainly alleged that in view of section 468 and 469 of the Cr. P.C., the period of limitation is six months and the complaint is filed after the expiry of six months.

Conclusion-

It has been held that the provisions of Section 470 of the P.C. would not have any application for the reason that the permission of the MCA was not required. Further, it has been held that the time 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 limitation.

Having carefully considered the submissions made by the learned counsel appearing for the parties and having perused the decision in the case of Kavi Arora, this court does not find it appropriate to take a different view. Accordingly, the petition is allowed. The impugned summoning order dated 10.07.2014 and other consequential proceedings emanating thereto are accordingly quashed.

FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT

1. The instant petition under Section 482 of the Code of the Criminal Procedure, 1973 (hereinafter referred to as P.C.) is directed against the complaint bearing CC No.171/3 of 2014 pending in the court of Additional Chief Metropolitan Magistrate, Tis Hazari Courts, Delhi (hereinafter, referred to as “ACMM”) and order of summoning dated 10.07.2014.

2. Learned counsel appearing on behalf of the petitioner challenges the impugned order mainly on the ground that the same is without application of mind; the allegation made in the complaint does not constitute any offence and lastly, in view of Sections 468 and 469 of the Cr.P.C, the period of limitation is six months and the complaint is filed after the expiry of six months.

3. It is further submitted that in the instant case, the offence is punishable only with a fine, therefore, from the date of knowledge of the offence i.e., 24.06.2013, the complaint should have been filed within six months, however, in the instant case, it was filed on 10.07.2014, hence, it is barred by limitation. She has placed reliance on the following decisions:

(i) State of Punjab v. Sarwan Singh1,

(ii) Udai Shankar Awasthi v. State of U.P.2,

(iii) State of Bihar v. Deokaran Nenshi3,

(iv) Amit Kapoor v. Ramesh Chander4,

(v) State of Haryana v. Bhajan Lal5,

(vi) P. Chengalvaraya Naidu v. Jagannath6,

(vii) Jiyuan Li v. Registrar of Companies7,

(viii) Sunair Hotels Ltd. v. Registrar of Companies8,

(ix) Ranjit Mal Kastia v. Registrar of Companies9,

(x) Krishna Sanghi v. State of M.P.10,

(xi) Kumar v. M.O. Roy11,

(xii) Mishra Dhathu Nigam Ltd. v. State12and

(xiii) AI Champdany Industries Limited v. Blancatex A. G.13

4. Besides the aforesaid, learned counsel submits that this court in its authoritative pronouncement dated 17.09.20 15 in the case of Kavi Arora v. Registrar of Companies14, and other connected matters, has quashed the complaint on the ground of limitation. She explains that the decision dated 17.09.2015, deals with the cases of the Managing Director, Company Secretary, Ex-Whole Time Director and Director, for whom the limitation was for one year and the present case relates to Statutory Auditor, therefore, the limitation period is six months. She states that except aforesaid, all other facts and the legal position is the same. According to her, this case is squarely covered by the said decision dated 17.09.2015 and the present complaint followed by the order of taking cognizance needs to be set aside.

5. On the other hand, Shri Ajay Digpaul, learned CGSC appearing on behalf of the respondents, opposes the submissions and states that in the instant case, the inspection of financial years 2009-10, 2010- 2011 to 2011-12, was done in the month of April 2013 and consequent thereto, an explanation to that effect was sought from the petitioner on 05.2013 and the report to that effect was submitted to the Ministry of Corporate Affairs (hereinafter, referred as MCA) on 24.06.2013.

According to him, certain important aspects in the instant case have not been properly considered by this court in its earlier decision in the case of Kavi Arora (supra) which requires reconsideration. While placing heavy reliance on the decision of Udai Shankar Awasthi (supra), he states that the decision in the said case has not been properly understood by this court while deciding the controversy in the case of Kavi Arora (supra). He, therefore, while placing reliance on the decision of Udai Shankar Awasthi (supra) and State of Rajasthan v. Sanjay Kumar 15 submits that if both the decisions are understood in the right perspective, the conclusion recorded in the case of Kavi Arora (supra) would be incorrect and this court should either reconsider the decision passed in the case of Kavi Arora (supra) or should refer the matter for further consideration before the Division Bench. For this purpose, he placed reliance on the decision of the Honble Supreme Court in the case of Shah Faesal v. Union of India,16.

6. I have heard learned counsel appearing on behalf of the parties and perused the record.

7. A perusal of the order passed by the learned ACMM dated 07.20 14 indicates that no reason, much less sufficient reason, is assigned while taking cognizance. The said order only states that the learned ACMM perused the complaint which prima facie disclosed offence under Section 233 read with Sections 227(2) and 227(3)(d) of the Companies Act. The order of taking cognizance being non­speaking, deserves to be set aside merely on this ground alone in view of the decision of the Honble Supreme Court in the case of Lalit Kumar Singh & Ors. v. State of Maharashtra17 and the matter can be remanded back to the learned ACMM. However, at this stage, this court does not find it appropriate to relegate the parties to the court of the learned ACMM and instead would proceed to decide the matter on merits as the same is pending since 2014 and parity is claimed with other orders emanating from the same inspection report.

