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Issues:
Violation of provisions of Companies Act, 1956 regarding deposits repayment. Constitutional validity of punishment under section 58A. Applicability of regulation under Reserve Bank of India Act. Scheme of administration for repayment of liabilities. Analysis: The petitioners sought to quash criminal proceedings for violating provisions of the Companies Act, 1956 related to non-refund of deposits. The charges were under section 58A(3), 58A(4), and 58A(5) of the Act, carrying a punishment of imprisonment up to five years. The petitioners argued that the constitutional provision of article 20(1) prohibits punishment greater than what was in force at the time of the offense. A previous judgment by S. Natarajan J. affirmed this position, highlighting the limitation on imposing imprisonment for offenses committed before the amendment introducing section 58A. The petitioners expressed willingness to be prosecuted under the regulation of the Reserve Bank of India Act, waiving the defense of limitation. They cited a previous order by Shanmukham J. where a scheme of administration was framed for the company, leading to repayment of liabilities, including the deposits in question. It was emphasized that the deposits had been repaid, and the parties had complied with the court's scheme, portraying the violation as technical rather than intentional. Considering the repayment of deposits and compliance with the court's scheme, the court decided to take a lenient view. The court opined that the fine under the Reserve Bank of India Act, which could extend up to the deposit amount, was unnecessary in this case. The matters were remitted to the lower court to treat the cases as complaints under section 45-0 of the Reserve Bank of India Act before its amendment, directing the lower court to handle the cases accordingly.
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