Non-consideration of the petitioners' replies and defective show cause notice amount to non-application of mind, rendering the complaint unsustainable in law.

JUDGMENT

(Prayer: Criminal Original Petition is filed under Section 482 of Code of Criminal Procedure, to call for the records in EO CC No.199 of 2015 pending before the Court of the learned Additional Chief Metropolitan Magistrate (EO.II), Chennai 600 003 and quash the same.)

1. This is a petition to call for records in EO CC No.199 of 2015 pending before the Court of the learned Additional Chief Metropolitan Magistrate (EO.II), Chennai 600 003 and quash the same.

2. The respondent filed the complaint against the petitioners under Section 205 C r/w. Section 629A of the Companies Act, 1956. The complaint allegations, in brief, are as follows:

The first petitioner company is represented by petitioners 2 to 4 as the Directors of the first petitioner company. As per the balance sheet for the financial year 31.03.2013, there is unpaid dividend of Rs.10,00,000/-. Section 205 C of companies Act 1956 requires that this amount shall be credited to the Fund “Investors Education and Protection Fund”.

3. Investors Education and Protection Fund (uploading of information regarding unpaid and unclaimed amounts lying with the companies) Rules 2012 mandates every company shall within 90 days after the holding of Annual General Meeting or the date on which it should have been held as per the provisions of Section 166 of the Act and every year thereafter till completion of seven years period, identify the unclaimed amounts as referred to in sub-Section (2) of Section 205 C of the Act, separately furnish and upload on its own website as also on the Ministry's website or any other website as may be specified by the Government, a statement of information through E Form 5 INV, separately for each year.

4. Petitioners have not filed E form 5 INV as required under the above rule. Show cause notice was issued on 21.07.2014. No reply was received from the petitioners. Therefore, petitioners are liable to be prosecuted for the offence aforesaid.

5. Learned counsel for the petitioners submitted that the complaint is not maintainable in law for the following reasons,

a) The show cause notice dated 21.07.2014 is silent as to period and as to which of the amounts mentioned under clauses (a) to (g) required under sub-Section (2) of Section 205 C of the Companies Act 1956 was not credited to the Investors Education and Protection Fund by the first petitioner/accused company;

b) The show cause notice dated 21.07.2014 itself is silent as to how and in what way the provisions of the Investors Education and Protection Fund (uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012 were violated or contravened by the first petitioner/accused company.

c) Replies to the show cause notice dated 21.07.2014 issued by the respondent/complainant were indeed given by each of the petitioners/accused, and the said replies were not duly considered.

d) Unpaid dividend shall not form part of Investors Education and Protection Fund till expiry of seven years from the date it became due for payment. As per the complaint, the balance sheet for the financial year ending 31.03.2013 shows unpaid dividend of Rs.10,00,000/-. Only if it remains unpaid/unclaimed for the period of seven years, it would form part of Investors Education & Protection Fund. Therefore, the show cause notice issued on 21.07.2014 for the unpaid dividend of Rs.10,00,000/- as on 31.03.2013 and the prosecution launched is pre-mature and illegal.

e) No shareholder had given any complaint regarding unpaid dividend. Therefore, the complaint is liable to be quashed.

6. In support of submission of learned counsel for the petitioners, he relied on the following judgments for the proposition that non consideration of reply shows non application of mind making the complaint liable to be quashed.

In the judgment reported in 2014 (3) MWN (Cr.) 86 K.Masthan Rao Vs. State represented by Inspector of Factories, First Circle, Vellore, it is observed that,

29. As noticed above, there is no reference to t