In the High Court of Judicature at Madras Dated: 19.12.2008 Coram: The Honourable Mr.Justice M.SATHYANARAYANAN Crl.O.P.Nos.27692 to 27703 of 2005 and Crl.M.P.Nos.8137 and 8138 of 2005 T.G.Krishnamurthy ... Petitioner Versus The Assistant Registrar of Companies, Tamil Nadu, Shastri Bhavan, No.26, Haddows Road, Chennai-6. ... Respondent Criminal Original Petitions filed under Section 482 of Cr.P.C., seeking to quash the proceedings in E.O.C.C.Nos.252, 251, 250, 249, 248, 247, 257, 256, 255,254, 253 and 258 of 2004 on the file of the Court of Additional Chief Metropolitan Magistrate (Economic Offence-II), Egmore, Chennai. For Petitioners .. Mr.R.Karthikeyan For Respondent .. Mr.P.Kumaresan, SCGSC. ***** O R D E R
These Criminal Original Petitions are filed to quash the prosecution launched against the petitioner herein who is arrayed as accused in E.O.C.C. Nos.247 to 258 of 2004 by the respondent herein pending on the file of the Court of Additional Chief Metropolitan Magistrate (Economic Offences-II), Egmore, Chennai.
2. The sum and substance of the averments made in all the complaints are:
That the petitioner is the Managing Director of the first accused company viz., M/s. Gangappa Paper Mills Limited, Chennai-21. As per Section 220 of the Companies Act, the first accused company and its Directors are under statutory obligation to file with the respondent herein/complainant, three copies of Balance Sheet and Profit and Loss Account in the prescribed format within 30 days of placing the same in the Annual General Body Meeting and in case no Annual General Body Meeting was held, within 30 days of the due date of the said meeting. It is further averred in the complaint that the Balance Sheet and Profit and Loss Account pertaining to the first accused company for the financial years 1991 to 2000 respectively, have not been filed and thereby the statutory requirements contemplated under Section 220 of the Companies Act 1956 have been violated. It is also averred in the complaint that in spite of issuance of show cause notice dated 02.04.2002 by the respondent/complainant to the petitioner/accused No.2, in his capacity as the Managing Director of the first accused company, having not chosen to comply with it and as per Section 162 of the Companies Act, every officer of the company who is in default, shall be punishable with a fine which may extend to Rs.50/- for every day during which, the default continues. The respondent/complainant specifically averred that the offence is a continuing one within the meaning of Section 472 of Cr.P.C. and hence the complaints are not barred by limitation.
3. The petitioner who was the Managing Director of the first accused company challenging the legality of the prosecution launched against him in the above said Calendar Cases, has filed these Criminal Original Petitions to quash the complaints contending that the complaints are hopelessly barred by limitation as those complaints have not been filed within a period of six months in respect of the alleged commission of the offence which took place in the year 1990. It is further contended by the petitioner herein that BIFR had passed an order winding up of the first accused company and consequently the company had suspended its operations even as early as in the year 1987 and hence the question of filing Balance Sheet and Profit and Loss Account do not arise for consideration.
4. Heard the submissions of Mr.R.Karthikeyan, learned counsel appearing for the petitioner in each of Criminal Original Petitions and Mr.P.Kumaresan, learned Senior Central Government Standing Counsel.
5. The learned counsel appearing for the petitioner heavily placed reliance upon the following decisions to substantiate his contention.
1. (Volume 97) Company Cases 500-NEPC India Limited and others vs. The Registrar of Companies.
2. 2001 – 2- L.W. (Crl.) 656 – V.Karthikeyan, T.L.Pragasam vs. The Registrar of Companies.
3. 2007-2-L.W.(Crl.) 606 N.Kumar vs. M.O.Roy, Assistant Director, Serious Fraud Investigation Office, Ministry of Company Affairs, Government of India, Paravarna Bhavan, New Delhi.
