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TMI Blog2011 (2) TMI 1292X X X X Extracts X X X X X X X X Extracts X X X X ..... s Stock Offer plan (ESOP). The company was asked to furnish the names and addresses of the members of the above said trust and also to furnish the complete address of the trust and names and addresses of the trustees. Further the company was asked to state as to how much has been so far recovered from the trust. If not, to furnish the reasons for the same. The above information called for by the inspecting officer was not furnished by the company and its directors/officers/employees which is a contravention under section 209A(2) of the Companies Act, 1956 (hereinafter referred as "the Act"). 4. Indisputably, it is the duty of the directors/officers/employees of the company to furnish the information relating to the affairs of the company as the inspecting officer may require. 5. Failure to furnish information as called for by the inspecting officer is an offence under section 209A(1) and (2) of the Companies Act and liable for punishment under section 209A(8) of the Act. Therefore, the respondent has initiated proceedings before the learned Additional C. M. M. Economic Offences. 6. The learned Additional C. M. M. took cognisance of the case in E.O.C.C. No. 91 of 2009 and issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Devendran, learned counsel for the respondent would submit that the company was directed to furnish not only the names and addresses of the trustees but also the accounts relating to the amount advanced and the amount recovered from the trust and the company has not furnished books of account as contemplated under section 209A(2) of the Act. Learned counsel submitted that on issuance of the show-cause notice dated January 11, 2008 the proceeding has been initiated on February 29, 2008. Therefore, the proceedings are not barred by limitation. 10. Heard both sides and perused the materials available on record. 11. It is not in dispute that an inspection of records and documents of the company were carried out on May 25, 2006 and on October 10, 2006 a letter was sent by the respondents calling for certain particulars. A query was raised in paragraph 20 of this letter which is as follows : "20. During the year 1999-2000, the company had advanced an interest free loan of Rs. 2 crores to California Software Employees Welfare Trust to enable the trust to purchase 4 lakhs equity shares of the company for further issue to selected employees of the company under its Employee Stock Offer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect their explanation as called for in the show-cause notice. The prosecution was launched on February 29, 2008. K. Kanagasabapathy (supra ) this court held as follows (pages 600 and 601) : "It is true that while the court is entitled to look at the headings in an Act of Parliament to resolve any doubt, the law is quite clear that you cannot use such headings to give a different effect to clear words in the section where there cannot be any doubt as to their ordinary meaning. In my view, it would be dangerous to construe the words 'other books and papers' to embrace every scrap of paper in the office of the company, whether it is in the nature of a books of account or not. The sub-heading to section 209 of the Companies Act is 'books to be kept by company and penalty for not keeping proper books'. This sub-heading emphasises the fact that the words 'proper books' have a restricted meaning and refer only to books in the nature of accounts... It is, therefore, clear that the object of the amendment was to cover not only books of account, strictly so-called, but also books showing such particulars relating to utilisation of material or labour or to other items of cost as may be pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore the question before this court is, (i) whether the information which has already been furnished satisfies the requirement of section 209A(2) of the Act and (ii) whether the initiation of the prosecution is barred by limitation ? 21. As already stated, for a query raised in paragraph 20 of the letter dated October 10, 2006, information has already been furnished by reply dated October 30, 2006. The information called for was to furnish the complete address of the trust and names and addresses of the trustees and the amount recovered from the trust. The reply clearly indicates the amount recovered from the trust and the outstanding and also the names and addresses of the trust and trustee. That being so, this court fails to understand why a show-cause notice was issued on January 11, 2008 that too, after 18 months, stating that the same was not furnished. The failure to reply within 10 days from the date of receipt of the show-cause notice itself will not constitute an offence. Even assuming, the company has failed to furnish the information the limitation for initiation of prosecution is one year. In the complaint, it is stated that the offence is not barred by limitatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. When certain information is called for under section 209A of the Act, the company is bound to furnish that information and produce "books of account and other papers of the company" if called for. If the Registrar of the Companies is not satisfied with the information, it is the duty of the authority to specify that the information so furnished is not in compliance with the provisions under section 209A(2) of the Act and may provide sufficient time to rectify the omissions. Only thereafter the failure to comply with such direction will only attract the provisions of section 209A(2) of the Act. 26. Therefore, in the present case, the company has furnished the information as called for and the respondent has not stated as to how the information is not satisfactory. 27. Therefore, under these circumstances, I am of the considered opinion that the jurisdiction under section 482 of the Criminal Procedure Code is to be exercised to quash the proceedings in E.O.C.C. No. 91 of 2009 on the file of the learned Additional Chief Metropolitan Magistrate's Court (Economic Offence-1), Egmore, Chennai-600 008. 28. Accordingly, the criminal original petition is allowed and the proceedings in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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