2022 (1) TMI 1254 - HC - Companies Law

Continuing offences or not - non filing of annual return and non placing of balance sheet and profit and loss account of the company - service of SCN - applicability of time limitation - whether offences under Section 159 and 220 of the Companies Act, 1956 which are punishable under Section 162 and 220(3) of the Companies Act, 1956, are continuing offences are not? - HELD THAT - The expression continuing offence has not been defined in the Code of Criminal Procedure, 1973. However, the courts have explained the same in number of judgments. In the case of continuing offence, the ingredients of offence continues even after the offence takes place, whereas in an instantaneous offence, the offence took place once and for all, in such case, there is no continuance of offence. For the offence arising out of a failure to comply with a statutory provision, which is involves penalty, the liability continues until the default is complied with complied with and on every moment of such non compliance occurs and recurs, there is an offence committed and it is a continuing offence until the default is complied with. The Companies Act, 1956, provides different kinds of punishments for various offences committed by the companies. For certain offences, took place once and for all, the Act provide only maximum punishment. For some kind of offences, for example, under Section 159, 160, 161 and 220 of the Act, relating to non filing of returns and some other documents before the Registrar of Companies, the punishment is provided under Section 162 of the Act - there is a clear distinction between the punishment. The penalty of payment of fine for every day till the default continues, indicates that, the offence continues until the default is complied with, which makes the offence a continuous offence. This court has no hesitation to hold that offence under Sections 159 and 220 of the Companies Act, 1956 are continuing offences and the bar created under Section 468 of Cr.P.C. will not get attracted as those offences are saved by the provisions of Section 472 of Cr.P.C. Petition dismissed.

Summary

Issues Involved:
1. Whether the offences under Sections 159 and 220 of the Companies Act, 1956, which are punishable under Sections 162 and 220(3) of the Companies Act, 1956, are continuing offences.
2. Whether the complaints are barred by limitation under Section 468 of Cr.P.C.
3. Whether the non-issuance of show cause notice before filing the complaints is fatal to the case.

Detailed Analysis:

Issue 1: Continuing Offences
The primary issue is whether the offences under Sections 159 and 220 of the Companies Act, 1956, are continuing offences. The court explained that a continuing offence is one where the ingredients of the offence continue even after the offence takes place, whereas an instantaneous offence occurs once and for all. For offences arising from a failure to comply with statutory provisions involving penalties, the liability continues until the default is rectified, making it a continuing offence. The court cited several judgments, including *Udai Shankar Awasthi v. State of U.P.*, to elucidate the concept of continuing offences. The Companies Act provides for daily penalties for non-compliance with Sections 159 and 220, indicating that these are continuing offences. Consequently, Section 472 of Cr.P.C. applies, allowing a fresh period of limitation to begin at every moment during which the offence continues.

Issue 2: Limitation under Section 468 of Cr.P.C.
The petitioners argued that the complaints should have been filed within six months from the date of the alleged offence as per Section 468 of Cr.P.C. However, the court held that since the offences under Sections 159 and 220 are continuing offences, the limitation period does not apply. The court referenced consistent views from previous judgments, including *Kalaimagal Corporation Limited, In Re* and *Assistant Registrar of Companies v. Premier Synthetics Pvt. Ltd.*, which affirmed that the offences under Sections 159 and 220 are continuing offences. Therefore, the bar under Section 468 of Cr.P.C. does not apply, and the offences are saved by Section 472 of Cr.P.C.

Issue 3: Non-Issuance of Show Cause Notice
The petitioners contended that the complaints should be quashed due to the non-issuance of show cause notices. The respondent claimed that show cause notices were issued and acknowledged by the petitioners. The court noted that whether show cause notices were issued is a disputed question of fact that can only be resolved during the trial. Therefore, this contention cannot be a ground to quash the complaints under Section 482 of Cr.P.C.

Conclusion:
The court concluded that the offences under Sections 159 and 220 of the Companies Act, 1956, are continuing offences, and the complaints are not barred by limitation under Section 468 of Cr.P.C. The issue of non-issuance of show cause notices is a factual dispute to be resolved at trial. Consequently, the criminal original petitions were dismissed, and the connected miscellaneous petitions were closed.