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TMI Blog1993 (12) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... Contention No. 1 : Contravention of the provisions of the Act, was within the knowledge of authorities concerned, during inspections made in May, 1988, and December, 1988. Contraventions have occurred on November 30, 1985, November 30, 1986, and November 30, 1987. This offence, if committed, is punishable only with fine which may extend to Rs. 500. The Companies Act not having prescribed any specific period of limitation, the provisions of the Code of Criminal Procedure will come into operation. Under section 468(2)( a ), period of limitation for initiating this prosecution will be six months. Hence, complaint dated December 14,1989, is hopelessly barred by limitation. Expatiating this contention, he submitted, that the letter of law will have to be followed and the respondent cannot claim a different date of knowledge, for the entire department must be deemed to be charged with a duty. The authorities concerned, whoever it might be, if they had become aware of commission of an offence, must have promptly acted to inform the respondent to set the law in motion, within the period of limitation, or otherwise face the risk of the prosecution being thrown out, on the ground of limitati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whichever was earlier. If, on the allegations in the complaint, it is evident that the respondent had knowledge only on November 17, 1989, the plea of limitation bar cannot enure in favour of the petitioners. He referred to section 621 of the Companies Act, which reads that no court shall take cognizance of any offence against this Act (other than an offence with respect to which proceedings are instituted under section 545), which is alleged to have been committed by any company or any officer thereof, except on the complaint in writing of the Registrar, or of a shareholder of the company, or of a person authorised by the Central Government in that behalf, and contended that the respondent is the person aggrieved and hence the date of his knowledge will be the relevant date. Expatiating further, he submitted that every inspection need not result in a prosecution, and on processing made by the Company Law Administration, directions are issued to the Registrar to prosecute, at the time when the offence gets disclosed, and hence the period of limitation cannot be reckoned from the date of inspection. He also contended that inspection was different from investigation, for inspection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence was continuing, Mr. N.T. Vanamamalai rebutted it. Both counsel have placed for my scrutiny certain decided cases, which I shall refer to, as and when the context demands. To appreciate the contentions advanced, for my assessment, it will be better to have a bird's eye view of the nature of prosecution initiated against the petitioners. The first petitioner, a leasing company, stands incorporated under the Companies Act. Petitioners Nos. 2 to 7 are not only the directors as per the records of the company, but they are also officers in default within the meaning of section 5 of the Act. Section 297(1) of the Companies Act states that except with the consent of the board of directors of a company, a director of a company or his relative, a firm in which such a director or relative is a partner or any other partner in such firm or a private company of which the director is a member or director, shall not enter into any contract with the company for the sale, purchase or supply of any goods, materials or services. The proviso to the said section further provides that in the case of a company having a paid-up share capital of not less than one crore rupees, no such contract shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 469 of the Code, the period of limitation in relation to an offender shall commence on the date of the offence or where the commission of the offence was not known to the person aggrieved by the offence, the first day on which such offence came to the knowledge of such person. Again, where it was not known by whom the offence was committed, the period of limitation shall commence from the first day on which the identity of the offender was known to the person aggrieved by the offence. On the facts averred in the complaint, it is clear that inspection of the first petitioner-company under section 209A of the Companies Act was conducted during May and December, 1988. Under the aforestated section, the books of account and other books and papers of every company shall be open to inspection during business hours, ( i ) by the Registrar, or ( ii ) by such officer of the Government as may be authorised by the Central Government in this behalf. In the instant case, the inspection was conducted by the officers authorised by the Central Government and not by the Registrar. Under section 621 of the Act, a court can take cognizance only on a complaint in writing made by the Registrar or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red his explanation, while the other petitioners did not choose to reply. Only on the basis of the reply of the first petitioner, taken along with the material collected during investigation and subsequent assessment the authority concerned would have become aware of the commission of the offence alleged. Obviously those details will have to be brought out in evidence before the plea of limitation can be considered. Merely, based on the date of inspection, it will be neither fair, nor just, to hold even at the threshold, that the impugned prosecution is barred, though the averments in the complaint, indicate the date on which the explanation was forwarded, as well as the date of knowledge of the respondent, who is the aggrieved person. Again, it will pertain to the realm of evidence if the entire department is charged with the duty to be watch-dogs for initiating prosecution or a particular procedure within the framework of law stands followed by the department. It is at this juncture that the averments in the complaint, that the direction to file a prosecution was received in the office of the complainant on November 17, 1989, becomes relevant. The petitioner's counsel submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a person aggrieved by the offence or to any police officer, it is the first day on which such offence comes to the knowledge of such person or to any police officer, whichever is earlier. The period of limitation for the prosecution for that offence could not start in the case in hand when the sample was lifted, as the making of the offence could not be known and it could be known only when the seed analyst submitted his report to the Seed Inspector under section 16(1) of the Act whereupon the Seed Inspector could launch the prosecution against the offender. In this case, even though the sample was lifted on January 5, 1984, that is not the material date for the purpose of limitation, but the starting point of limitation is March 1, 1984, when the report of the seed analyst was received by the Seed Inspector and keeping that date in view the prosecution against the petitioner launched on August 1, 1984, is obviously within the statutory limitation of six months and thus the contention of learned counsel for the petitioner on the point of limitation is not correct and must be discarded". This decision is in consonance with the view I have taken. A Division Bench of this court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under section 468 cannot have any application and that the offence would be governed by section 472, according to which a fresh period of limitation would begin to run at every moment of time during which the offence continued. However, Mr. N.T. Vanama-malai, the petitioner's counsel, referred to the decision rendered, by S.A. Kader J. in Assistant Registrar of Companies v. Narayanaswamy [1985] 57 Comp. Cas. 787, wherein the learned judge, while construing section 58A(3) and (5)( a ) of the Companies Act, stated that acceptance of deposits by a company in excess of limits prescribed by the Reserve Bank and failure to repay the excess as required, on or before April 1, 1975, was a single default which got completed on the expiry of the aforestated period, and hence cannot be stated to be a continuing one. In this petition, there will be no need to consider if the offence alleged is continuing or otherwise, for sans this issue, I am of the opinion that on the facts available in the complaint, the instant prosecution cannot be quashed on the ground of limitation though this issue may have to be kept alive for consideration by the trial court after sufficient evidence is adduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall stand rejected. The second ground, also referable to mens rea of the accused, will have to be left open for consideration, by the trial Magistrate, on the basis of evidence that may be brought on record by either party. It is not disputed that the meaning for the words "officer who is in default" in the instant prosecution will have to be based on section 5 of the Act, as it stood prior to July 15, 1988, when mens rea was essential under that provision. The said section has already been extracted earlier in this order. The word "knowingly", mentioned in the section, was stressed by the petitioner's counsel to contend that the averments in the complaint do not disclose necessary mens rea . I have already referred to the arguments of Mr. T. Srinivasamurthy, the respondent's counsel, pinpointing certain averments made in the complaint. The complaint does show that the first petitioner has admitted the sum and substance of the contraventions brought to his notice, which amounts to an offence punishable under section 629A of the Act. Petitioners Nos. 2 to 7 who were put on notice about those contraventions did not choose to offer any explanation and at this stage that would ..... X X X X Extracts X X X X X X X X Extracts X X X X
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