M.K. Ananthanarayanan Vs Union of India (Madras High Court)
The Madras High Court allowed a Criminal Original Petition filed by A8, the statutory auditor of Subhiksha Trading Services Limited (STSL), seeking quashing of the complaint in Spl.C.C.No.2/2018 pending before the XV Additional City Civil and Sessions Court, Chennai. The complaint alleged offences under Sections 159, 166, 209(5), 210, 211(7), 211(8), 217(3), 220, 227 read with Sections 233, 240(3) and 628 of the Companies Act, 1956. The petitioner was specifically prosecuted under Sections 628 read with 211 and 227 read with 233.
According to the prosecution, STSL and its Managing Director were involved in financial irregularities, mismanagement and siphoning of funds. It was alleged that the company failed to maintain proper books of account, made false statements in its Balance Sheets for 2004-05, 2005-06 and 2006-07, and that the statutory auditor failed to verify sales, purchases and related-party transactions and omitted material observations.
The petitioner contended, among other things, that the complaint was barred by limitation, cognizance was improperly taken, the Court lacked jurisdiction, and the offences alleged against him were not made out. He also argued that Sections 211 and 628 could not be invoked against a statutory auditor and that any lapse in his duties could not constitute a wilful default under Section 233.
