The court may exercise its inherent powers to quash criminal proceedings when the prosecution fails to prove the service of show-cause notices (where voluntarily issued) and where the accused entity is defunct, serving no purpose in continuing the litigation to meet the ends of justice.

ORDER :

G.K. ILANTHIRAIYAN, J.

Crl.O.P.No.11803 of 2023 is filed to quash the proceedings in E.O.CC.No.49 of 2022 passed by the learned Additional Chief Metropolitan Magistrate EO II, Egmore, Chennai.

Crl.O.P.No.11822 of 2023 is filed to quash the proceedings in E.O.CC.No.50 of 2022 passed by the learned Additional Chief Metropolitan Magistrate EO II, Egmore, Chennai.

2. The facts of the case in Crl.O.P.No.11803 of 2023 is that the respondent had filed a complaint in E.O.CC.No.49 of 2022 for the offence punishable u/s 207 (3) of the Companies Act 2013 (hereinafter referred as Act). It is alleged that an inspection was conducted by the respondent under section 206(5) of the Companies Act, and the petitioners who are the Directors of the company were summoned to be present on 30.09.2019 in connection with the inspection made under 206(5) of the Act. On receipt of the said summons, the Directors failed to appear and thereby contravened the provisions under Section 207 (3) of the Act. Therefore, it is punishable under Section 207(4) of the Act. Hence, the respondent issued Show Cause Notices seeking explanation within 15 days and even then the accused did not send any reply to the Show Cause Notice. Therefore, the respondent initiated prosecution for the contravention of the provisions under section 207(3) punishable under section 207(4) of the Act. Aggrieved over the same, the petitioners have come up with this petition.

3. The facts of the case in Crl. O.P.No.11822 of 2023 is that the respondent had filed the complaint in EOCC No.50 of 2022 for the contravention of the provisions u/s 96 of the Act. It is alleged that an inspection was conducted by the respondent in the accused company and was observed from the communication dated 19.09.2019 that the accused had defaulted in holding an Annual General Body Meeting as mandated under the provisions of Section 96 of the Act for the financial years 2014-2015,2015-2016 and 2017-2018 within the stipulated time. Therefore, the accused had contravened the provisions under section 96 of the Act punishable under section 99 of the Act. Aggrieved by the same, the petitioners have come up with this petition.

4. The learned counsel for the petitioners submits that the Show Cause Notice dated 16.06.2020 was not even served to the accused. Therefore, the accused lost their opportunity to submit their explanations for the Show Cause Notice dated 16.10.2020. However, the complaint was filed u/s 207(3) of the Act. It is the only contravention and hence, the complaint is not maintainable. Further the company itself has now became defunct and it is not in operation. If at all the petitioner was served with Show Cause Notice, he would have been complied with the provisions u/s 207(3) and 96 of the Companies Act. If at all the company failed to convene a meeting, the respondent ought to have approached the National Company Law Tribunal for complying the contravention under section 207 of Act but, the respondent initiated prosecution for the contravention under section 207(3) of the Act. Hence, it is not maintainable.

5. Per contra the learned counsel for the respondent filed a counter and submits that, after inspection the accused were summoned to depose for certain violations. However, on receipt of the said summons, they failed to appear before the respondent and the same is a clear contravention of the provisions u/s 207(3) of the Act. The said contravention is punishable u/s 207(4) of the Act. Though the complaint was titled as complaint u/s 207(3) of the Act, in the prayer portion in the and operative portion it was categorically mentioned that the contravention u/s 207(3) is punishable under section 207(4