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2008 (2) TMI 628 - HC - Companies LawCognizance of the offence under section 224(7) by Metropolitan Magistrate - Held that - It is futile on the part of learned counsel for the respondent to invoke section 473 of the Code of Criminal Procedure for more than one reason. The order dated 6-1-2005 of the learned Additional Chief Metropolitan Magistrate Delhi nowhere mentions any such contention having been raised by the complainant-Registrar of Companies. The order does not make any reference either to section 468 or 473 of the Code of Criminal Procedure. Secondly the explanation offered in the complaint is only that the complaint could not have been filed without the prior sanction of the Regional Director Kanpur which was received on 9-9-2003. The complaint still does not offer any explanation for the delay in the Regional Director Kanpur according sanction although the Department of Company Affairs was made aware of the contravention on 15-6-2002 by M/s. T.S. Kakkar and Co. Further they had the company s reply dated 25-11-2002 to the show-cause notice issued to it. The complaint also does not explain the delay of more than one year after the grant of sanction in the Registrar of Companies filing its complaint in the court of the learned Additional Chief Metropolitan Magistrate Delhi. Thus the learned Metropolitan Magistrate ought not to have taken cognizance of the offence under section 224(7) of the Act as it was beyond the period of limitation stipulated under section 468(2)(a) of the Code of Criminal Procedure. Petition allowed.
Issues:
1. Quashing of Complaint Case under section 482 of the Code of Criminal Procedure. 2. Violation of section 224(7) of the Companies Act, 1956. 3. Time limitation for taking cognizance of the offence under section 224(7). 4. Invocation of section 473 of the Code of Criminal Procedure for delay. Issue 1: Quashing of Complaint Case under section 482 of the Code of Criminal Procedure: The petition sought the quashing of Complaint Case No. 670 of 2004 under section 482 of the Code of Criminal Procedure, which was pending in the court of the learned Additional Chief Metropolitan Magistrate, Delhi. The complaint was filed against the company for alleged violation of section 224(7) of the Companies Act, 1956. The petitioners argued that the cognizance of the offence was taken beyond the period of limitation specified under section 468(2)(a) of the Code of Criminal Procedure, as the complaint was filed more than four years after the commission of the offence. Issue 2: Violation of section 224(7) of the Companies Act, 1956: The complaint alleged contravention of section 224(7) of the Act, which mandates a company to obtain prior approval of the Central Government for the removal of auditors at a general meeting. The company had removed its auditors without obtaining prior approval, leading to the complaint being filed. The court determined that the contravention constituted a one-time offence and not a continuing one, as the subsequent permission of the Central Government could not rectify the initial contravention. Issue 3: Time limitation for taking cognizance of the offence under section 224(7): The punishment for contravention under section 224(7) was a fine, as per section 629A of the Act. The court noted that the cognizance of the offence should have been taken within six months as per section 468(2)(a) of the Code of Criminal Procedure. However, the complaint was filed after more than four years from the commission of the offence, and cognizance was taken even later, rendering it beyond the period of limitation. Issue 4: Invocation of section 473 of the Code of Criminal Procedure for delay: The Registrar of Companies sought to invoke section 473 of the Code of Criminal Procedure to justify the delay in taking cognizance. However, the court rejected this argument, stating that the complaint did not offer a reasonable explanation for the delay in filing the complaint after receiving the necessary sanction. The court emphasized that the delay in taking cognizance was not justifiable, especially considering the lack of valid explanations for the delays in the process. In conclusion, the court allowed the petition, quashing the Complaint Case No. 670 of 2004 and all proceedings related to it, as the cognizance of the offence under section 224(7) was taken beyond the period of limitation specified under the Code of Criminal Procedure.
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