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Issues:
1. False balance sheet preparation under Section 282, Indian Companies Act. 2. Allegations of false statements in the balance sheet. 3. Interpretation of initial expenditure and organization expenses. 4. Auditor's role and certification. 5. Consideration of current expenditure in revenue accounts. 6. Reduction of sentence and fine. 7. Second case under Section 282 regarding incorrect date of share allotment. Analysis: 1. The judgment dealt with the case of the appellant, the Managing Director of a company, charged under Section 282 of the Indian Companies Act for preparing a false balance sheet. The prosecution alleged that certain items on the expenditure side were false, leading to a misleading revenue account balance. The appellant argued that initial heavy expenditure charges were correctly shown as organization expenses, but the prosecution contended that only pre-revenue expenditure could be classified as such to prevent deception. 2. The court considered the role of the auditor, who certified the balance sheet but later admitted that not all liabilities were disclosed, leading to a false representation. The judgment highlighted that a wilful false statement in a balance sheet, even if not intended to deceive, constitutes a technical offense under the Act. The court emphasized the importance of accurate financial reporting to prevent misrepresentation to the public. 3. Regarding the interpretation of initial expenditure and organization expenses, the court clarified that only expenses incurred before revenue generation could be classified as organization expenses. Any current expenditure, such as wages incurred after revenue commencement, should have been reflected in the revenue account to maintain transparency and accuracy in financial reporting. 4. The judgment also touched upon the second case against the appellant under Section 282 concerning the incorrect date of share allotment. The court found that a mistake in stating the allotment date did not amount to an offense, especially when the actual confirmation date was within the required timeline. Additionally, the dispute regarding the payment of initial instalments for share allotment led to the acquittal of the appellant in that particular charge. 5. Considering the circumstances and the appellant's time served in jail, the court decided to reduce the sentence to the period already served and set aside the fine. The appellant was ordered to be released immediately. In the second case, the convictions and sentences were set aside, and the appellant was released from bail bond, with a refund of the fine if paid. In conclusion, the judgment underscored the significance of accurate financial reporting, the limitations on classifying expenses, and the consequences of false statements in balance sheets under the Indian Companies Act.
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