8. The petitioner, in the instant case, is a partner at Price Water House, Chartered Accountants, which is a Statutory Auditor of M/s Religare Finvest Limited (hereinafter, referred as “the Company”). The petitioner by profession is a Chartered Accountant. On 10.07.20 14, a complaint was filed against the petitioner before the court of the learned ACMM under Section 233 of the Companies Act, 1956 (hereinafter referred as Companies Act) for the commission of an offence under Section 227(2) and 227(3)(d) of the Companies Act. According to the complaint so filed, the MCA; vide its letter dated 16.01.2013, directed for inspection of the books of accounts and other records of the Company under Section 209(A) of the Companies Act. The inspection of the books of accounts of the Company was carried out by the Assistant Director (Inspection) in April 2013. On 22.05.2013, the Inspecting Officer asked the petitioner to explain the violations found in the inspection so conducted. It is stated in the complaint that the petitioner failed to furnish any reply till the submission of the inspection report. On 24.06.2013, an inspection report was submitted which was later on forwarded to the MCA by Regional Director on the same day i.e., 24.06.2013 itself, to examine various violations reported in the inspection report and for issuance of necessary instructions in that matter. It is stated that vide letter dated 21.03.2014, MCA directed the complainant i.e., Registrar of Companies to file the instant complaint. Accordingly, the complaint was filed on 10.07.2014 and on that very date, the learned ACMM had taken cognizance.

9. In the instant case, the violation alleged in the complaint is punishable only with a fine as per Section 233 of the Companies Act. As per Section 468 of the Cr.P.C., there is a bar in taking cognizance of an offence specified in sub-Section 2 of Section 468 of the Cr.P.C., after the expiry of the period of limitation. As per sub-Section (2) (a) of Section 468 of the Cr.P.C., the period of limitation for the offence punishable with a fine is only six months.

10. The argument whether the period of limitation in the instant case would commence from 21.03.2014 or not has already been considered by this court in the case of Kavi Arora (supra) against the respondents. It has been held that the provisions of Section 470 of the P.C. would not have any application for the reason that the permission of the MCA was not required. It is profitable to note that similar arguments were made by the respondents in the case of Kavi Arora (supra), and in that case, while placing reliance on the decision cited by the learned counsel for the respondents, in paragraph No.45, it has been held that the time 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 limitation.

11. It is to be noted that in the instant case also same inspection report is being referred to. The only distinction between the case of Kavi Arora (supra) and the present one is that in the case of Kavi Arora (supra), the date of filing of the complaint was 18.09.2014 and the offence was punishable up to one year, therefore, the limitation for filing of the complaint was one year. Paragraphs No.5 1, 53, 54, 56, 63 to 67 of the decision of Kavi Arora (supra) are being reproduced as under: –

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 4 70(3) Cr.P. C cannot be relied upon by the respondents.

53. Admittedly, Section 211 of 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.

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 Company can be taken on the complaint in writing of the Registrar, or of a shareholder of the company, 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.

63. The said plea of the petitioners is correct in law as an offence under Section 211 is not a continuing offence and is 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 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 1st September, 2014 does not even find a mention in the complaint. The explanation only given by the counsel for the respondents is 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 4 70(3) 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.

67. The impugned summoning orders and other proceedings emanating from the said orders against the petitioners are accordingly quashed.”

12. In view of the aforesaid, this court finds that the controversy involved in the instant case has already been settled. Arguments similar to the ones made in the present case have been rejected by the co-ordinate Bench of this court in its decision in Kavi Arora (supra). To that extent this court is bound, therefore, there is no reason to take a different view and hence, the submission made by learned counsel for the respondents to refer the matter to the Division Bench is also liable to be rejected.

13. It is a settled principle of law that the decision rendered by a co­ordinate Bench is binding on the subsequent Benches of equal or lesser strength [see: National Insurance Company Limited v. Pranay Sethi18]. It is also settled law that it is only when a proposition is contradicted by a subsequent judgment of the same Bench, or it is shown that the preposition laid down has become unworkable or contrary to a well-established principle of law, that a reference will be made to a larger Bench. The doctrine of binding precedent is of utmost importance in the administration of our judicial system; it promotes a confidence in the minds of the individuals that their conduct is to be regulated by a law that is certain, predictable, and consistent. Indeed it is an essential component of any civilized democracy governed by the rule of law. [See: Chander Prakash v. State of U.P.19].

14. Having carefully considered the submissions made by the learned counsel appearing for the parties and having perused the decision in the case of Kavi Arora (supra), this court does not find it appropriate to take a different view. Accordingly, the petition is allowed. The impugned summoning order dated 10.07.2014 and other consequential proceedings emanating thereto are accordingly quashed.

Notes:

1. (1981) 3 SCC 34

2. (2013) 2 SCC 435

3. (1972) 2 SCC 890

4. (2012) 9 SCC 460

5. 1992 Supp (1) SCC 335

6. (1994) 1 SCC 1

7. 2012 SCC OnLine Del 1299

8. 2009 SCC OnLine Del 536

9. 2002 SCC OnLine HP 60

10. 1975 SCC OnLine MP 94

11. 2007 SCC OnLine Mad 406

12. 1997 SCC OnLine AP 1015

13. 2011 SCC OnLine Cal 764

14. 2015 SCC OnLine Del 12300

15. 1998 5 SCC 82

16. 2020 4 SCC 1

17. 2022 SCC OnLine 1383

18. 2017 (16) SCC 680

19. 2002 (4) SCC 234

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