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2024 (2) TMI 1095 - HC - Companies LawPrayer for being excused of any criminal liability and relieved of the alleged defaults complained of by the respondent in the notice dated 6.10.2020 - prayer for an injunction restraining the respondent / Registrar of Companies (ROC), West Bengal from initiating criminal proceedings in respect of any of the matters referred to in the notice dated 6.10.2020 - section 463(2) of the Companies Act, 2013 - HELD THAT - In the present case, the respondent did not pass any reasoned order pursuant to the reply given by the Company on 17.11.2020. This letter was a detailed reply to the impugned Notice dated 6.10.2020. Criminal proceedings were instituted in June, 2023 after almost 3 years from the date of issuance of the preliminary findings letter. In the present case, the respondent issued the Notice dated 9.11.2023 which is a supplementary Inspection Notice from the Office of the Regional Director after filing of the present writ petition. Thus, the petitioner s apprehension was correct and ultimately came true by issuance of the Notice dated 9.11.2023. The Departmental Circular dated 20th June, 2016 relied on by the respondent is an internal document. The contents of the circular are mostly illegible. In any event, the consent/sanction referred to in section 470(3) of The Code of Criminal Procedure would only be applicable where the prosecution has exceeded the limitation period due to the requirement for sanction from the concerned authority. The reasons persuade the Court to allow the prayers in the writ petition and excuse the petitioners and each one of them of any criminal liability in respect of the alleged defaults complained of by the respondent in the impugned notice dated 6th October, 2020. The respondent is accordingly restrained from instituting or proceeding with any criminal proceedings in respect of the matter referred to in the notice dated 6th October, 2020 or take any further steps in respect thereto. Petition allowed.
Issues Involved:
1. Criminal liability and injunction against the Registrar of Companies (ROC). 2. Application under Section 463(2) of the Companies Act, 2013. 3. Limitation period for initiating criminal proceedings. 4. Due process before initiating criminal proceedings. 5. Jurisdiction of the High Court under Section 463(2). Summary: Issue 1: Criminal liability and injunction against the ROC The petitioners sought to be excused from any criminal liability and to restrain the ROC, West Bengal, from initiating criminal proceedings based on the notice dated 6.10.2020. The petitioners argued that they had acted honestly and with due diligence, and thus should be relieved of the alleged defaults. Issue 2: Application under Section 463(2) of the Companies Act, 2013 The case was filed under Section 463(2) of the Companies Act, 2013, which allows the High Court to grant relief to an officer of a company who apprehends proceedings for negligence, default, breach of duty, misfeasance, or breach of trust. The High Court has the same power as a Special Court to relieve the officer if they have acted honestly and reasonably. Issue 3: Limitation period for initiating criminal proceedings The petitioners contended that the alleged offences were barred by limitation under Section 468(2) of the Code of Criminal Procedure, 1973. The offences related to the years 2014-2019, and the limitation period for such offences is 6 months to 1 year. The Court agreed that the offences were barred by limitation, referencing previous judgments that supported this view. Issue 4: Due process before initiating criminal proceedings The Court found that the ROC did not follow due process before initiating criminal proceedings. Citing the case of Venkatesan Thyagarajan vs. Registrar of Companies, Tamil Nadu, the Court emphasized that a show cause notice should result in an adjudication considering the replies of the concerned person. The ROC did not pass any reasoned order after the Company's detailed reply to the notice dated 6.10.2020. Issue 5: Jurisdiction of the High Court under Section 463(2) The Court rejected the respondent's contention that only Special Courts have the power to grant relief under Section 463(2). The High Court has jurisdiction to grant relief, even if criminal proceedings have been initiated. The Court referenced several cases, including Visram Financial Services (P) Ltd. vs. V. Rajendran, which affirmed the High Court's power to grant relief even after the initiation of criminal proceedings. Conclusion: The Court allowed the prayers in the writ petition, excusing the petitioners from any criminal liability and restraining the respondent from proceeding with any criminal proceedings related to the notice dated 6.10.2020. The judgment was disposed of along with all connected applications, and urgent certified copies were to be supplied upon fulfillment of requisite formalities.
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