JUDGMENT
Asit Kumar Bisi, J.
1. By the instant application under Section 482 of the Code of Criminal Procedure the petitioners have sought quashing of the proceedings in Case No. C/4132/2001 under Section 217(5) of the Companies Act, 1956 (in short the Act) pending before the learned Metropolitan Magistrate 10th Court, Calcutta.
2. The facts anterior to filing of the instant application, may briefly be narrated thus.
3. M/s. East India Pharmaceuticals works Limited (hereinafter referred to as the Company) was incorporated under the Indian Companies Act, 1913 on 27th April, 1936 bearing registration No. 2108598 and having its registered office at 6, Little Russel Street, Kolkata – 700071. Petitioner Nos. 1 and 2 are the Joint Managing Directors and petitioner Nos. 3 and 4 are the Directors of the Company. For the financial year ending 31st, March, 1993 the statutory Annual General Meeting (AGM) of the Company was held on 17th September, 1993 and at the said meeting audited accounts of the company for the said financial year, reports of the Directors and auditors of the Company were considered and adopted. Under Section 220 of the Act, the notice of AGM with audited accounts, reports of the Directors and Auditors were filed with the authority concerned.
4. On 4th November, 1993 the Regional Director, Department of Company Affairs, Government of India issued a notice to the Company informing that the authorised representative of the Directorate would inspect records of the Company including balance-sheet and profit and loss accounts together with reports of Directors and Auditors for the last three accounting years. Inspection was accordingly made by the representative of the Directorate and by the letter dated 18th November, 1993 the Company furnished information required by the Directorate.
5. On 21st December, 1993 the Joint Director, Department of Company Affairs informed the Company that during course of inspection in relation to books of account and statutory records of the Company various irregularities including omission to provide particulars of shares of the Managing Directors under Section 217(2A) of the Act were found. It has been alleged in para 7 of the said letter that the Company has not furnished the details of information in regard to shares held by the employees in the annexure to the Director’s report for the year 1992-93 in terms of the provision of Section 217(2A) of the Act. By the said letter the Company was asked to furnish the required information as enumerated therein within ten days from the date of issue of that letter. By the letter dated 8th January, 1994 the Company asked for time to furnish clarification of those alleged irregularities. By the letter dated 12th January, 1994 addressed to the authority concerned the Company submitted clarification of the alleged irregularities. After consideration of the Company’s clarification with regard to various irregularities the Deputy Registrar of Companies issued the notice dated 16th June, 2000 alleging violation of Section 217(2A) of the Act and the Company or its Directors who were in default were asked to showcause as to why penal action under Section 217(5) of the Act should not be initiated. On 13th December, 2000 the Deputy Registrar of Companies issued further notice alleging violation of Section 2I7(2A) of the Act and asked the Company or its Directors who were in default to showcause why penal action under Section 217(5) of the Act should not be initiated.
6. By the letter dated 14th August, 2000 the Company informed the present opposite party Mr. K.A. Rao, Deputy Registrar of Companies, West Bengal that there had been no violation of Section 217(2A) of the Act as there was no such employee drawing salary in excess of that of the Managing Director during the relevant period and it was further explained that delay to submit reply to the show-cause notice was due to fire in the office building of the Company. On 29th September, 2001 the petitioners received summons along with copy of the complaint made under Section 217(5) of the Act from 10th Court of the learned Metropolitan Magistrate, Calcutta.
7. Being aggrieved by and dissatisfied with the initiation and/or continuation of the impugned proceedings being Case No. C/4132 of 2001 under Section 217(5) of the Act pending before the learned Metropolitan Magistrate, 10th Court, Calcutta the petitioners have preferred the instant application under Section 482 of the Code of Criminal Procedure.
8. Mr. Hirak Kumar Mitra, the learned senior advocate on behalf of the petitioners has challenged the impugned proceedings initiated against the present petitioners and contended that the allegations contained in the petition of complaint, even if believed to be true, do not disclose the essential ingredients of the offence punishable under Section 217(5) of the Act. From the averments made in the petition of complaint copy of which is marked annexure P-8 to the instant application it appears that an inspection of the books of account and other records of the Company was carried out by an officer duly authorised by the Central Government under Section 209A of the Act who reported that the Company failed to furnish the details of information in regard to the shares held by the employees exceeding 2%, in the Director’s report for the year 1992-93 in accordance with the provisions of Section 217(2A) of the Act read with the Companies (Particulars of Employees) Rules, 1975 and the present petitioners are alleged to have committed an offence punishable under Section 217(5) of the Act. It has been further alleged in the petition of complaint that after the inspection report was submitted the Regional Director (Eastern Region) advised the complainant to issue notice to show cause to the Company for contravention of Section 217(2A) of the Act and accordingly a showcause notice was issued on 16th June, 2000 and the reply was submitted by the petitioners to that showcause notice. It further appears that a second showcause notice was issued subsequently and the Company in its reply to that showcause notice denied the allegations. The case as stated in the complaint reveals that since the reply to the second showcause notice was found to be satisfactory the complaint was filed against the petitioners.
