Golden Forests (I) Ltd. vs Registrar of Companies

R.L. Anand, J.

This is a petition u/s 482, Cr.P.C. filed by the petitioners M/s Golden Forests (I) Ltd., and three others and has been directed against the order dated 5.9.1998, passed by the court of the C.J.M., Chandigarh, in a complaint filed u/s 210(5) of the Companies Act, 1956, Annexure P1. The petitioners are seeking the quashment of the complaint and the summoning order through this petition without availing the remedy u/s 245, Cr.P.C., to convince the learned CJM that the complaint is nothing but an abuse of process of law or that the summoning order requires to be recalled.

Be that as it may, the Registrar of Companies, Punjab, Himachal Pradesh and Chandigarh, filed a criminal complaint u/s 210(5) of the Companies Act against M/s Golden Forests and three others and the main allegations on which the complaint was lodged are contained in paras 1 to 6 of the complaint, which read as under :

"1. The Golden Forests India Limited was incorporated on 23.2.87 as a Public Limited Company under the Companies Act, 1956 and is having its registered office at SCO No. 859, Golden Complex, Manimajra, Chandigarh. The authorised and paid up capital of the company is Rs. 1,00,00,000/.

That the accused No. 1 is company, 2 is Managing Director and 3 and 4 are directors of the company according to the particulars filed in the office of the complainant and are the officer in default.

That Company is engaged in investment schemes, plantation activities and financing business. There are various complaints received by the Government of India, Ministry of Finance, Dept. of Company Affairs, New Delhi. Govt. has ordered for an inspection of the company under section 209A of the Companies Act, 1956 vide letter No. 27/5395CLII dated 7.6.95. Sh. Dhan Raj, Joint Director (Accounts), Dept. of Company affairs, Kanpur carried out inspection under Section 209A of the Companies Act, 1956. The inspection report was submitted to the Govt. of India on 25.2.97. The directions for filing their prosecution proceedings against the company and its directors were issued on 13.2.98 by the Regional Director (N.R.) Deptt. of Company Affairs, Kanpur. During the course of inspection made under Section 209A of the Companies Act, 1956, it was noticed that the Balance Sheet as at 31.3.95 should have been laid and adopted by the company in the shareholders meeting to be held latest by 30.9.95. But the same has not done by the company and thereby the provisions of Section 166 read with section 210 of the Companies Act, 1950 have been contravened.

That according to the provisions laid down under sections 210(1)(3) of the Companies Act, 1956 it was the statutory duty of each of the accused to place Balance Sheet and Profit and Loss accounts of the company as at 31.3.96 before the A.G.M. which ought to have been held on or before 30.9.95 in accordance with the provisions of Section 210 of the Companies Act, 1956 i.e. within six months from the close of the Financial year.

That the accused named above contravened the provisions of section 210 of the Companies Act, 1956 wilfully and intentionally. Thus the accused No. 1 to 4 have committed offence under section 210 of the Companies Act, 1956 and every officer of the company who is in default shall be punishable with imprisonment for a tenure which may extended to six months or with fine which may extend to one thousand rupees, or with both.

That the aforesaid contravention of Section 210 of the Companies Act, 1956 has been committed by the accused within the jurisdiction of this Hon''ble Court and the aforesaid Balance Sheet and Profit Loss Accounts had to be placed before the A.G.M. (Annual General Meeting) required to be held under section 166 of the Act, at the registered office of the company which is situated with the jurisdiction of the Hon''ble Court. Therefore, this Hon''ble Court is competent to take cognizance the said complaint and punish the accused in accordance with law."

Along with the complaint, the complainant also filed an application u/s 5 of the Limitation Act for condonation of the delay of three years 2 months 24 days. The reasons of delay are given in paras 2 to 7 of the application, which read as under :

"2. That the inspection of M/s. Golden Forest (I) Ltd., was ordered vide letter dated 7.6.1995 by the Deptt. of Company Affairs, New Delhi for inspection of records under Section 209A of the Companies Act, 1956.

