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2022 (6) TMI 389 - HC - Companies LawPunishment for false statement - Defect in preparation of profit and loss account of the company - amount of bad debt written off - main contention of the learned counsel appearing for the petitioner is that the entire prosecution is nothing but an abuse of process of law and there is no details containing the entire complaint as to the nature of suppression of material facts to attract the offence either under Section 447 or 448 of the Companies Act - HELD THAT:- A combined reading of Sections 447 and 448 makes it very clear that there must be some material evidence to proceed against the person either by way of finding that there has been a fraud committed by a person or there was suppression of material facts with intention to suppress the same. To initiate the prosecution either under Section 448 or to attract the punishment under Section 447, there must be a clear finding on record as to the fraud or suppression or omission of the material facts. Only, on such facts unearthed during investigation as contemplated under the Companies Act, the prosecution will normally lie. The present prosecution has been filed mainly on the ground that reply notice given by the petitioner was not satisfactory to the defacto complainant. Otherwise, it is not the case of the de facto complainant that there are material facts which have been suppressed and there is no clear cut findings recorded by the de facto complainant as to the nature of the omissions or suppression of material facts - Therefore, this Court is of the view that unless and until, there is a finding as to the suppression of the material facts, the prosecution cannot be launched, as a matter of right. The only allegation against the petitioner is that in the financial year ended on 31.03.2011, a sum of Rs.27,85,20,027/- shown as bad debts, written off, therefore, it attracts the offence under Section 447 of the Companies Act. Merely because the de facto complainant was not satisfied with the reply to the show case notice, one cannot be presumed that the offence either under Section 447 or 448, has been committed and the same are attracted. Therefore, in the absence of any materials to show that there was any material suppression or omission of material facts, the prosecution for the false statements will not be maintained and such attempt is nothing but a futile exercise and an abuse of process of law - this Criminal Original Petition is allowed.
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