9. Mr. Mitra on behalf of the petitioners has contended that there is no allegation in the complaint that any particular employee of the Company during the financial year 1992-93 was in receipt of remuneration which was in excess of that drawn by the Managing Director or whole time Director or Manager of the Company or that he had equity share which was not less than 2% of the equity shares of the Company. It has been urged by Mr. Mitra that in absence of such averment in the complaint it cannot be said that the petitioners being Directors of the Company violated the provisions of Section 217(2A) of the Act. As argued by Mr. Mitra,. inclusion of a statement as per requirement under Section 217(2A) of the Act is not mandatory until and unless the conditions as specified therein arise and in the instant case at the material point of time no employee satisfied the requirements as provided under the said provisions of law and hence there was no obligation on the part of the Company or its Directors to make such statement. In other words, Mr. Mitra has argued that at the material point of time there was no employee of the Company, who was in receipt of remuneration which was in excess of that drawn by the Managing Director or whole time Director or Manager and there was no such employee of the Company at the relevant point of time who had 2% of equity shares of the Company and as such there was no obligation on the part of the Company or its Directors to furnish such statement showing the name of any such employee.
10. It has been next urged by Mr. Mitra that the petition of complaint was filed beyond the period of limitation as envisaged under Section 468 of the Code of Criminal Procedure and the complainant has failed to explain the delay in the matter of filing of the complaint. It is further contended by Mr. Mitra that having regard to the special features of the case and the connected facts and circumstances it is expedient in the interest of justice that the instant proceedings should not be permitted to continue any further as the process of the Criminal Court should not be allowed to be utilized for harassing the petitioners.
11. Mr. Himangshu Dey, learned advocate on behalf of the opposite party has contended, on the other hand, that even if there was no such employee in the Company who was in receipt of remuneration which was in excess of that drawn by the Managing Director of whole time Director or Manager of the Company and held not less than 2% of the equity shares of the Company during the relevant period, it was the duty of the management of the Company to inform the authority concerned of the said fact and since it was not done, the petitioners cannot escape penal liability of the offence punishable under Section 217(5) of the Act for contravention of the provisions of Section 217(2A) of the Act.
12. So far as delay in the matter of filing of the complaint by the present opposite party is concerned Mr. Dey in his usual fairness has conceded the factum of delay but he has contended that the matter relating to such delay can only be considered by the learned Court below where the proceeding is pending. He has drawn my attention to Section 473 of the Code of Criminal Procedure which empowers the Court to take cognizance of an offence after the expiry of 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. Pointing out the above noted provision embodied in Section 473 of the Code Mr. Dey on behalf of the opposite party has sought to argue that it is for the learned Metropolitan Magistrate in whose Court the proceeding is pending to decide whether or not delay in filing of the complaint has been properly explained by the present opposite party/compainant. Mr. Dey has urged that this Court of revision cannot take into account the annexures to the instant application under Section 482 of the Code of Criminal Procedure filed by the present petitioners and all the disputes can only be adjudicated upon by the learned Trial Court at proper stage of trial. He has further submitted that this Court cannot quash the impugned proceedings by treating the annexures to the instant application filed by the petitioners as evidence. He has cited State of Bihar and Anr. v. Shri P.P Sharma and Anr. in support of his contention.
13. I have carefully considered the rival contentions raised by Mr. Mitra on behalf of the petitioners and Mr. Dey on behalf of the opposite party/complainant and gone through the materials on record. Inordinate delay in the matter of filing of the complaint is quite apparent in the face of the materials on record. The indisputable fact emerging from the materials on record is that on , 4th November, 1993 the Regional Director, Department of Company Affairs, Government of India issued the notice to the Company and by the said notice it was intimated that an inspection of the books of account and other records of the Company in terms of Section 209A of the Act would be conducted by the Directorate. Inspection of the documents was made by the representative of the Directorate and the Company furnished the information required by the Directorate. It is also an admitted fact that on 21st December, 1993 the Joint Director (Inspection), Department of Company Affairs, Calcutta informed the Company that during course of inspection in relation to the books of account and statutory records of the Company various irregularities including omission to provide particulars of shares of the Managing Directors under Section 217(2A) of the Act were found and it was specifically alleged that the Company had not furnished the details of information in regard to the shares held by the employees in the annexure to the Director’s report for the year 1992-93 in terms of provision of Section 217(2A) of the Act. It further appears that by the letter dated 21st December, 1993 the Company was asked to furnish clarification regarding those irregularities within ten days from the date of issue of the letter. The Company asked for time till January, 1994 to furnish clarification of those alleged irregularities and on 12th January, 1994 such clarification of the alleged irregularities was submitted by the Company to the Directorate.
