We have heard the learned Counsel for the parties. Let there be an order in terms of prayer (a) of the application admitting the appeal.

This appeal is against an order dated 9th April, 2007 of the Learned Single Judge in an application of the appellants under Section 633(2) of the Companies Act, 1956, to the extent that the appellants have not been excused from liability for contravention of Sections 211(1), 211(2) and 628 of the said Act, as alleged in a show cause notice dated 5th May, 2005. The appellants have, however, by the order under appeal, been absolved of all liabilities for violation of Section 299(1) of Companies Act, as alleged in five other show cause notices also dated 5th May, 2003.

Pursuant to a notice dated 28/29th May, 2003, the books of accounts 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.

By a letter No. JD Inspn./Cal/01/03/3572 dated 12th December, 2003 the Deputy Director (Inspection) alleged, that in course of inspection of the books of accounts and other documents of the appellant company, the contraventions 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.

Paragraph 12 of the said letter dated 12th December, 2003 is extracted hereinbelow for convenience:

“It has been found from the records of the company that the company avoiding the Central Excise Duty payment which is to be paid to the Central Govt. by way of suppression of actual production and clearances of goods clandestinely. The company have admitted the offences have been made voluntarily payment of Rs.28.5 lacs in total, during the month of May, 2003, it is financial irregularities and misleading statements in the audited accounts which has tantamount violation of sections 628 and 211(1)(2) of the Companies Act, 1956. The explanation in this regard may be furnished.”

In reply, the appellants wrote a letter dated 22nd December, 2003, explaining and/or controverting the allegations levelled in the said letter dated 12th December, 2003.

The appellants pointed out that the appellant company had paid Rs.7.50 lakhs to the Excise authorities and not Rs.28.50 lakhs and that too in the circumstances mentioned in the said letter. The appellants categorically denied that they had either suppressed the production of any goods, or cleared any goods without payment of excise duty.

On the basis of an inspection report submitted on or about 29th April, 2004 the Deputy Registrar of Companies, West Bengal issued about 8 show cause notices, all dated 16th July, 2004, to the appellants, calling upon the appellants to show cause why penal action should not be initiated against the appellants for contravention of Sections 97(1), 193(1), 143(1), 209(5), 211(1) & (2), 301(1) and 303(3) of the Companies Act, 1956 as alleged in the said notices.

In the show cause notice for alleged contravention of Section 211(1) and (2) of the Companies Act, 1956, it was alleged that the company had inter alia suppressed production figures in its accounts and made misleading statements, which would be evident from voluntary payment, in May, 2003 of Rs.28.50 lakhs towards the demand of the excise authorities.

There was significantly, no allegation against the appellants, of making any false statement, knowing the same to be false or of suppression of any material fact, knowing the same to be material, either in the letter dated 12th December, 2003 of the Deputy Director (Inspection) or in the show cause notice. There were thus no ingredients of an offence under Section 628 of the Companies Act, 1956.

Even though there was a bare allegation of contravention of Section 628 in the letter dated 12th December, 2003, the appellants were not required to show cause against penal action under Section 628 of the Companies Act, 1956.

It may thus