2009 (5) TMI 547 - HC - Companies Law

Quashing of complaint - complaint under sections 63 and 628 of Companies Act, 1956 alleging mis-statement/wrong statement in prospectus - Held that - In the present case, the respondents have submitted that it is only when a balance sheet was filed by the petitioner for the year ending 31-3-2001 that they came to know that the statement made in the prospectus was not correct and, accordingly, they gave a show-cause notice which was given on 21-5-2002 and then they have filed a complaint dated 14-1-2004. It is submitted that the delay had been caused because of obtaining sanction, etc., from the department concerned. However, when in the complaint it is not stated as to from which date the limitation starts so as to bring the complaint within limitation nor it is stated as to when they applied for obtaining sanction of the competent authority to file the complaint and when the sanction was granted, it does not lie in the mouth of the respondents to submit that the complaint was within limitation. Petition allowed and the complaint filed by the respondents is dismissed as barred by limitation.

Summary

Issues Involved:
1. Quashing of complaint due to limitation period.
2. Requirement and timing of sanction from the Department of Company Affairs (DCA).
3. Application of sections 63 and 628 of the Companies Act, 1956.
4. Interpretation and application of sections 468, 469, 470, 471, and 472 of the Criminal Procedure Code (Cr. P.C.).

Issue-wise Detailed Analysis:

1. Quashing of Complaint Due to Limitation Period:
The petitioner sought to quash the complaint (C.C. No. 461/2002) filed by the Registrar of Companies (RoC) on 7-5-2002 under sections 63 and 628 of the Companies Act, 1956, alleging misstatements in the prospectus dated 18-4-1995. The complaint was filed after a delay of seven years, whereas the limitation period prescribed under section 468(2)(c) of the Cr. P.C. is three years, as the maximum penalty for the alleged violations is two years imprisonment.

2. Requirement and Timing of Sanction from the Department of Company Affairs (DCA):
The respondent argued that the delay in filing the complaint was due to the need for sanction from the DCA, which was granted on 3-3-2002. The respondent claimed that the offence came to their knowledge only upon receiving the sanction letter, thus justifying the delay under sections 468, 469, 470, 471, and 472 of the Cr. P.C. However, the complaint did not specify when the application for sanction was made, which is crucial for computing the limitation period as per section 470(3) of the Cr. P.C.

3. Application of Sections 63 and 628 of the Companies Act, 1956:
Section 63 deals with criminal liability for misstatements in a prospectus, punishable by up to two years imprisonment or a fine. Section 628 penalizes false statements in any document required by the Act, also punishable by up to two years imprisonment. The petitioner argued that the complaint, filed after seven years, was barred by the three-year limitation period under section 468 of the Cr. P.C.

4. Interpretation and Application of Sections 468, 469, 470, 471, and 472 of the Cr. P.C.:
The court referred to previous judgments, including Sunair Hotels Ltd. v. RoC and Rajiv Kumar v. RoC, which dealt with similar issues of delayed complaints and the requirement of sanction. The court emphasized that for computing the limitation period, the date of application for sanction and the date of receipt of the sanction must be specified and excluded. The complaint lacked these details, making it impossible to justify the delay.

Conclusion:
The court held that the complaint was barred by limitation as the respondent failed to specify the dates necessary for computing the exclusion period under section 470(3) of the Cr. P.C. Consequently, the petition was allowed, and the complaint was dismissed as time-barred. The order of the learned Additional Chief Metropolitan Magistrate (ACMM) was set aside, and the bail bond of the petitioner was discharged.