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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
K.NATARAJAN, J.
Sanjay Sreesha S/o.K.S.Acharya – Appellant
Versus
Serious Fraud Investigation Office Ministry Of Corporate Affairs, Represented By Assistant Director - Respondent
Criminal Petition No.2136 of 2016
Decided on : 19-05-2022
Criminal Procedure Code, 1973 – Section 200, Companies Act, 1956 – Sections, 229, 239, 226, 209A and 240(3) – Indian Partnership Act, 1932 – Sections 5, 18, 25 and 26 – Liability of a partner for acts of firm – Chartered Accountant Act 1949 – Quashing criminal proceedings – Case of petitioner is that respondent is Serious Fraud Investigation (officer herein referred as SFIO) filed complaint against petitioner for violation of Section 240 (3) of Companies Act, alleging that they issued summons to petitioner and he has not replied to the notice – Para 13.
Finding of the court: In court considerate opinion there is substance in argument addressed by respondent counsel, that auditor appointed under Companies Act as per section 226 of Companies Act and there are some duties cast upon Auditor of company and they are responsible to be answered or liable to give information to authority under section 239 – As per Section 240 of Companies Act, employees and other persons also are required to give the information – Therefore, said judgment relied upon by petitioner counsel is not acceptable to case on hand – Judgment of co-ordinate bench case stated supra in respect of Company and by relying upon the judgment of the Supreme Court in Sunil case quashed the criminal proceedings
Results: Criminal petition is dismissed.
ORDER :
This petition is filed by the petitioner/accused accused under Section 482 of Cr.P.C for quashing criminal proceedings in CC No.34/2012 pending on the file of Special Court for economic offences Bangalore to set aside the order of the trial court dated 23.02.2012 for the offence punishable under section 209A and 240(3) of the Companies Act, 1956.
2. The case of the petitioner is that the respondent is Serious Fraud Investigation (officer herein referred as SFIO) filed complaint under section 200 of Cr.P.C against the petitioner for violation of Section 240 (3) of Companies Act, alleging that they issued summons to the petitioner on 16.06.2011 and he has not replied to the notice.
Again one more summons issued on 20.06.2011 to be appeared on 28.06.2011 and it is also alleged the final summons was issued on 01.07.2011 to appear before them on 07.07.2011 and he has not appeared and he has sent a reply that he was not employed as Auditor of the Company. Therefore private complaint came to be filed and the trial court took the cognizance of the offence against the petitioner, which is under challenge.
3. Learned senior counsel appearing for the petitioner has mainly argued on the ground, the petitioner was not employed by the Company as per Section 240 of Companies Act. The petitioner was the partner in the firm in which the petition was appointed as Auditor. Such being the case, without making the firm as an accused the petitioner cannot be prosecuted and he cannot be vicariously be held liable for the penal provisions. Therefore, prayed for quashing the proceedings.
4. Per Contra learned counsel for the respondent has objected the petition and contended that the petitioner is the Auditor. The eligibility criteria for appointing the Auditor is that he must be a Chartered Accountant as per Section 226 of the Companies Act and the partner who is practicing in India and if the firm is appointed as Auditor then he has to sign as an Auditor of the Company. Therefore, the petitioner being a Accountant was appointed as an Auditor and he is running the firm, therefore even without making firm as party he is liable for the responsibility of answering the questions, as he was appointed by the resolution of the Company. Further contended that the petitioner himself signed the Audit Report as per Section 229 of Companies Act and as per 240 of Companies Act, it is the duty of all the Officers, employees and Agents of the Company and where the affairs of any other body corporate are investigated by the virtue of Section 239 of Companies Act, they have to furnish the details requested by the investigating agency, in view of the powers of this Section 239 of Companies Act. Therefore, the petitioner has been appointed as Auditor with eligibility criteria of Chartered Accountant, he is responsible person to submit the information to the investigating agency, failure to furnish the information, he has to be prosecuted. Therefore, the petitioner is liable to be prosecuted for the offence punishable under Section 240 (3) of Companies Act, 1956. Therefore the special counsel prayed for dismissal.
5. The learned counsel for the petitioner, in support of his arguments relied upon the following judgments:
2. Sunil Bharti Mittal Vs. Central Bureau of Investigation reported in (2015) 4 SCC 609.
3. Rafel Del Riyo Vs The State of Karnatak through Agricultural Officer and Seeds Inspector, Haveri reported in 2022(2) KCCR 1071.
4. Aneeta Hada Vs Godfather Travels and Tours Pvt. Ltd. reported in (2012) 3 SCC (Cri) 241.
6. Learned counsel for the respondent also relied upon the judgment of the co-ordinate bench in the case of K.Janardhan Reddy Vs State by CBI/ACB in Crl.P.No.7847/2018 dated 03.06.2019.
7. Having heard the arguments and perused the records. On perusal of the same, it reveals that the respondent SFIO filed private complaint against the petitioner for the offe
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