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TMI Blog2008 (1) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... 5-5-2003. 3. Pursuant to a notice dated 28/29-5-2003, the books of account and other relevant documents of the appellant-company were inspected by the office of the Eastern Regional Director, Department of Company Affairs of the Government of India. 4. By a letter No. JD Inspn./Cal./01/03/3572 dated 12-12-2003 the Deputy Director (Inspection) alleged, that in course of inspection of the books of account and other documents of the appellant-company, the contravene-tions specified in the said letter had been noticed. The appellants were directed to submit their explanation with regard to the contraventions alleged in the said letter. 5. Paragraph 12 of the said letter dated 12-12-2003, is extracted hereinbelow for convenience : "It has been found from the records of the company that the company avoided the Central excise duty payment which is to be paid to the Central Government by way of suppression of actual production and clearances of goods clandestinely. The company has admitted the offences and having made voluntary payment of Rs. 28.5 lakhs in total during the month of May 2003, it is financial irregularities and misleading statements in the audited accounts which tantamo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 16-7-2004, inter alia, submitting that their letter dated 22-12-2003, be treated as reply to the show-cause notices. 13. No proceedings were initiated against the appellants. Upon expiry of one year from the date of inspection, cognizance of the offence, if any, of contravention of section 211(1) and (2) of the Companies Act, 1956, punishable under section 211(4) of the said Act, became barred by limitation. 14. On the same allegations as made in some of the show-cause notices dated 16-7-2004, the Deputy Registrar of Companies again issued 5 several show-cause notices, all dated 5-5-2005, calling upon the appellants to show cause why penal action should not be initiated against the appellants for contravention of section 299(1) of the said Act, on account of the acts and omissions alleged in the said notices. Cognizance of an offence under section 299(1) of the Companies Act, 1956, however, becomes time-barred upon expiry of six months from the date of the offence, or where the offence was not known, upon expiry of six months from the date of knowledge of the offence. 15. A sixth show-cause notice was issued, calling upon the appellants to show cause why penal action should n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 211(1), (2), 299(1) and 628 of the Companies Act, 1956. 19. Sometime in June 2006, while the application under section 633(2) of the Companies Act, was pending in the company court, the appellants received a letter from the Deputy Registrar of Companies, the contents of which are for convenience, extracted hereinbelow : "Sub : Inspection under section 209A of the Companies Act, 1956. With reference to the subject cited I am to state that the aforementioned inspection was conducted by an officer of the Central Government and different violations were pointed out which includes the violation of sections 143(1), 193(1) and 303(1). The show-cause notices were also issued to the company and the directors and in reply, you have communicated a written statement by 22-12-2003, to the Deputy Director (Inspection). Now, on the basis of your compliance you are hereby warned to be cautious in future to comply with the requirements of the aforementioned sections." 20. The explanation of the concerned respondent, that the appellants had been let off with a warning only in respect of contravention of sections 143(1), 193(1) and 303(1), is difficult to accept, since proceedings for contraven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to violation of section 299(1) of the Companies Act, subject to payment of Rs. 5,000. In respect of the sixth charge, the learned Single Judge was of the view that the appellants should face appropriate criminal proceedings. 26. The learned Single Judge found that although there had been transgression of section 299(1) of the Companies Act, 1956, as complained in the five show-cause notices dated 5-5-2005, there did not appear to be any dishonest intention, since the appellant-company was a private company and its shares held by a few persons either related to or acquainted with each other. The learned single judge, in effect, accepted the submission of the appellants of the breach being attributable to a mistake. 27. The learned Single Judge did not, however, exercise jurisdiction under section 633(2), to excuse the appellants of the liability under section 211(4) read with section 628 of the Companies Act, 1956, having regard to the gravity of the allegation in the sixth show-cause notice, of suppressing actual production figures and making misleading statements in the audited accounts of the appellant-company. 28. A person seeking to be excused under section 633(1) or (2) ..... 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