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TMI Blog1990 (2) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... rein, are the directors of the company. The petitioners have filed this petition under section 482, Criminal Procedure Code, to quash the proceedings against them on the ground that the allegations in the complaint did not make out any offence against them. Section 233B (11) of the Companies Act provides that, if default is made in complying with the provisions of this section, the company shall be liable to be punished and every officer of the company who is in default shall be liable to be punished. Section 2(30) of the Companies Act defines "officer" which includes any director, etc. Section 2(31) says that the officer who is in default in relation to any provision referred to in section 5 has the meaning specified in that section. Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 70): "...the prosecution must establish, though not necessarily by direct evidence but at least inferentially supported by enough material that the default has been done knowingly or the default has been authorised knowingly or wilfully. In other words, the bare fact of default or contravention does not make an officer of the company suffer penal consequence but to incur that disqualification, he must have knowledge and that for the second part, he must also have the intention". Further, he observed that (at page 270): "Significantly, there is not even a whisper in the complaint either about the knowledge, much less about the intention". In the facts of the case, the learned judge considered the case of petitioners Nos. 3 to 5 who w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reminded several times by the department as well as the complainant but the accused herein have failed to make any application to the Central Government for the appointment of a cost auditor and, therefore, violated the provisions of section 233B(1) and (2) of the Companies Act. In para 7, it is stated that accused Nos. 2 to 5, being the directors of the company during the material and relevant times have allowed the default committed to be continued and they are officers-in-default within the meaning of section 5 of the Companies Act. Para 8 reads that the accused herein have been given sufficient time, notices and opportunity and despite, that they failed to comply with the requirements of section 233B of the Companies Act. These allegat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lameful inadvertence or failure to supervise may properly be designated as mens rea". As stated above, in spite of the notices being given, the petitioners have failed to comply with the requirements and, therefore, they are in default and it is alleged that they are officers in default within the meaning of section 5 of the Companies Act. Section 5 which is referred to above defines who is an officer in default. In the complaint, it is stated that the accused, i.e. , the petitioners are officers in default. Therefore, the question whether they actually come within the meaning of section 5 and liable for punishment or not is a matter which can be proved during the course of the trial. At this stage, it is not possible to interfere under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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