2009 (8) TMI 699 - HC - Companies Law

Non filing of Annual return - Penalty for non filing - Held that - As the petitioner has no connection with the company affairs particularly the affairs during financial year 2005-06. Therefore the petitioner is not liable to face the criminal proceedings in E.O.C.C. No. 35 of 2007 on the file of the Chief Additional Metropolitan Magistrate Court Chennai. Accordingly the quash petition has to be allowed against the petitioner/accused No. 3 alone. Hence the Criminal Original Petition No. 23684 of 2007 is allowed.

Summary

Issues:
- Alleged offence under section 159 read with section 162 of the Companies Act, 1956.
- Petitioner's resignation from the company and subsequent legal implications.
- Liability of the petitioner as accused No. 3 in E.O.C.C. No. 35 of 2007.

Analysis:
1. The prosecution alleged that the accused persons, including the petitioner as the third accused, committed an offence under section 159 of the Companies Act, 1956, by failing to file the annual return within the stipulated time frame. The complainant argued that this non-compliance amounted to an offence under section 162 of the Act, making the accused punishable with a fine. The prosecution contended that the offence was continuous, and therefore, not subject to any limitation period under the Code of Criminal Procedure, 1973.

2. The petitioner, aged about 75 years, filed a quash petition stating that he had resigned from the company on 30-4-1994 due to his inability to concentrate on daily affairs. He claimed to have surrendered his share capital and completely disassociated himself from the company's operations. The petitioner argued that he had informed the complainant of his resignation in 2000 and 2007, providing documentary evidence of the same. He contended that he had no involvement in the company's affairs during the financial year in question, thereby challenging his liability as an accused in the case.

3. The court, after considering the arguments and evidence presented, noted that the petitioner had indeed resigned from the company in 1994, and this resignation was accepted by the company. The court found that the petitioner had effectively severed his ties with the company's affairs and had duly informed the complainant of his resignation on multiple occasions. Consequently, the court held that the petitioner had no connection with the alleged offence under sections 159 and 162 of the Companies Act, specifically during the financial year in question. As a result, the court allowed the quash petition in favor of the petitioner, absolving him of any liability in the criminal proceedings of E.O.C.C. No. 35 of 2007.

4. In conclusion, the court ruled in favor of the petitioner, allowing the quash petition and dismissing the criminal proceedings against the petitioner as accused No. 3. The judgment emphasized the petitioner's successful demonstration of his disassociation from the company's affairs and his lack of involvement in the alleged offence, leading to the decision to absolve him from any criminal liability in the case.