1995 (12) TMI 272 - HC - Companies Law

Summary

Issues:
1. Barred by limitation under section 468 of the Code of Criminal Procedure.
2. Accused not properly arrayed in the case.
3. Clubbing of offences arising out of two financial years.

Analysis:

Issue 1: Barred by limitation under section 468 of the Code of Criminal Procedure
The petitioner argued that the complaint was filed beyond the period of limitation prescribed under section 468 of the Code. The offence under section 371(1) of the Companies Act, 1956, carries a term of imprisonment of six months, making the limitation period one year. The complaint was filed on 26-9-1994, exceeding the one-year limit from the date of the offence. The respondent contended that the limitation question is a mixed question of fact and law, and the Court cannot determine it at this stage. However, the Court held that the complaint was clearly barred by limitation as the respondent had knowledge of the offence well before the complaint was filed, based on the events and communications between the parties.

Issue 2: Accused not properly arrayed in the case
The petitioner argued that all offenders liable for the offence were not included as accused in the case, which would vitiate the prosecution. The Court noted that the company violated section 370 of the Companies Act by making loans without proper authorization. The balance sheets were submitted to the respondent on specific dates, and an inspection revealed non-compliance with the law. The respondent issued a show-cause notice, and the petitioner replied, but no further action was taken until a complaint was filed. The Court found that the complaint was filed well beyond the limitation period, rendering it unlawful and liable to be quashed.

Issue 3: Clubbing of offences arising out of two financial years
The petitioner also raised the issue of unlawfully clubbing offences arising out of two financial years. The Court did not delve into this issue as it found the complaint to be clearly barred by limitation. The Court cited a precedent from the Madras High Court emphasizing the importance of adhering to limitation periods in criminal prosecutions to prevent abuse of the legal process and ensure fairness to both the prosecution and the accused. Ultimately, the Court allowed the criminal petition, quashing the proceedings in the case on the grounds of being time-barred.