2023 (10) TMI 1002 - HC - Companies Law

Failure to get its cost accounting records to be audited by a Cost Auditor and failed to file Cost Audit Report to the Central Government - time limitation for filing such reports - violation of Section 148(8) of Companies Act, 2013 - HELD THAT - According to the notice sent by the Registrar of Companies, it was observed from the records of the accused company that the cost audit report was not filed with the Central Government for the financial year ending 31.03.2014 within the stipulated time. The period of limitation is dealt under Code of Criminal Procedure under Section 468 to 473. Admittedly, punishment prescribed under the Section 147 of the Companies Act is one year in the present facts of the case. Accordingly, under Section 468 of Cr.P.C, the period of limitation for an offence punishable is one year under Section 468(2)(b) of Cr.P.C. Under Section 469 of Cr.P.C, the commencement of period of limitation is prescribed - In view of Section 469 of Cr.P.C, the commencement of period of limitation would be from the date of knowledge to the Registrar of Companies. The said date can be taken as 14.06.2016 on which date the show-cause notice was sent to the accused company. Since complaint was filed on 30.05.2017, complaint is well within time. The date of filing the complaint would be criteria and not the date on which the Court takes cognizance of the offences in the said complaint. For the said reason, the ground of complaint being barred by limitation cannot be accepted - Since the company itself had mentioned that the industry is Edible Oil Seeds and Oils (including vanaspati) industry, the same cannot be determined in the proceedings for quashing the complaint. If the ROC has no provision of seed manufacturing companies and for which reason, the company had entered the name as Edible Oil Seeds and Oils (including vanaspati) , to enable themselves to upload the relevant documents into the ROC, the said ground can be agitated only before the trial Court. Petition dismissed.

Summary

Issues involved:
The judgment deals with the continuance of proceedings in Criminal Cases on the grounds of violation of Section 148(8) of the Companies Act, 2013, for failure to file Cost Audit Reports within the stipulated time, and the main issue questioned is the limitation period for filing the complaints.

Issue 1: Limitation for filing complaints
The petitions were filed questioning the continuation of proceedings in Criminal Cases for violation of the Companies Act, 2013. The complaints were filed on 31.05.2017, and the petitioners argued that the complaints were beyond the limitation period as they should have been filed from 01.10.2014 or 01.11.2014. The notice issued under Section 233B(11) of the Companies Act, 1956 was considered illegal as the provision had been repealed. The respondent contended that the complaints were filed within the time limit and that the trial court should determine if an offense was committed.

Issue 2: Commencement of the period of limitation
The period of limitation for the offenses was discussed under Section 468 to 473 of the Code of Criminal Procedure. Since the punishment prescribed under the Companies Act was one year, the limitation period was one year under Section 468(2)(b) of the Cr.P.C. The commencement of the limitation period was considered to start from the date of knowledge to the Registrar of Companies, which was deemed to be 14.06.2016, the date on which the show-cause notice was sent to the accused company. The date of obtaining sanction could not be considered the date of knowledge of the offense.

Issue 3: Interpretation of Rules for Cost Records and Audit
The petitioners argued that the company did not fall under Rule 3 of the Companies (Cost Records and Audit) Rules 2014 as a seed manufacturing company. However, since the company was mentioned under "Edible Oil Seeds and Oils (including vanaspati)" in the industry column, the prosecution was initiated. The respondent acknowledged that seed manufacturing companies were not covered under Rule 3 but proceeded with prosecution based on the company's industry designation.

In conclusion, the petitions were dismissed as the complaints were filed within the limitation period. The issue of the company's industry designation could only be raised before the trial court. The trial court was directed to consider the grounds raised in the applications, particularly regarding the industry designation, as no finding was given on this matter.