2008 (12) TMI 821 - HC - Companies Law

Summary

Issues involved:
The judgment involves the legality of prosecution under Section 220 of the Companies Act, violation of statutory obligations, the bar of limitation under Section 469 of Cr.P.C., and the distinction between a continuing offence and an offence committed once and for all.

Details of the judgment:

Violation of statutory obligations:
The petitioner, as the Managing Director of the accused company, challenged the prosecution on the grounds of being barred by limitation and the company's winding-up. The complaints alleged non-filing of Balance Sheet and Profit and Loss Account for the financial years 1991 to 2000, violating Section 220 of the Companies Act. The complaints contended that the offence is continuing under Section 162 of the Companies Act, punishable with a fine for each day of default.

Bar of limitation under Section 469 of Cr.P.C.:
The petitioner argued that the complaints, issued in 2004 for an offence alleged to have occurred in 1990, were hopelessly barred by limitation. Citing previous cases, the petitioner contended that the complaints should have been filed within six months of the alleged offence, which was not done in this case. The petitioner also highlighted the winding-up of the company by BIFR in 1987, asserting that the company's operations had ceased, making the filing of financial documents unnecessary.

Continuing offence vs. offence committed once and for all:
The respondent argued that the offence under Section 162 of the Companies Act is a continuing one, not subject to the bar of limitation under Section 469 of Cr.P.C. Citing the distinction between a continuing offence and an offence committed once and for all, the respondent relied on the judgment in State of Bihar v. Deokaran Nenshi and Anr. The court noted that the offence of non-compliance with Sections 159, 160, or 161 of the Companies Act is punishable with a fine for each day of default, indicating a continuing offence.

Conclusion:
The court dismissed the Criminal Original Petitions, upholding the validity of the prosecution as the offence was deemed a continuing one. The court directed the trial court to prioritize the early disposal of the cases, emphasizing that the findings were specific to the petitions and the trial court would decide the complaints on their own merit. The court refrained from adjudicating on the factual aspects of the company's winding-up, leaving it open for the petitioner to raise during trial.