The issuance of regulatory notices for technical violations under Company law must respect limitation periods and demonstrate substantive grounds for action rather than mechanical issuance of notices.

JUDGMENT :

RAVI KRISHAN KAPUR, J.

1. This is an application under section 463(2) of the Companies Act, 2013 challenging a notice dated December 20, 2024 bearing reference No. ROC/TS/Inquiry-206/052962 issued by the Assistant Registrar of the Companies West Bengal, Ministry of Corporate Affairs (the impugned notice).

2. Briefly, the company namely, Shyam Sel and Power Limited is engaged in the business and sale of iron and steel. The petitioners are the present directors of the company. By a notice dated 8 April 2021, the respondent authorities had sought for financial information and explanations under section 206(1) of the Act. The company duly replied to the notice by a letter dated 25 June 2021 and provided a point wise reply. Subsequently, after a period of eighteen months, the company received a summons dated 14 March 2023 under section 207(3)(b) of the Act, directing the concerned officers of the company including the auditors to be examined on oath personally in relation to the letter 8 April 2021. Significantly, the company had timely filed all its financial statements and statutory filings for the relevant periods. Thereafter, the company received a communication dated 20 July 2023 issued under section 206(4) of the Act. By the said communication, the respondent authorities sought for queries and further information on the basis of financial information for the years 31.03.2020, 31.03.2021 and 31.03.2022 respectively and furnished necessary clarifications. Pursuant to the above, the respondent authorities on the ground of alleged violations of section 129(1) read with Schedule III Division II, 7(c) of Part II of the Act, section 129(I), Schedule III, 6F(III)(c) of Division II and section 129(I) Schedule III Division 6F(i)(II) of the Act found the company to be in violation of the above provisions of the Act and threatened prosecution against the petitioners by a notice dated 20 December 2024 calling upon the company and directors of the company to file an application for compounding under the Act. In this background, the petitioners have filed this application seeking quashing of the impugned notice and all proceedings connected therewith.

3. On behalf of the petitioner, it is contended that the impugned notice is ex facie barred by limitation. All the financial statement and accounts were readily available with the respondent authorities. There is no case of fraud nor negligence of the directors or any other officer of the company. The company and its directors have all acted bonafide and in good faith. In support of such contentions, the petitioner relies on the decisions in Bhagwati Foods P. Ltd. vs. Registrar of Companies, West Bengal , (2008) 143 Comp Cas 531, Girdhar Tracom Private Limited vs. Registrar of Companies , 2024 SCC OnLine Cal 1671 and AI Champdany Industries Ltd. vs. Registrar of Companies , 2011 SCC Online Cal 2296.

4. On behalf of the respondent it was submitted that the clarification and queries sought for were in good faith and the petitioners always had the option of approaching the respondent authorities for filing applications for compounding of the offences complained of.

5. The relevant sections of the Act are set out below:

129. Financial statement.—

(1) The financial statements shall give a true and fair view of the state of affairs of the company or companies, comply with the accounting standards notified under section133 and shall be in the form or forms as may be provided for different class or classes of companies in Schedule III:

Provided that the items contained in such financial statements shall be in accordance with the accoun