14. The materials on record further denote that though the alleged irregularities were detected during inspection and those alleged irregularities were intimated by the Joint Director concerned by his letter dated 21st December, 1993 and necessary clarification was furnished by the Company on 12th January, 1994 the Deputy Registrar of Companies issued the showcause notice on 16th June, 2000. It is manifestly clear that the showcause notice was issued after several years elapsed from the date of detection of the alleged irregularities by the authority concerned in the course of inspection. Such long delay remains unexplained. Curiously enough I find that in para 9 of the petition of complaint it has been stated by the complainant that the violation of the Act came to the knowledge of the complainant on 29th September, 2000 when final direction to file the complaint had been issued by the Regional Director by his letter dated 29th September, 2000 along with an extract of the inspection report submitted by the Inspecting Officer. But the materials on record contradict such version of the complainant as to date of knowledge referred to in the complaint. As mentioned hereinbefore, the alleged irregularities were detected in the course of inspection which was held as far back as in 1993 and the Company was informed of the alleged irregularities by the letter dated 21st December, 1993 issued by the Joint Director concerned, Department of Company Affairs, Calcutta. The show-cause notice issued by the Deputy Registrar of Companies, West Bengal, who himself is the complainant, is dated 16th June, 2000. It is really an insoluble enigma how in such circumstances tile alleged violation of the Act came to the knowledge of the complainant on 29th September, 2000.
15. The circumstances emerging from the factual matrix leave no roam for scepticism that long unexplained delay strikes at the root of the proceedings initiated by the opposite party/complainant against the present petitioners. In State of Punjab v. Sarwan Singh, the Supreme Court held as follows :
“… The object of Criminal Procedure Code in putting a bar of limitation on prosecutions was clearly to prevent the parties from filing cases after a long time, as a result of which material evidence may disappear and also to prevent abuse of the process of the Court by filing vexatious and belated prosecutions long after the date of the offence. The object which the statute seeks to subserve is clearly in consonance with the concept of fairness of trial as enshrined in Article 21 of the Constitution of India. It is, therefore, of the utmost importance that any prosecution, whether by the State or a private complainant must abide by the letter of law or take the risk of the prosecution failing on the ground of limitation ….”
16. The ratio of the decision in the case of State of Punjab (supra) applies with full force to the case on hand where the prosecution has been launched after several years from the date of detection of the alleged offence.
17. The decision in the case of State of Bihar and Anr. v. Shri P.P. Sharma and Anr. (supra) relied on by Mr. Dey, on behalf of the opposite party does not render any assistance to the opposite party/complainant. In the said case the annexures to the writ petition challenging criminal proceedings against the accused were neither part of the police report nor relied upon by the investigating officer and those documents were produced by the accused before the High Court along with the writ petition. It is in such context the Supreme Court has held that by treating the annexures and affidavit as evidence and by converting itself into a Trial Court the High Court cannot declare the accused to be innocent and quashed the proceedings. The facts of the case of the State of Bihar (supra) as referred to above are completely different from the facts of the instant case and as such the said decision has no manner of application to the facts and circumstances of the present case.
18. As already indicated, the petitioners who are the accused in the impugned proceedings are alleged to have committed an offence punishable under Section 217(5) of the Act for violation of the provisions of Section 217(2A) of the Act because of failure to furnish the details of information in regard to the employees who were in receipt of remuneration in excess of that drawn by the Managing Director or whole time Director or Manager of the Company and held not less than 2% of the equity shares of the Company at the material point of time. It is significant to note in this context that during inspection it was not detected that there was any such employee in the Company at the relevant time. That apart, it appears from the written reply dated 14th August, 2000 to the show-cause notice sent by the Manager concerned on behalf of the Company that they need not disclose information of share holdings of the employees as mentioned in Sub-clause (iii) of Cause (a) of Sub-section (2A) of Section 217 of the Act as there was no such employee in the Company during the relevant period. The provision contained in Section 217(2A)(a){iii) of the Act obviously indicates that the Company is under statutory liability to submit a statement showing the name of employee of the Company if such employee employed throughout the financial year or part thereof, was in receipt of remuneration in excess of that drawn by the Managing Director or whole time Director or Manager and holds not less than 2% of the equity shares of the Company. The Act nowhere indicates that even if there was no such employee the Company is still liable to submit a statement showing that there was no such employee of the Company during the relevant period. Omission to submit any such statement indicating that there was no such employee in the Company during the relevant period cannot fasten penal liability on the petitioners. Thus I find that no prima facie case for the alleged violation of Section 217(2A) of the Act is made out against the petitioners in the complaint.
19. For the foregoing reasons I am clearly of the view that continuance of the impugned proceedings against the present petitioners will be abuse of process of the Court. There is justifiable ground for quashing of the impugned proceedings.
20. The instant application under Section 482 of the Code of Criminal Procedure filed by the petitioners is accordingly allowed. The impugned proceedings of Case No. C/4132/2001 under Section 217(5) of the Act pending before the learned Metropolitan Magistrate, 10th Court, Calcutta be quashed.
Let a copy of this order be sent down to the learned Court below forthwith.
Xerox certified copy of this order, if applied for, be given to the parties as expeditiously as possible.