COMMON ORDER

Crl.O.P.No.16025 of 2018 is filed by A2 to A10 and Crl.O.P.No.11345 of 2018 is filed by A1, who are facing trial in EOCC.No.68 of 2018 for the offence under Section 148(6) r/w. 148(8) ;of the Companies Act, 2013, pending on the file of the learned Additional Chief Metropolitan Magistrate [E.O.1], Egmore at Allikulam Complex, Chennai-3 and to quash the same.

2.The gist of the complaint is that the A1/Company is a wholly owned Tamil Nadu Government Company registered and incorporated under the Companies Act. The Company was formed by the Government of Tamil Nadu for development and promotion of industries in the State. The petitioners/A2 to A10 are the nominee Directors of A1 Company. The respondent, Registrar of Companies found A1/Company falls under the ambit of Cost Audit, not filed the Cost Audit Report for the financial year 2013-14, even beyond the last date of submission which is contravention of sub-section (6) of Section 148 of the Companies Act, 2013 [hereinafter referred to as “the Act”]. As per Section 148(6), a Company shall within thirty days from the date of receipt of a copy of the cost audit report prepared in pursuance of a direction under sub-section (2) furnish Central Government with such report along with full information and explanation on every reservation or qualification contained therein and as per sub-section (8), if any default is made in complying with the provisions of this section, the Company and every Officer of the Company who is in default shall be punishable in the manner as provided. Since the accused have not complied with the provisions, prosecution launched.

3.The contention of the petitioners is that the Companies Act, 2013 was enacted with effect from 29.08.2013, however, under Section 1(3) of the said Act, different provisions will be notified on different dates. Section 148 of the Act was notified with effect from 01.04.2014, as per the provision, the audit shall be conducted by a Cost Accountant in practice who shall be appointed by the Board. The meeting of the Board of Directors of SIPCOT was convened on 28.06.2016, in Chennai. In that meeting, the Board noted that (i) As per the Companies [Cost Records and Audit] Rules, 2014, pursuant to Section 148 of the Companies Act, 2013, the maintenance of cost records and conducting of Cost Audit is applicable to Non-Regulated Sectors, Construction Industry, industrial, commercial and social development and maintenance, real estate development including an Industrial Park or Special Economic Zone when overall turnover exceeds a limit of Rs.35 Crores/Rs.100 Crores respectively during the immediately preceding financial year;

(ii)As per Rule, maintenance of Cost Records and conducting of Cost Audit is applicable to SIPCOT from the financial year 2014-15 since the turnover for the financial years 2013-14 and 2014-15 is Rs.382.97 Crores and Rs.474.05 Crores;

(iii)As per Rule 6(1) of Companies [Cost Records and Audit]

Rules, 2014, the Cost Auditor should be appointed within

180 days of the commencement of every financial year.

(iv)M/s.S.Jagadeesan & Co. Cost Accountant has expressed his willingness to carry out Cost Audit for three Financial Years 2014-15, 2015-16 and 2016-7 at the fee of Rs.50,000/- per each financial year towards Cost Audit inclusive of XBRL filing;

(v)Audit Committee of the Board in its meeting held on

28.06.2016 recommended the appointment of M/s.S.Jagadeesan & Co. Cost Accountant to carry out Cost Audit for three financial years 2014-15, 2015-16 and 2016-17 at the fee of Rs.50,000/- for each financial year towards professional charges for Cost Audit inclusive of XBRL filing. These proposals were approved by the Board and a resolution was also passed.

4.Accordingly, necessary statutory declarations were made to the respondent as early as October 2016. The petitioner Company had substantially complied with the new provisions of the Companies Act, 2013 and the Rules framed thereunder. This being the case, the respondent i