2018 (10) TMI 1954 - HC - Companies Law

Levy of penalty - offences under Section 159 r/w 162 of the Companies Act - continuing offences or not - HELD THAT - These two sections fall under chapter XXXVI of the Code of Criminal Procedure with the heading Limitation for taking cognizance of certain offences. As per section 468 of the Code of Criminal Procedure Code, which is a non absentee clause wherein it has categorically held that no court shall take cognizance of an offence after the expiry of the period of limitation. The period of limitation shall be 6 months if the offence is punishable with fine only. In this case, the cause of action as per the complainant as could be found in the complaint would commence after issuance of show cause notice dated 30.07.2008. The complaint in all the four cases have been filed only during June 2011, which is well after three years from the date of issuance of the show cause notice hence the complaint has to be quashed. The other contention of the petitioner is that the offences under Sections 159 and 220 are punishable under Section 162 of the Companies Act for default in filing the annual returns and Profit Loss Account that within a stipulated time that does not render the initial default a continuing one. The offence cannot be said to be repeated or committed from day to day after the initial default. It is only where the offence is committed from day to day or repeated from day to day, then in that event only it can be called a continuing offence. The language of section 162 does not warrant any continuity as they are in sections 234, 294, 372 and 598 of the Companies Act. The offence on the breach there of is complete with the failure to furnish the return in the manner or within the time stipulated such an offence is committed once and for all as and when one commits the default the same analogy could be drawn with regard to Section 220 of the Companies Act for failure of filing Profit and Loss Account. Further it is held that the above provisions does not contemplate that the obligation to submit such returns continues from day to day until the return is actually submitted nor does it provides that continuance of business without filing of such returns is prohibited so that non fulfillment of a continuing obligation or continuing business without filing of such returns becomes a continuing offence. The offences complained of in these complaint are continuing offences and therefore the period of Limitation prescribed in law is not attributed. In view of the settled position of Law, the petitioners contention are not sustainable and rejected - petition dismissed.

Summary

Issues:
Violation of Sections 159 and 220 of the Companies Act - Continuing offence - Period of limitation - Interpretation of Section 162 - Applicability of Section 468 of the Code of Criminal Procedure.

Analysis:

The judgment involves multiple Criminal Original Petitions filed by the accused against complaints filed by the Deputy Registrar of Companies, Tamil Nadu for violations of Sections 159 and 220 of the Companies Act. The complaints alleged that the accused failed to conduct annual general meetings, file annual returns, and submit balance sheets and profit & loss accounts within the stipulated time frame, leading to offences punishable under Section 162 of the Act. The complaints were filed in 2011 and were pending trial before the Additional Chief Metropolitan Magistrate Court, Economic Offences-I, Egmore, Chennai.

The primary contention raised by the petitioners was regarding the interpretation of Section 162 of the Companies Act, which imposes penalties for defaults under Sections 159 and 220. The petitioners argued that the initial defaults did not constitute continuing offences, and therefore, the complaints filed in 2011 were time-barred under Section 468 of the Code of Criminal Procedure, which sets limitations for taking cognizance of certain offences.

The court examined the nature of continuing offences and the applicability of Section 162 in light of the provisions of the Companies Act. It referenced previous judgments, including those of the Apex Court and the Calcutta High Court, to establish that offences under Sections 159 and 220 could be considered continuing offences due to the ongoing nature of the violations until compliance is achieved. The court emphasized that the obligation to submit returns and accounts continues until fulfilled, making the offences continuous in nature.

Additionally, the court highlighted a previous decision where complaints were returned by a Magistrate as time-barred but were later considered continuing offences upon re-presentation. The court upheld the view that offences under Sections 159 and 220 are indeed continuing offences, as established by various legal precedents, and rejected the petitioners' contentions.

Ultimately, the court dismissed the Criminal Original Petitions, affirming that the complaints alleging violations of Sections 159 and 220 of the Companies Act constituted continuing offences, thereby not being subject to the period of limitation prescribed by law. The judgment emphasized the importance of compliance with statutory obligations and upheld the principle that ongoing defaults in such matters are considered continuing offences under the law.