The Order of the Court was as follows :

The petitioner is the accused in STR No. 2644 of 2000 on the file of Sub-Divisional Judicial Magistrate, Pondicherry and he seeks to quash the proceedings in the case.

The respondent filed a complaint under Section 211(7) of the Companies Act against the petitioner, in which, it is alleged that a sum of Rs. 1, 44, 71, 902/- has been shown as other expenses, including bad debts, in Schedule J. in the Profit and Loss Account filed by the petitioner for the period ending 31-3-1997 and on a direction to furnish break-up for the said expenses, the petitioner furnished break-up figures in the letter, dated 28-12-1998 and it has been noticed in it that out of the total expense of Rs. 1, 50, 18, 708.23, a sum of Rs. 4, 46, 806.24 being other income and Rs. 1, 00, 000/- being profit on sale of Trade-Mark had been deducted and the balance of Rs. 1, 44, 71, 901.99 was shown as other expenses. The respondent alleged in the complaint that the Profit and Loss Account for the year ending 31-3-1997 has not disclosed the other income of Rs. 4, 46, 806.24 and the profit on sale of Trade-Mark amounting to Rs. 1, 00, 000/- and the miscellaneous expense of Rs. 59, 790.74 separately.

According to the petitioner, the contention of the respondent in the complaint stating that the default commenced on 1-4-1997 and is a continuing offence within the meaning of Section 472 of Criminal Procedure Code is not correct. The offence complained of under Section 211(7) of the Companies Act is punishable with imprisonment for a term which may extend to six months or with fine or with both. The limitation for filing the complaint lapses on the expiry of one year. The present complaint was not filed within the time prescribed and hence it is barred by limitation. The learned Magistrate ought not to have taken cognizance of the offence. Hence proceeding with the present complaint is an abuse of the process of court and the complaint is liable to be quashed. The petitioner has not concealed any material facts. The profit and loss account was audited and certified as true and fair by the qualified Chartered Accountant. The other income of Rs. 4, 46, 806/- represents recovery of expenses and therefore it has been shown under the head 'other expenses'. The sale profit of Trade Mark has been disclosed under clause 3 of Schedule D. The accounts reflects true and fair view. The proceedings against the petitioner are unsustainable and liable to be quashed.Mr. Arvind P. Dattar, learned senior counsel, appearing for the petitioner mainly contended that the offence complained of under Section 211(7) of the Companies Act is punishable with imprisonment for a term which may extend to six months or with fine or with both and the limitation for filing the complaint lapses on expiry of one year and since the respondent did not file the complaint within the time prescribed, the learned Magistrate ought not to have taken cognizance of the offence for the reason that the complaint was barred by limitation. Per contra, Mr. T. S. Sivagnanam, learned Additional Central Government Standing Counsel, appearing for the respondent contended that the offence alleged in the complaint against the petitioner is a continuing offence under Section 472 of Cr. P.C. and the offence continued till the date of the complaint.

As per the complaint, the accused, namely, the petitioner herein, has failed to comply with the statutory requirements of Section 211(2) read with Schedule VI, Part II, Cl. 2(b) of the Companies Act and hence liable for prosecution under Section 211(7) of the Act. The relevant portion in the complaint is extracted below.

"7. As per Schedule VI, Part II, Cl. 2(b) under the provisions of Section 211(2) of Companies Act, the Profit and Loss Account of the Company shall disclose every material feature including credits and debts or expenses in respect of non-recurring transactions or transaction of an exceptional nature and as per Sch. VI