6. In (Volume 97) Company Cases 500 (Mad.) –NEPC India Limited and others vs. The Registrar of Companies , M/s. NEPC India Limited had declared dividend in the Annual General Body Meeting held on 19.9.1995 and failed to despatch the dividend warrant within the stipulated time. Therefore, prosecution was launched against the said company under Section 220 read with Section 162 of the Companies Act. The company challenging the vires of the said prosecution moved this Court for quashing the complaint. It was contended therein that the prosecution launched is barred by time as it was done after a period of three years from the date when the offences are alleged to have been committed and that since the said offence is punishable only with a fine and the complaint if any ought to have been filed within a period of six months and consequently the complaint itself is barred by limitation.
7. This Court in the said case, taking note of the said submission and Section 468 of Cr.P.C. held that since the offence punishable is only with a fine and in view of Section 468 of Cr.P.C., it ought to have been filed within a period of one year. However, the show cause notice in that case was issued on 15.10.1996 and the complaint itself came to be filed on 10.3.1998 and hence held that the complaint is barred by limitation and quashed the complaint.
8. In 2001 – 2- L.W. (Crl.) 656 – V.Karthikeyan, T.L.Pragasam vs. The Registrar of Companies, again the question of non payment of dividend within a period stipulated under the Companies Act and the consequent launch of prosecution was the subject matter of petition for quash and this court found that the complaint is barred by limitation and therefore the cognizance on account of the time barred complaint is to be quashed and accordingly quashed it.
9. In 2007-2-L.W.(Crl.) 606 N.Kumar vs. M.O.Roy, Assistant Director, Serious Fraud Investigation Office, Ministry of Company Affairs, Government of India, Paravarna Bhavan, New Delhi, this Court after taking into consideration the NEPC case 1999 (Vol.97) Company Cases 500 V.Karthikeyan and another vs. TheRegistrar of Companies, 2001(2) L.W. 656, has held the prosecution launched on the ground of non payment of dividend or non posting of warrant for financial years, is barred by limitation and quashed it.
10. Therefore the learned counsel appearing for the petitioner would submit that since the offence said to have been committed from the year 1990 and that the show cause notice was issued in the year 2002 and the complaint came to be filed only in the year 2004, all the complaints are hopelessly barred by limitation and therefore, the cognizance taken by the lower Court on the face of it, is unsustainable in law and are liable to be quashed. That apart the learned counsel appearing for the petitioner would submit that since BIFR ordered winding up of the company even prior to the launching of the prosecution and the High Court of Bombay has also appointed Receiver in the suit filed by IDBI, the petitioner herein cannot be faulted with for non filing of Balance Sheet and Profit and Loss Account and on that ground also, the complainants are liable to be quashed.
11. Mr.P.Kumaresan, learned Senior Central Government Standing Counsel would submit that as per Section 162 of the Companies Act, if a company fails to comply with any of the provisions contained in section 159, 160 or 161, the company and the every officer of the Company who is in default, shall be punishable with a fine which may extend to Rs.50/- for every day during which the default continues.
12. Therefore, according to the learned counsel appearing for the respondent, the bar of limitation contemplated under Section 469 of Cr.P.C. is not applicable in respect of the prosecution launched against the petitioner.
13. The learned Senior Central Government Standing Counsel also drawn attention of the Court to the judgment reported in AIR 1958 (SC) 908 – State of Bihar vs. Deokaran Nenshi and another, wherein the distinction between offence which takes place when an act or omission is committed once and for all and continuing offence, has been stated. The Honble Supreme Court of India in the said decision has held as follows:-
” Continuing offence is one which is susceptible of continuance and is distinguishable from the one which is committed once and for all. It is one of those offences which arises out of a failure to obey or comply with a rule or its requirement and which involves a penalty, the liability for which continues until the rule or its requirement is obeyed or complied with. On every occasion that such disobedience or non-compliance occurs and recurs there is the offence committed. The distinction between the two kinds of offences is between an act or omission which constitutes an offence once and for all and an act or omission which continues and therefore, constitutes a fresh offence every time or occasion on which it continues. In the case of a continuing offence, there is thus the ingredient of continuance of the offence which is absent in the case of an offence which takes place when an act or omission in committed once and for all.”
