Back
High Court Of Calcutta
I.P. Mukerji, J.
Al Champdany Industries Ltd. - Appellants
Vs
Registrar Of Companies - Respondents
C.P. No. 29 of 2011
Decided on: July 26, 2011
COMPANY LAW - SECTION 633(2) - DISMISSAL OF COMPLAINT - LIMITATION - SECTION 468(2)(A) OF CRPC - OFFENCES PUNISHABLE WITH FINE - SIX MONTHS LIMITATION - KNOWLEDGE OF THE OFFENCE - SECTION 469(1)(C) OF CRPC - CENTRAL GOVERNMENT AS THE PERSON AGGRIEVED - INSPECTION AND ENQUIRY UNDER SECTION 209A OF THE ACT - KNOWLEDGE OF THE DEPARTMENT EQUIVALENT TO KNOWLEDGE OF THE REGISTRAR - MISRA DHATHU NIGAM LTD. V. STATE - RATIO - LIMITATION PERIOD COMMENCES FROM THE DATE OF KNOWLEDGE OF THE OFFENCE - REASONABLE EXPLANATION BY DIRECTORS - NO OFFENCE COMMITTED - DISCHARGE OF PETITIONERS.
Fact of the Case:
Petitioners, including non-executive directors and a whole-time director of Al Champdany Industries Ltd., sought relief from prosecution for alleged violations of the Companies Act, 1956, through five show-cause notices issued by the Registrar of Companies.
Finding of the Court:
The court found that the alleged offences were punishable with a fine and subject to a six-month limitation period under Section 468(2)(a) of the Code of Criminal Procedure, 1973. The knowledge of the offence was deemed to have arisen on the date when the office of the Regional Director, Eastern Region, had positive information or knowledge of the commission of the alleged offences under Section 469(1)(c) of the Code.
Issues: 1. Whether the alleged offences were barred by limitation under Section 468(2)(a) of the Code of Criminal Procedure, 1973? 2. Whether the petitioners provided reasonable explanations for the alleged violations?
Ratio Decidendi: 1. The period of limitation for offences punishable with a fine is six months, and it commences from the date of knowledge of the offence by the person aggrieved, as per Section 469(1)(b) of the Code of Criminal Procedure, 1973. 2. The Central Government, being the person aggrieved under Section 621 of the Companies Act, 1956, read with Section 469(1)(c) of the Code of Criminal Procedure, 1973, is deemed to have knowledge of the offence from the date when the office of the Regional Director, Eastern Region, had positive information or knowledge of the commission of the alleged offences. 3. The knowledge of the department is equivalent to the knowledge of the Registrar, as per the decision in Misra Dhathu Nigam Ltd. v. State. 4. The petitioners provided reasonable explanations for the alleged violations, including the calculation of depreciation, distribution of dividends, and the existence of a remuneration committee.
Final Decision: The court allowed the petition, discharged the petitioners, and dismissed the show-cause notices on the grounds of limitation and the absence of any offence committed.
1. THIS is an application under Section 633(2) of the Companies Act, 1956 (hereafter "the Act"). It is made by five persons and a Company. The first three describe themselves as non-executive directors. The first petitioner is the promoter of the Company Al Champdany Industries Ltd. which is the sixth petitioner. He is 72 years old. The second petitioner is the Chairman of this Company. He is 84 years old. The fourth petitioner is a whole time Director. The fifth is the Company Secretary. They ask this Court to relieve them of the offences with which they are charged by five show-cause notices, all dated 28th December, 2010. They were issued under various sections of the Act.
2. THIS application was filed in this Court on 10th January, 2011. It was moved with a Tender No. on 10th itself. On the day of moving, I granted an injunction in terms of prayer 'c' of the petition. As the Central Government did not file any Affidavit -in -Opposition till 9th March, 2011, by an order made on that day time to file their affidavit was further extended peremptorily. In addition to prayer 'c' an order in terms of prayer 'd' was also granted. Prayers (c) and (d) are as follows:-
"(c) An order of injunction restraining the respondents from instituting or causing to be instituted any criminal proceedings or any other proceedings against the petitioners or any of them on account of the alleged violation as complained of in the five several notices all dated 28th December, 2010 being Annexures "G", "H", T, "J" and "K" to this petition.
(d) Injunction restraining the respondents and/or each of them from instituting any criminal proceedings and/or any other criminal proceedings and/or taking any steps or further steps and / or giving any effect or further effect to the notice dated 2nd June, 2010 being Annexure "B" to the petition in any manner whatsoever."
It appears that prior to writing a letter dated 2nd June, 2010, the office of the Regional Director, Eastern Region, Ministry of Corporate Affairs had conducted an inspection and enquiry with regard to the Company under Section 209A of the Act. It appears that this department made an inspection of their books of accounts, statutory records and other documents. According to them these documents revealed several violations of the Act. Thus, they wrote the above letter on 2nd June, 2010, with copies to all its directors and its statutory auditor, alleging the violations and asking for explanation. The Company replied to it by their letter dated 13th July, 2010 denying each and every allegation.
3. MORE than six months after the above notice, the first show- cause notice was issued by the office of the Registrar of Companies. It was dated 28th December, 2010. It alleged that for the financial years 2005-06, 2006-07, 2007-08 and 2008-09 the Company had declared dividend out of profits. These profits were computed without deducting the depreciation on assets of book value Rs. 31,89,779/-. Hence there was violation of Section 205 (1) (a) of the Act. The Company replied to this notice on 6th January, 2011. They said that these assets had been bought by the Company in the years 1994-95 and 1995-96. They were not in active use. Hence, they were non-depreciable assets. The Company got them valued by a chartered valuer whose report was enclosed with the reply. According to such valuation the value of these assets was over their book value. It was also said that no advantage was gained by the Company. The total fixed asset was Rs. 106 crores in the financial year 2008-09. Rs. 31,89,779/- was a very small percentage of that. Depreciation on the said value would only be 1.50 lacs per annum whereas the total depreciation claimed by the Company was Rs. 846 lacs.
4. I was shown the provisions of the Code of Criminal Procedure. Sections 467 to 469 of the Code of Criminal Procedure, 1973 inter alia, states that the period of limitation for an offence starts on the date of the offence or where the date is unknow
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