That the inspection was conducted and the report was submitted to the Government of India on 25.2.1997.

That report was examined by the appropriate authority of the Department of Company Affairs, permission for launching prosecution was granted vide Department''s letter dated 29.1.1998.

That the decision for filing prosecution was conveyed to this office vide Directorate''s letter dated 13.2.98.

That this office issued notices to the Company and its Directors on 19.2.98 and complainants were prepared and sent to the Advocate, Central Govt. Standing Counsel at Chandigarh for vetting on 2.4.98 in between Company reply dated 4.4.98 received in this office on 15.4.98 and the same was forwarded to the Directorate for further instructions.

That this office received a letter from Directorate dated 1.7.98 for filing of application for condonation of delay under Section 468 of Cr.P.C."

The learned CJM vide order dated 5.9.1998 summoned the petitioners u/s 210(5) of the Companies Act, for noncompliance of the provisions of section 211 of the Companies Act for the financial year 199192, by stating as follows :

"Complaint presented today. Alongwith complaint, an application under Section 5 of the Limitation Act for condonation of delay of more than three years two months and 24 days is filed. Keeping in view the facts mentioned in the application that most of the time was consumed in the official matters and for receiving the sanction to launch the prosecution, I allow the application and condone the delay.

Complaint be registered. Keeping in view the exigencies of the services and in the interest of justice, the personal appearance of Sh. S.K. Saxena, Registrar of Companies is exempted till further orders and in his place Ms. Deepali Puri, learned counsel for complainant will continue to represent the complainant.

It is averred in the complaint that during the course of inspection made under Section 209A of the Companies Act, 1956 it was noticed that the balance sheet as at 3.3.1995 should have been laid and adopted by the company in the shareholders meeting to be held latest by 30.9.1995 but the same has not been done by the accused company and it was the statutory duty of each of the accused to place balance sheet and profit loss accounts of the accused company at 31.3.1995 in the meeting before the shareholders to be held latest by 30.9.1995.

Accused No. 1 is company, accused No. 2 the Managing Director and accused Nos. 3 and 4 are the Directors of the company. Thus all the accused have committed the offence under Section 210(5) of the Companies Act for noncompliance of the provisions of section 211 of the Companies Act, 1956 for the financial year, 199192. Let all the accused be summoned for 31.10.1998 on filing of PF, copy of complaint etc."

Accused No. 2 and 4 appeared before the learned C.J.M. on 31.10.1998 and they were released on bail. Accused No. 3 did not appear inspite of service and an application was made on her behalf for her personal exemption, which was allowed and the complaint was adjourned for the appearance of respondent No. 3. Not satisfied with the complaint and the summoning order, the present petition u/s 482, Cr.P.C., for the quashment of the complaint and the summoning order itself.

I have heard Mr. S.C. Sibal, Sr. Advocate, assisted by Shri Deepak Suri, Advocate, on behalf of the petitioner and after hearing the learned counsel for the petitioner, I am of the considered opinion that the present petition is liable to be dismissed in limine at the motion stage itself without issuing notice to the respondent.

The first submission which was raised by the counsel for the petitioner is that the alleged offence under the Companies Act pertains to the year 199192 and the complaint was hopelessly barred by limitation by more than 3 years 2 months and 24 days and the application under section 5 of the Limitation Act was not legally maintainable as this section only applies to the civil proceedings and not to the criminal proceedings. Since, the complaint has not been filed within the period as stated in section 468, Cr.P.C., therefore, the complaint is liable to be dismissed on this short ground. According to the learned counsel for the petitioner, the complaint ought to have been filed within a period of six months from the date of the cause of action.

