2005 (5) TMI 336 - HC - Companies Law

Issues Involved:
1. Quashing of proceedings under section 217(5) of the Companies Act, 1956.
2. Alleged violation of section 217(2A) of the Companies Act, 1956.
3. Delay in filing the complaint and its implications under section 468 of the Code of Criminal Procedure.
4. Requirement of submitting a statement under section 217(2A) of the Companies Act, 1956.

Detailed Analysis:

1. Quashing of Proceedings under Section 217(5) of the Companies Act, 1956:
The petitioners sought quashing of the proceedings in Case No. C/4132/2001 under section 217(5) of the Companies Act, 1956, pending before the learned Metropolitan Magistrate, 10th Court, Calcutta. The petitioners argued that the allegations in the complaint did not disclose the essential ingredients of the offence punishable under section 217(5) of the Act.

2. Alleged Violation of Section 217(2A) of the Companies Act, 1956:
The complaint alleged that the company failed to furnish details regarding shares held by employees exceeding 2% in the Director's report for the year 1992-93, as required under section 217(2A) of the Act. The petitioners contended that there was no employee who met the criteria specified in section 217(2A) during the relevant period, and therefore, there was no obligation to furnish such details.

3. Delay in Filing the Complaint and its Implications under Section 468 of the Code of Criminal Procedure:
The petitioners argued that the complaint was filed beyond the period of limitation as envisaged under section 468 of the Code of Criminal Procedure. The complainant acknowledged the delay but contended that the matter of delay should be considered by the learned Trial Court under section 473 of the Code, which allows the Court to take cognizance of an offence after the expiry of the period of limitation if the delay is properly explained or necessary in the interests of justice.

4. Requirement of Submitting a Statement under Section 217(2A) of the Companies Act, 1956:
The petitioners argued that there was no requirement to submit a statement under section 217(2A) of the Act as no employee met the criteria specified in the section. The court found that the Act does not mandate the submission of a statement indicating the absence of such employees and that failure to submit such a statement does not constitute a violation of section 217(2A) of the Act.

Judgment:
The court found that the complaint was filed after an inordinate delay, which was not properly explained. The court referred to the Supreme Court's decision in State of Punjab v. Sarwan Singh, which emphasized the importance of timely prosecution to prevent abuse of the process of the Court and to ensure fairness of trial as enshrined in Article 21 of the Constitution of India.

The court also noted that the alleged irregularities were detected in 1993, but the show-cause notice was issued only in 2000, and the complaint was filed thereafter. This unexplained delay was deemed to strike at the root of the proceedings.

Furthermore, the court concluded that no prima facie case for the alleged violation of section 217(2A) of the Act was made out against the petitioners, as there was no evidence of any employee meeting the criteria specified in the section during the relevant period.

Consequently, the court held that the continuance of the impugned proceedings would be an abuse of the process of the Court and quashed the proceedings in Case No. C/4132/2001 under section 217(5) of the Companies Act, 1956, pending before the learned Metropolitan Magistrate, 10th Court, Calcutta.

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