The central legal point established in the judgment is the interpretation and application of the provisions of section 297(1) and 629A of the Companies Act, 1956, regarding the sale of goods without prior approval and the penalty provisions for contravention of the Act.

Judgment

Petitioner approached this Court by way of an application under section 482 Cr.P.C praying for quashing of the proceedings of C.R. Case No. 192(S) 2010 under section 629A read with section 297(1) of the Companies Act, 1956 pending before the Chief Judicial Magistrate, Shillong.

2. The brief facts of the case in a nutshell is that the petitioner is a Director and Company Secretary of M/s Apeejay Surrendra Corporate Services Limited having its registered office at Apeejay House, 15 Park Street, Kolkata-700016. The Company had sold tea with effect from 01.04.2006 to 31.03.2007 valued at Rs. 5.19 lacs to M/s A.J. Tea Private Limited, wherein Mr. Jit Paul is also one of the Director.

3. On 27.06.2008 first notice was received by the petitioner wherein, it is alleged that petitioner has sold tea without previous approval of the Central Government and in the said notice also it was advised to the petitioner to move a separate application for compounding the offence within 15 (fifteen) days. In case no application is moved, then prosecution will follow vide letter dated 19.08.2008. The petitioner replied that there was no violation of section 297(1) of the Companies Act, 1956 and also further stated that the transactions are exempted from restricted provisions of the said Act. Inspite of all these replies, the respondent i.e. Registrar of Companies has filed a C.R. Case bearing C.R. Case No. 192(S) 2010 under section 629A read with section 297(1) of the Companies Act, 1956 which is pending at present before the Chief Judicial Magistrate, Shillong. Being aggrieved by the action of the respondent i.e. Registrar of Companies, the petitioner approached this Court by way of this instant petition praying for quashing the C.R. Case.

4. Learned counsel, Mr. D. Baruah assisted by Mr. K. Khan appearing for and on behalf of the petitioner submits that the petitioner entered into the contract for selling tea for which prior consent of the Central Government is not necessary as far as the exemption provided under the provisions of section 297(2)(a). He also further contended that the offence was not a continuous offence. It was a one time contract besides that C.R. Case had been filed after lapse of limitation period. Therefore, the C.R. case in question has no legs to stand and need to be quashed.

5. The learned counsel in support of his submission relied on section 297(1) as well as 629 A of the Companies Act and also further relied on section 468/469 and 473 of the Criminal Procedure Code. In reply, Mr. R. Debnath, learned CGC submits that the petitioner failed to substantiate his claim by any document. However, he agreed while moving the C.R. Case, no petition has been filed for condoning the delay.

6. It is true, on perusal of the proviso of section 297(1), that approval of the Central Government is necessary, however, the said section at sub-section (2)(a) make also a provision that will not attract in case of purchase of goods and materials from the company, or the sale of goods and materials to the company, by any Director, relative firm, partner or private company as aforesaid for cash at prevailing market prices. The petitioner's case is that they have sold tea to a company M/s AJ. Tea House Private Ltd, wherein Mr. Jit Paul is one of the Directors and sold tea for a sum of Rs. 5.19 lacs since they have sold only the tea for cash. In my considered view, this case is covered by the provision (2)(a) of section 297 of the Companies Act, 1956 and in such case, prior approval of the Central Government is not necessary. Further, section 629A provides a penalty which is reproduced herein as under:

“629 A. Penalty where no specific penalty is provided elsewhere in the Act.-If a Company or any other person contravenes any provision of this Act for which no punishment is provided elsewhere in this Act or any condition, limitation or restriction subject to which any approval sanction, consent, confirmation, recognition, direction or