TMI Blog2016 (8) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... 209(5) of the Act would go to show that the default is punishable with imprisonment for a term which may extend to six months and shall also be liable to fine which may extend to ten thousand rupees, or with both. Section 628 provides for punishment with imprisonment, which may extend to two years and shall also be liable to fine. It is not in dispute that the alleged contravention with regard to the maintenance of Registers of Directors are for a period spanning from 1997-98 and 1998-99. The complaint came to lodged in the year 2006 The question which falls for my consideration is whether the learned Magistrate could have taken cognizance of the alleged offence, after the expiry of the period of limitation as provided under Section 468 of the Code of Criminal Procedure. Section 468 provides that the period of limitation shall be six months, if the offence is punishable with fine only, and three years if the offence is punishable with imprisonment for a term exceeding one year, but not exceeding three years. Having regard to the nature of the contravention, it could not be said that the Sections 211(7), 209(5) and 628 of the Companies Act are continuing offences so that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealing with different matters together, for the sake of convenience and brevity on record, following details are necessary. a. In Special Criminal application No.3139 of 2016, the petitioner has challenged the proceedings of Criminal Case No.14 of 2006 wherein including Mardia Chemicals Ltd., in all there are 13 accused amongst which present petitioner is accused No.7. b. In Special Criminal application No.3140 of 2016, the petitioner has challenged the proceedings of Criminal Case No.08 of 2006 wherein including Mardia Chemicals Ltd., in all there are 12 accused amongst which present petitioner is accused No.7. c. In Special Criminal application No.3141 of 2016, the petitioner has challenged the proceedings of Criminal Case No.24 of 2006 wherein including Mardia Chemicals Ltd., in all there are 13 accused amongst which present petitioner is accused No.7. d. In Special Criminal application No.3142 of 2016, the petitioner has challenged the proceedings of Criminal Case No.15 of 2006 wherein including Mardia Chemicals Ltd., in all there are 16 accused amongst which present petitioner is accused No.7. 3. At this juncture, it cannot be ignored that out of the four differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, 1997-1998 and 1998-1999 did not present true and financial position and as such the accused being 2 to 13 are responsible and liable to be punishable under Section 209 read with Section 211 read with Section 628 of the Act. 5.3 The accused persons being 2 to 13 have knowingly and willfully approved the false annual accounts and thereby the accused persons have rendered themselves liable to be prosecuted under Section 209(5) read with Section 211 read with Section 628 of the Companies Act 1956. Submissions of the Petitioner 5.4 The Petitioner is a practicing lawyer and was appointed as a Director of the Company in view of his professional expertise. The Petitioner was neither in-charge of the Company nor in day to day management of the Company. Even otherwise, there is no averment in the complaint that the Petitioner was in-charge or that he was responsible for the conduct of the business of the Company. Further, there is nothing in the complaint to show that the act committee or the conduct of the Petitioner was such that an inference can be drawn that he could be held vicariously liable. Also, no overt act of commission or omission has been alleged against the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn, report or balance sheet. In any case, as per the provision of Section 5 of the Companies Act, 1956, the Petitioner cannot be said to be an officer in default. In this regard, the Petitioner relies upon the judgment dated 5.3.2012 of this Hon ble Court in Special Criminal Application No.2421 of 2007 Kalpesh Dagli v/s State of Gujarat. 5.10 There is no specific allegation made in the complaint, holding the Petitioner liable for the offence alleged to have been committed under Section 628 of the Companies Act. Further, there is no averment in the complaint alleging mala fides or want of good faith on the part of the Petitioner. In the circumstances, the Petitioner cannot be said to be liable for the offence alleged to have been committed under Section 628 of the Companies Act. In this regard, the Petitioner relies upon the judgment of the Hon ble Madras High Court in the case of In re G. Natesan and others, reported in AIR 1949 Mad 657. 5.11 The Petitioner resigned as a Director of the Company on 31.8.2009. Thus the Petitioner was not a Director of the Company during the period of 2001-2002, 2002-2003 and 2003-2004. The allegation made in respect of non-disclosure of party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014 Rasik Shantilal Mardia v/s State of Gujarat. Special Criminal Application No.3141/2012 (Criminal Case No.24 of 2006 ( complaint fo r short) Allegations made in Criminal Case No. 24 of 2006: 5.18 The 30 subscribers to the allotment of 2 crores shares were involved in the mischievous movement of funds on the date of allotment i.e. 21.6.1994. Deeper analysis of the bank accounts and entries very clearly indicate that the movement of cheques from one account to another was carried out with a view to generate a web of entries and to confuse the authorities. 5.19 The cheques were rotated among the said companies through the Company s account without any movement of funds, the source of account being the account of the Company. This amounts to financial transaction of purchase of shares of the Company from out of the funds available with the Company, which is in violation of the provisions of Section 77 of the Companies Act, 1956. 5.20 The accused persons being 2 to 13 have knowingly and willfully approved and signed the false annual accounts and thereby the accused persons have rendered themselves liable to be prosecuted under Section 211 read with Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be satisfied in the allegations made in the complaint, much less against the Petitioner. Special Criminal Application No.3142/2012 (Criminal Case No.15 of 2006 ( complaint fo r short) Allegations made in Criminal Case No. 15 of 2006: 5.24 It is seen from the annual reports containing the auditor s report, director s reports, balance sheets, profit and loss accounts etc. for the period from 1994-1995 to 2003-04 (Annexure-A) received from various agencies such as ROC, SEBI, Stock Exchange, Income Tax Department etc. that the auditor s reports have several remarks/observations which are in the nature of reservations or qualifications or adverse remarks but they have not been replied by the directors in their respective reports as required under sub-section (3) of section 217 of the Companies Act, 1956. 5.25 The directors have not furnished the fullest information and explanations in their reports on every reservation, qualification or adverse remark contained in the Auditor s Report relating to the financial years 1994-1995 to 2003-2004. 5.26 The accused persons being 2 to 16 have knowingly and willfully approved the accounts without furnishing fullest i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redients of the offence has been established against him. Here in this case, it is established from the complaint itself that, though the present petitioner has been named as an accused in the said complaint, neither there is specific allegation made nor prima-facie ingredients of the offence established from the said complaint against the petitioner. It seems that he has been joined as an accused in the said proceedings merely because he is a formal Director in the Company. In absence of any specific averments or ingredients in the complaint against the petitioner, the process issued against the petitioner requires to be quashed. 7. A plain reading of Section 211(7) and 209(5) of the Act would go to show that the default is punishable with imprisonment for a term which may extend to six months and shall also be liable to fine which may extend to ten thousand rupees, or with both. 8. Section 628 provides for punishment with imprisonment, which may extend to two years and shall also be liable to fine. It is not in dispute that the alleged contravention with regard to the maintenance of Registers of Directors are for a period spanning from 1997-98 and 1998-99. The complaint cam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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