2012 (4) TMI 45 - HC - Companies Law

Registrar of Companies (ROC) received a complaint regarding the affairs of M/s. Tianjin Tianshi India Pvt. Ltd. (the Company) being irregular and illegal - a report was sent by ROC to the Central Government in terms of section 234 (6) of the Act seeking advice for prosecution of company u/s 234 of the Act - It was submitted that the alleged offences being punishable with fine only, the limitation of taking cognizance under Section 468(2) Cr.PC was six months - It was submitted that the alleged offences being punishable with fine only, the limitation of taking cognizance under Section 468(2) Cr.PC was six months - There is no dispute with regard to the proposition of law that the powers of this Court under Section 482 Cr.PC were to be exercised sparingly and in exceptional circumstances where there appeared to be glaring injustice or manifest error committed by the trial court Regarding non-issuance of notice under Section 234 of the Act to the petitioners, it is seen that ROC issued a letter dated 24.2.2004 to the company to enquire about its affairs - the contention of the petitioner that cognizance by the Trial Court was barred by the limitation, the Trial Court record must be perused - The period of limitation for taking cognizance of the offences commences when the knowledge of the commission of offence is gained by the prosecuting agency - Held that present offence arises out of a failure to comply with the statutory rule and such liability will continue until the requirement is complied with - Petition is allowed

Issues:
1. Assailing the order summoning the petitioners in CC No. 939/07 passed by the Ld. Addl. Metropolitan Magistrate (ACMM).
2. Allegations of irregular and illegal affairs of M/s. Tianjin Tianshi India Pvt. Ltd. by the Registrar of Companies (ROC).
3. Non-issuance of mandatory and statutory notice under Section 234 of the Companies Act.
4. Cognizance taken by the ACMM challenged on the ground of limitation.
5. Interpretation of the powers of the High Court under Section 482 Cr.PC at the stage of summoning.
6. Dispute over the delivery of statutory orders under section 234 of the Act to the petitioner company.
7. Examination of the limitation period for taking cognizance of the offences.
8. Differentiation between a continuing offence and an offence committed once for all.

Analysis:

1. The petitioners challenged the summoning order, arguing that it was passed without ensuring the issuance of mandatory notices under Section 234 of the Companies Act. The High Court observed that the prosecution was initiated without providing the petitioner company with an opportunity to respond to the statutory orders, as there was no evidence of the delivery of such orders to the company. Lack of proof of service rendered the complaint not maintainable.

2. The issue of limitation was raised concerning the cognizance taken by the ACMM. The defense contended that the complaint was filed within the limitation period, starting from the Central Government's approval for prosecution. However, the High Court found no evidence of the respondent seeking approval before initiating the prosecution against the petitioner. The court emphasized that the period of limitation begins when the prosecuting agency gains knowledge of the offense, and in this case, there was no application for condonation of delay.

3. The High Court delved into the interpretation of its powers under Section 482 Cr.PC at the summoning stage. While acknowledging the need for caution in exercising these powers, the court highlighted that inherent powers could be invoked in cases of apparent injustice or manifest errors committed by the lower court. The court emphasized that each case's facts determine the application of these powers.

4. The judgment also addressed the distinction between a continuing offense and an offense committed once for all. Referring to legal precedents, the court explained that a continuing offense involves a failure to comply with a rule, with liability persisting until compliance. In this case, the offense was deemed not a continuing one, and the complaint was considered time-barred.

5. Consequently, the High Court invoked its inherent powers under Section 482 CrPC to quash the summoning order against the petitioners, citing the lack of delivery of statutory orders and the issue of limitation as grounds for the decision. The judgment emphasized the importance of procedural fairness and adherence to statutory requirements in legal proceedings.

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