2006 (10) TMI 239 - HC - Companies Law

Summary

Issues Involved:
1. Quashing of proceedings in STC No. 146 of 2001.
2. Limitation period for taking cognizance of the offence.
3. Whether the offence u/s 113 of the Companies Act is a continuing offence.

Summary:

Issue 1: Quashing of proceedings in STC No. 146 of 2001

Seeking to have the proceedings in STC No. 146 of 2001, on the file of the Special Judge for Economic Offences, Nampally, Hyderabad, quashed, this criminal petition is filed by the 3rd accused. The complaint, in STC No. 146 of 2001, was filed by the Registrar of Companies, A.P., Hyderabad on 21-8-2001, u/s 113(2) of the Companies Act, for contravention of the provisions of section 113(1) of the Companies Act.

Issue 2: Limitation period for taking cognizance of the offence

Learned Counsel for the petitioner contended that the learned Magistrate ought not to have taken cognizance of the offence since it was beyond the period of limitation prescribed u/s 468 of the Criminal Procedure Code. The penalty prescribed u/s 113(2) is only fine, the period of limitation is six months, and as the complaint was filed only on 21-8-2001, more than one year from the date of knowledge, it is barred by limitation. The Court referred to the relevant sections of the Companies Act and the Criminal Procedure Code, emphasizing that the period of limitation, u/s 468(2)(a), Cr.P.C, is six months, and as the complaint itself was filed more than one year after the date of knowledge, no cognizance could have been taken of the offence since it is barred by limitation.

Issue 3: Whether the offence u/s 113 of the Companies Act is a continuing offence

The Court examined whether the offence u/s 113 of the Companies Act is a continuing offence, in which event u/s 472, Cr. P.C. a fresh period of limitation will begin to run at every moment of the time during which the offence continues and the bar u/s 468, Cr. P.C. would not apply. The Court concluded that the offence u/s 113(1) is not a continuing offence. The liability under section 113(1) does not continue until the rule, or its requirement, is obeyed or complied with. The offence, on the breach of section 113(1), is complete once and for all on the failure to deliver the shares, debentures, and stocks within the time stipulated. There is no continuing obligation even after the expiry of the time limit. The offence under section 113(1) is not repeated or committed day to day after the initial default and cannot, therefore, be said to be a continuing offence attracting the provisions of section 472 of the Code of Criminal Procedure.

Conclusion:

Since the penalty prescribed, for violation of section 113(1) of the Companies Act, is fine of Rs. 500 for each day during which the default continues, even if the period of limitation is calculated from the date of knowledge u/s 469(1)(b) of the Code of Criminal Procedure, cognizance could not have been taken beyond six months in view of the bar in taking cognizance u/s 468(2)(a), Cr.P.C. In the case on hand, since the complaint itself was filed more than one year after the date of knowledge, no cognizance can be taken of the offence u/s 113(1) of the Companies Act. Proceedings in S.T.C. No. 146 of 2001, on the file of the Special Judge for Economic Offences, Nampally, Hyderabad, for the offence u/s 113(1), read with section 113(2) of the Companies Act is quashed. The criminal petition is allowed.

This Court acknowledges the valuable assistance rendered by Sri O. Kailashnath Reddy, learned amicus curiae.