Mohit Kumar Mookherjee and Others vs Registrar of Companies, West Bengal

Mohan Kumar Mukherjee, J.—For advancing loan to Messrs. Integral Structures (India) Limited during the period from 25th June 1974 to 1st July 1974 without approval of the Central Government, the Directors of Messrs. Insov Auto Ltd., have been arraigned before the learned Metropolitan Magistrate to answer a charge u/s 295(4) of the Companies Act, 1956. Against the said prosecution, the accused persons have moved this Court for quashing on the ground that the prosecution is barred by limitation. In rejecting such a plea, the learned trying Magistrate held that the offence was a continuing one and that the complainant namely the Registrar of Companies, was entitled to exclude the time taken by the Central Government in according sanction for launching the prosecution. In my considered view the reasonings of the learned Magistrate are erroneous and the complainant is not entitled to extend the period of limitation on those scores.

The offence alleged against the petitioners is one of advancing loan without prior approval of the Central Government. Once such loan was advanced without such approval the offence was complete and it cannot be said to be a continuing one. In the instant case, the loan was last advanced on 1st July 1974 and consequently, it must be held that the offence was complete on that day Even if the complainant''s plea that the offence came to his knowledge in the month of April 1976 is accepted as true still then the prosecution was to be launched before April 1977, one year being the period of limitation under section. 468(2)(b) Cr. P. C. for an offence u/s 295 (4) of the Companies Act. It, however, appears that the complaint was lodged on 8th February 1978 and cognizance was taken on that date. To explain this delay the complainant has also pleaded that some time passed for taking sanction from the Central Government and that a show cause notice was issued to ascertain the culpability of each of the Directors of the Company. The first plea is not available to the complainant as u/s 470 of the Cr. P. C. extension of the period of limitation for obtaining sanction is permissible when under any law sanction is required. The relevant law, namely, the Companies Act nowhere provides that for a prosecution u/s 295(4) a sanction of the Central Government is necessary. As regards the other plea, it appears from the record that the Directors were asked to show cause on 6th December 1977, that is, after the period of limitation. Since the cognizance was already barred by that time, the prosecution cannot avail of such a pela to circumvent the inhibition of limitation. For the above considerations, it must be held that the instant prosecution is barred by limitation. The application accordingly succeeds and the Rule is made absolute. The impugned proceeding is hereby quashed.