1997 (1) TMI 439 - HC - Companies Law

Summary

Issues Involved:

1. Bar of limitation for prosecution under Section 468(2)(a) of the Criminal Procedure Code, 1973.
2. Whether the complaints constitute the offences alleged under the Companies Act.
3. Knowledge of the offence by the Registrar of Companies.

Detailed Analysis:

1. Bar of Limitation for Prosecution:

The primary contention raised by the petitioner was that the complaints were barred by limitation under Section 468(2)(a) of the Criminal Procedure Code, 1973, which prescribes a limitation period of six months for offences punishable with fine only. The petitioner argued that the limitation period should commence from the dates when the balance-sheets were filed with the Registrar of Companies, i.e., October 14, 1991, and October 19, 1992, respectively. Alternatively, the petitioner contended that the limitation should be computed from September 19, 1994, the date when the Department must have received the reply from the petitioner regarding the deployment of funds.

The court, however, rejected the argument that the mere filing of balance-sheets constitutes the date of knowledge of the offence for the Registrar. The judgment emphasized that "mere filing of the balance-sheets with voluminous annexures does not necessarily mean that the offence can be detected by the Registrar immediately." It was concluded that the Registrar could only be deemed to have knowledge of the offence after a close scrutiny or inspection, which in this case was on March 30, 1995, when the Registrar received the communication from the Department.

2. Whether the Complaints Constitute the Offences Alleged:

The petitioner contended that even if the allegations in the complaints were taken as true, they did not constitute the offences alleged under the Companies Act. The specific violations included failure to comply with Section 49(1)(a), violation of Section 292 read with Article 85(XII) of the articles of association, and violation of Sections 292(1)(d) and 292(3) of the Act. The petitioner argued that the deposits made were short-term deposits and not investments in the nature of a portfolio management scheme, thus not falling under the purview of the alleged sections.

The court did not delve into this contention in detail, as the complaints were found to be barred by limitation, making this issue moot.

3. Knowledge of the Offence by the Registrar of Companies:

The court examined whether the knowledge of the Department could be imputed to the Registrar of Companies. The petitioner argued that the Registrar is part of the Company Law Department, and hence, the knowledge of the Department should be deemed as the knowledge of the Registrar. The court agreed with this contention, stating that "the Registrar of Companies, who is part of the Department is deemed to have knowledge of the offences on the date when the Department had knowledge." Consequently, the limitation period should be computed from September 19, 1994, the date when the Department received the reply from the petitioner.

Since the complaints were filed on September 28, 1995, they were held to be barred by limitation, as the limitation period expired on March 19, 1995.

Conclusion:

The court allowed the criminal petitions, quashing the proceedings in S.T.C. Nos. 11 to 14 of 1995, on the file of the Special Judge for Economic Offences, Hyderabad. The judgment concluded that the complaints were barred by limitation and did not address the issue of whether the complaints constituted the offences alleged under the Companies Act.