2022 (8) TMI 1484 - HC - Companies Law

Time Limitation - whether the complaint lodged by the respondent is barred by limitation or not? - Sections 468 469 of Cr.P.C - HELD THAT - In the present case the show cause notice was issued on 14.06.2018 for which the petitioners sent reply on 22.06.2018. Thereafter, the respondent lodged complaint on 12.04.2019. This Court repeatedly held in various judgments that there is absolutely no provision available under the Act contemplating prior sanction for initiating prosecution of the offence under the Act. According to the respondent, there was a delay for obtaining sanction from the authority concerned and as such the complaint was lodged belatedly. Further the respondent had knowledge about the commission of the offence by the petitioners company as early as on 14.06.2018. Since, there is no provision available under the Act contemplating the prior sanction for initiating prosecution for the offence under the Act, the knowledge of the alleged commission of offence must have come to the notice of the Central Government. The consent or sanction as has been referred to in sub-clause 3 of Section 470 of Cr.P.C., relates to consent or sanction which is obtained under the Statute itself - Further in the present case, under the Act neither any consent nor any sanction from the Central Government is required to prosecute the petitioners. The administrative side permission cannot be equated to a consent or sanction to be obtained statutorily as referred to under sub-section 3 of Section 470 of the Cr.P.C., Therefore, the period for obtaining sanction cannot be excluded at all from the period of limitation. The present complaint was filed on 12.04.2019 viz., after the period of six months. Thus, the complaint is barred by limitation, since the complaint was not launched within a period of six months. The present complaint cannot be sustained as against the petitioners and the impugned proceeding is liable to be quashed - Petition allowed.

Summary

Issues:
1. Whether the complaint lodged by the respondent is barred by limitation?

Analysis:
The petitioners filed a petition to quash the proceedings in E.O.C.C.No. 97 of 2019, which alleged offences under Section 185(2) of the Companies Act, 2013. The respondent's complaint stated that the petitioners' company had made a loan without prior approval, violating Section 185 of the Act. The petitioners argued that the complaint was time-barred, citing Sections 468 & 469 of Cr.P.C. They relied on previous judgments to support their contention, emphasizing the importance of the limitation period in legal proceedings.

In response, the Standing Counsel for the respondent contended that the complaint was not barred by limitation. An inspection under Section 206(5) of the Act revealed non-compliance by the petitioners with Section 185. The respondent issued a show cause notice, followed by the complaint. The Standing Counsel argued that the delay in lodging the complaint was due to the requirement of sanction, as per Section 470 of Cr.P.C. Therefore, the complaint was maintainable and not time-barred, urging the dismissal of the petition.

The Court deliberated on whether the complaint was barred by limitation. It noted that there was no provision in the Act requiring prior sanction for prosecution. The respondent's argument of delay due to obtaining sanction was considered. However, since no consent or sanction from the Central Government was necessary to prosecute the petitioners under the Act, the administrative permission obtained could not be equated to statutory consent. As the complaint was filed after the six-month period, it was deemed time-barred. Consequently, the Court allowed the petition, quashing the proceedings in E.O.C.C.No. 97 of 2019.

In conclusion, the judgment emphasized the importance of the limitation period in legal proceedings and clarified that administrative permissions do not equate to statutory consent. The Court's decision to quash the proceedings was based on the finding that the complaint was time-barred, as it was not launched within the stipulated period.