Non-compliance with Section 148 of the Companies Act, 2013, constitutes a continuing offence, and the complaint was not barred by limitation.

JUDGMENT

(Prayer: Criminal Original Petition is filed under Section 482 of Cr.P.C., to call for the records and quash the complaint in C.C.No.156 of 2018, on the file of the Judicial Magistrate No.III, Coimbatore.)

1. The petition to quash the complaint filed by the Registrar of Companies against the petitioners herein alleging non-compliance of Section 148 of Companies Act, 2013 and thereby, liable for prosecution under Section 148(8) of Companies Act, 2013.

2. The 1st petitioner herein is the Private Company incorporated under the Companies Act. The 2nd petitioner is the Managing Director of the Company. The prosecution is launched on the premise that the 1st accused is incorporated under the Companies Act on 11.10.2006. Section 148 of the Companies Act, 2013 came into force from 01.04.2014. As per the provision of Section 148 of Companies Act and Rules framed thereunder in Companies (Cost records and Audit) Rules 2014, a company which has net worth of above Rs.500 Crores or annual turnover of above Rs.100 crores has to appoint cost auditor and maintain Cost Audit records in their books of account. Every Company which has to appoint Cost Auditor shall resolve to appoint Cost Auditor in their Board of Directors within 180 days of the commencement of every financial year and same has to be informed to the Government within 30 days which ever is earlier within 18 days. Alleging that, the 1st petitioner has not appointed Cost Auditor within time prescribed and in spite of show cause notice issued on 05.12.2016, they did not respond. Hence, being a continuous offence the petitioner Company is liable to be punished for contravention of Section 148 of the Act.

3. The said complaint is sought to be quashed on the ground that the petitioner Company vide its Board Resolution dated 02.12.2016 has appointed Cost Auditor and notice to the Government along with fees in Form CRA-2 was submitted on 29.12.2016. As mandate under the Rules, Form CRA-4 was submitted along with the fees on 13.07.2017. While so, the impugned complaint presented on 05.03.2018 and taken cognizance by the Magistrate is liable to be quashed on the following grounds:- (i). The complaint is barred by Limitation. (ii). The show cause notice not served to the petitioner Company and no opportunity was given to the Company to place the facts on record. (iii). The complainant without verifying the records had filed this complaint as if, the Company has committed a continuous offence, without taking note of the facts that the requirement under Section 148 of the Act been complied much before presentation of the complaint.

4. The complainant has filed counter through Registrar stating that the 1st petitioner company represented by its Managing Director, the 2nd petitioner has committed default in appointing a Cost Auditor and to submit its cost accounts audited by Cost Accountant. After causing show cause notice, the complaint was filed since the petitioners failed to reply. The show cause notice dated 05.12.2016 was sent to the mail address ([email protected]) of the petitioners have provided by them to the Registrar of Companies in MGT-7 (Annual Return) filed by the petitioners for the financial year 2014-2015 and 2015-2016.

5. The contention of the petitioners that the show cause notice was not sent to them is an afterthought and blatant lie. The claim of the petitioners that Cost Auditor was appointed is not correct. They never report the Board of Directors resolution in their financial year 2015-2016 and CRA-4 Form not filed in the Office. It is a matter for trial to ascertain for which year the Board appointed Cost Auditor and for which financial year, the Cost Auditor in CRA-4 was filed by the Company. As far as, the financial year 2015-2016 is concerned, from the records available, no Cost Audit available with the Cost Audit Branch and no Cost Audit report was submitted. Therefore, the claim of the petitioners that they have complied Section 148 of Companies Act for the yea