TMI Blog2022 (6) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andemic situation. 2. This Criminal Original Petition has been filed to quash the proceedings in E.O.C.C.No.197 of 2017, filed against the accused for the offence under Section 448 of the Companies Act, 2013, on the file of the learned Additional Chief Metropolitan Magistrate [Economic Offence I], Egmore, Chennai. 3. The crux of the complaint is that the petitioner company was inspected by the Inspecting Officer. The Inspecting Officer has observed that in the profit and loss account for the year ended 31.03.2011, it was shown that a sum of Rs.27,85,20,027/- (Rupees Twenty Seven Crore Eighty Five Lakh Twenty Thousand and Twenty Seven Only) has been written off as bad debts. As complete details of transactions and break up details of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served that in the profit and loss account for the year ended 31.03.2011, a sum of Rs.27,85,20,027/- (Rupees Twenty Seven Crore Eighty Five Lakh Twenty Thousand and Twenty Seven Only) shown as bad debts, was written off. They were asked to give a reply to the following points: i. Details of all legal cases undertaken against the parties whose amount were written off is more than Rs.10 Lakhs. ii. A full list of case with name and full addresses where amount written off is more than Rs.10 Lakhs. iii. Copies of their ledger accounts since 01.04.2003 of all such cases where amount written off is more than Rs.10 Lakhs. Why the director of the company did not take action and how the directors of the company has taken proper action f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any of the provisions of this Act or the rules made thereunder, any person makes a statement,- (a) which is false in any material particulars, knowing it to be false; or (b) which omits any material fact, knowing it to be material, he shall be liable under section 447. 9 . From the reading of the above section makes it clear that, to initiate the prosecution, it must be shown by the prosecution that the false statement of any material particulars made by the petitioner in respect of any return, report, certificate or a statement etc. Similarly, any omission of material facts is liable under Section 447 of the Act. The punishment for giving a false statements and any material particulars or omission to make a material fact which is prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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/- (Rupees Twenty Seven Crore Eighty Five Lakh Twenty Thousand and Twenty Seven Only) shown as bad debts, written off, therefore, it attracts the offence under Section 447 of the Companies Act. 12. It is to be noted that the materials placed before this Court, which is not in dispute also indicate that the above a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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