The Honble Supreme Court of India on the said facts held that the complaint was time barred.
14. The Court has perused the petitions for quash, counter affidavit filed by the respondent in each of the quash petitions and also the decisions relied on by respective counsels.
15. The decisions relied on by the learned counsel appearing for the petitioner can be distinguished on facts, for the reason that in respect of belated despatch of dividend, warrants, the offence is not a continuing one. But in the case on hand as per Section 162 of the Companies Act, if a company and every officer of the company failed to comply with any of the provisions contained in Sections 159, 160 or 161, 162(1) they shall be punishable with a fine which may extend to Rs.50/- for every day during which default continues.
16. The same question came for consideration before this Court and this Court in the judgment reported in 1997 (1) CTC 382 Assistant Registrar of Companies, Tamil Nadu vs. M/s. Premier Synthetics Private Limited and two others held as follows:-
“In these cases under consideration, some of the complaints relate to violation of Section 159 of the Companies Act and some of the cases relate to violation of 220 of the Companies Act. The violation under Sectiion 220 of the Companies Act is made punishable in Section 162 of the Companies Act. The violation of Section 159 of the Companies Act is also made punishable under Section 162 of the Companies Act. The view of the learned Magistrate that the offences under Section 159 and 200 of the Companies Act, are not continuing offences and one an offence is done it is completed for all practicable purposes on that day itself, is opposed to atleast three rulings of this Court. There are other judgment of various other High Courts, some holding that the offence under Section 159 and 220 of the Companies Act are continuing offences and some holding the contra view. However in view of the settled position of law rendered by our High Court. I am not referring to any of the judgments of the other High Courts to decide that question. The question whether the offences referred to above are continuing offences or not is the subject matter of three deisions and they are as follows:-
(1) In the matter of Kalaimagal Corporation Ltd. Tuticorin and others, 1987 L.W. (Crl.) 501; (2) Dhanalakshmi Chemical Industries Pvt Ltd., 1988 L.W. Crl.181; (3) A unreported judgment dated 27.7.90 in Crl.M.P.7417 and 7419 of 1986.
The first two judgments have been rendered by Justice Mrs.Padmini Jesudurai, and the last one was rendered by Justice Mr.T.S.Arunachalam, (as he then was). Uniformly, all the judgments hold that the offences complained of in these complaints are continuing offences and therefore the period of limitation prescribed in law is not attracted. In view of the settled position of law, I have no hesitation in setting aside the orders impugned in each of the revision case and remand the matter back to the trial Court for further action in accordance with law. ”
17. In view of the said categorical pronouncement coupled with the averments made in the complaint, this court is of the view that since the offence alleged against the petitioners is a continuing one, it is not barred by limitation and the cognizance taken by the trial Court is valid and sustainable.
18. With regard to the submission made by the learned counsel appearing for the petitioner that even prior to the launching of the prosecution, the first accused company has been ordered to be wound up and a Receiver was also appointed by the High Court of Bombay in a suit filed by IDBI, it involves adjudication on facts and this Court at this stage cannot venture into the said factual aspect. It is open to the petitioner herein to urge those points during trial.
19. In the result, all the Criminal Original Petitions are dismissed. Since the Calendar Cases are of the year 2004, the Court of Additional Chief Metropolitan Magistrate (Economic Offences-II), Egmore, Chennai-8 is directed to give utmost priority for early disposal. Consequently, Crl.M.P.Nos.8137 and 8138 of 2005 are closed. It is made clear, that findings are given only for the disposal of these Crl.O.Ps. and the trial Court is to decide the complaints on its’ own merit.
gr.
To
1. The Additional Chief Metropolitan Magistrate (Economic Offences- II), Egmore, Chennai-8.
2. The Assistant Registrar of Companies,Tamil Nadu, Shastri Bhavan,
No.26, Haddows Road, Chennai-6.
3. The Public Prosecutor, High Court,
Madras