I am not in agreement with the counsel for the petitioner. No doubt, as per section 468, Cr.P.C., the complaint in the normal course ought to have been filed within six months, if the offence is punishable with fine only; one year, if the offence is punishable with imprisonment for a term not exceeding one year; and three years, if the offence is punishable with imprisonment for a term exceeding one year but not exceeding three years. The learned counsel for the petitioner, however, has skipped the provisions of section 472, Cr.P.C., which lay down that Notwithstanding anything contained in the Chapter XXXVI of the Cr.P.C., any court may take cognizance of an offence after the expiry of the period of limitation, if it is satisfied on the facts and in the circumstances of the case that the delay has been properly explained or that it is necessary so to do in the interests of justice. Present is a case of economic offence. In the application, though wrongly labelled u/s 5 of the Limitation Act, it has been clearly averred that the records of the company were inspected u/s 209A of the Companies Act and the report was submitted to the Government on 25.2.1997. Inspection was ordered on 7.6.1995 and after the inspection of the report, notices were issued to the company to explain why the prosecution should not be conducted. Thereafter, a decision was taken for the prosecution of the petitioners and in this regard instructions were given. Thus, sufficient cause has already been explained in the application dated 20.8.1998 explaining why the complaint could not be instituted against the petitioners within the stipulated period. Moreover, from the order passed by the learned C.J.M., it is evident that the C.J.M. was duly satisfied before passing the summoning order. He was conscious of the fact that the complaint was time barred. He has stated in the order itself that along with the complaint, an application was moved for condonation of delay of more than 4 years 2 months and 24 days and that keeping in view of the time was consumed in the official matters and for receiving the sanction to launch the prosecution, he was allowing the application and condoning the delay. In this view of the matter, it cannot be said that the learned C.J.M. did not apply the mind. It is true that the application is labelled as the one u/s 5 of the Limitation Act and not u/s 473, Cr.P.C. but the label is not to be seen, the contents of the application and the intention of the department are the material factors and what is the prayer made therein.

It was, then, submitted by the counsel for the petitioners that before allowing the application for condoning the delay, the learned C.J.M. did not give any notice to the petitioners and in their absence, the limitation could not be condoned.

I do not subscribe to the argument raised by the counsel for the petitioners because if we read the wording of section 473, Cr.P.C., the satisfaction on facts is that of the C.J.M. and in the interest of justice, he is bound to grant the sanction. Here is an offence committed by a company and its Directors. It is an economic offence. This is a case of absolute liability and if the learned C.J.M. had satisfied himself in condoning the delay, it is not right on the part of the petitioners to seek a notice before the condonation of the delay.

The petitioner had the alternative remedy to make a submission before the learned C.J.M. u/s 245, Cr.P.C. and in view of K.K. Mathew''s case, they could convince the C.J.M. that the complaint was nothing but an abuse of process of law and that the summoning order requires to be recalled. They have not availed this remedy. They have straight away come to the High Court for the quashment of the complaint and the summoning order. This court is well aware that the accused can directly come to the High Court for the quashment of the complaint and the summoning order but in those cases only where there is total nonapplication of mind on the part of the C.J.M. or a Magistrate, but here is a case where the learned C.J.M. has applied his judicial mind before summoning the accused.

It was, then, submitted by the counsel for the petitioner that the matter of 199192 is being brought to book in the year 1998 and on the ground of delay itself, the complaint is liable to be quashed.

The argument is, again, faulty. As per the allegations of the complainantRegistrar of Companies, the balance sheet as at 31.3.95 ought to have been laid and adopted by the company in the Share Holders meeting to be held latest by 30.9.95 but the same has not been done by the accusedcompany and the accusedcompany has violated the statutory duty. This alleged commission of offence came to the notice of the complaint at a subsequent date and, in these circumstances, there was hardly any inordinate delay on the part of the complainant. In the view of this court, the present attempt on behalf of the petitioner is to drag and delay the proceedings and, in these circumstances, the extraordinary powers u/s 482, Cr.P.C. cannot be invoked for the benefit of the petitioner.

Resultantly, I do not see any merit in this petition and the same is hereby dismissed in limine.