2013 (2) TMI 255 - HC - Companies Law

Non allotment of shares applied nor returned the share application money - contention of limitation raised by the petitioners against the prosecution - whether it was a continuing offence? - Held that - The ROC is the person competent to initiate prosecution under the provisions of the Companies Act. If a violation of the provision of Act has been brought to his notice, he is certainly competent to initiate a prosecution on the basis of the information received. Ext.P5 is only in the nature of an information regarding commission of an offence under Sections 73(2A) and 73 (2B) of the Companies Act. On the basis of that information, the Registrar of Companies is certainly entitled to initiate prosecution by filing a complaint. Such initiation of prosecution cannot be faulted simply because the informant has not been examined as a witness. It is all the more so, since the facts stated in Ext.P5 cannot be disputed by the petitioners at all in this case. The fact that the petitioners should have refunded the application money by 15.4.1992 cannot be disputed by the petitioners. Ext.P5 intimation to the petitioners by the Registrar of Companies directing them to explain the default by the petitioners has been proved in evidence. Ext.P7 reply dated 3.11.1994 did not contain the particulars called for by the Registrar. At least as on 3.11.1994 the petitioners had not refunded the application money. So up to 3.11.1994 at least the offence was a continuing offence. The complaint was filed on 22.4.1995 well within the six months period from 3.11.1994. Perhaps from the date when actually the application money was refunded, it may not be a continuing offence. But until the refund of the application money, the offence is a continuing offence. As such, I do not find any merit in the contention of limitation raised by the petitioners against the prosecution. This is a prosecution where the facts are not in dispute at all. The facts clearly establish the guilt of the petitioners. The petitioners were statutorily bound to refund the application money by 15.4.1992. Even as on 3.11.1994, when the petitioners submitted Ext.P7 reply to Ext.P5 letter by the Registrar of Companies, the application money had not yet been refunded. As such, the prosecution has proved the guilt of the petitioners beyond a reasonable doubt. In the above circumstances no merit in the contentions of the petitioners in this Criminal Revision Petition and accordingly, the same is dismissed.

Summary

Issues:
1. Conviction under Sections 73 (2A) and 73 (2B) of the Companies Act, 1956.
2. Competency of the Registrar of Companies to initiate prosecution.
3. Prosecution barred by limitation under Section 468 of the Cr.P.C.

Analysis:

Issue 1: Conviction under Sections 73 (2A) and 73 (2B) of the Companies Act, 1956:
The petitioners, a company and its Managing Director, were accused of offences under Sections 73 (2A) and 73 (2B) of the Companies Act. The prosecution was initiated based on a complaint by the Registrar of Companies, Kerala. The accused were convicted by the Magistrate and the conviction was upheld in the appeal. The petitioners challenged the judgments of the lower courts in a Criminal Revision Petition. The court noted that the petitioners were obligated to refund application money by a specific date, which they failed to do so even by a later date. The prosecution proved the guilt of the petitioners beyond a reasonable doubt, leading to the dismissal of their contentions and the Criminal Revision Petition.

Issue 2: Competency of the Registrar of Companies to initiate prosecution:
The court clarified that the Registrar of Companies is competent to initiate prosecution under the Companies Act upon receiving information about a violation. The court emphasized that the initiation of prosecution based on information received, even if the informant is not examined as a witness, is valid. In this case, the information provided by the Registrar of Companies was regarding offences under the Companies Act, and the prosecution was justified in pursuing the case without faulting the absence of the informant's testimony.

Issue 3: Prosecution barred by limitation under Section 468 of the Cr.P.C.:
The petitioners contended that the prosecution was time-barred under Section 468 of the Cr.P.C. as the complaint was filed beyond the prescribed six months. However, the court rejected this argument, stating that the offence was a continuing one until the application money was refunded. The court highlighted that the complaint was filed within six months of a crucial date when it was evident that the refund had not been made. The court emphasized that until the refund was completed, the offence continued, making the prosecution timely and valid.

In conclusion, the court dismissed the Criminal Revision Petition, upholding the convictions of the petitioners under Sections 73 (2A) and 73 (2B) of the Companies Act. The judgment emphasized the statutory obligations of the accused, the competence of the Registrar of Companies to initiate prosecution, and the continuing nature of the offence until the completion of the required action.