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TMI Blog1997 (1) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 292(1)( d ) of the Act do. do STC 14 of 1995 Violation of section 292(3) do. do. The averments in the petitions are as follows : The Joint Director of Inspection in the office of the Department of Company Affairs, Ministry of Law, Justice and Company Affairs, Government of India (for short referred to as "the Department"), issued notice of inspection on August 19, 1994, under section 209A of the Act calling for certain particulars to which the petitioner gave a reply on September 16, 1994, furnishing all the particulars required. On May 3, 1995, the Registrar of Companies issued a show-cause notice alleging that in the meeting of the board of directors held on July 20, 1989, the managing director/director (finance) was authorised to deal with the surplus funds without specifying the total amounts up to which the funds may be invested and without indicating the nature of the investment, thus violating section 292(3) of the Act. It was also alleged that the company made investment in non-banking financial institutions as against the authorisation of the board of directors for investment in short-term deposits in public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar of Companies had knowledge of the offence on March 30, 1995, when he received the communication dated March 29, 1995, from the Department and hence the complaints are within limitation of six months as per the provisions of section 468(2)( a ) read with section 469(1)( b ) of the Criminal Procedure Code, 1973. It may be noticed that in the complaints, only the company is shown as accused and the directors are not impleaded, evidently in view of the stay order obtained by them in Company Application No. 170 of 1995, dated September 7, 1995, in C.P. No. 47 of 1995, filed under section 633(2) of the Act. The first ground urged by Mr. S. Ravi, learned counsel for the petitioner, is that the complaints are barred by limitation since they were filed on September 20, 1995, beyond six months from the date of knowledge of the offence, viz. , October 14, 1991, and October 19, 1992, the dates when the petitioner has filed balance-sheets before the Registrar of Companies for the years 1990-91 and 1991-92, respectively. Alternatively, it is submitted that the limitation must be computed from September 19, 1994, the date on which the Department in New Delhi, must have received the reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as the date on which the offence has come to the knowledge of the Registrar and from which date the limitation starts running and as the complaint was filed beyond one year, it was barred by limitation. The learned judge observed as follows (page 174): "It is seen from the above that the petitioners have admittedly filed balance-sheets before the complainant on August 21, 1991, and August 19, 1992, respectively, with regard to the two relevant financial years. The first respondent being an authority enjoined under the Act to see that the provisions of the Act are properly followed by the companies, is expected to scrutinize the accounts, with the assistance of his competent officers, that are filed before him and find out the irregularities committed by the company, at least from the date of the filing of the balance-sheets. The filing of balance-sheets is a legal requirement and not a mere formality. It is also admitted that an inspection has been made by the inspection wing on March 10, 1993, and on detection of non-compliance with section 370(1) of the Act, a notice dated April 27, 1993, has been issued and the reply has been received by the first respondent on May 25, 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-sheet the moment it is filed and to find out whether any offence has been committed by a particular company. It is only after close scrutiny, which is done as in the case of inspection, that any offence committed by the company can be detected. Moreover, whether the particular deployment of funds is in the nature of investment or deposit cannot be detected by a mere look at the balance-sheets with its annexures and can be detected only after due inspection and close scrutiny. Thus, I respectfully disagree with the decision of the Madras High Court in Asst. Registrar of Companies v. H.C. Kothari [1992] 75 Comp Cas 688 . Accordingly, the first contentions of Mr. S. Ravi is rejected. The next contention of Mr. Ravi is that in any event, the Registrar is deemed to have knowledge of commission of the alleged offence on September 19, 1994, the date when the Department must have received reply given by the petitioner in response to the notice issued by it on August 19, 1994. The date of receipt of this reply is not available from the record. But in the normal course, the reply dated September 16, 1994, would have reached the Department in the Delhi office on September 19, 1994. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because one of the branches had been informed of it, would result in adverse consequences and would defeat action by banks for recovery of dues and would work great loss to banks and would harm public interest. Accordingly, the Supreme Court condoned the delay and set aside the abatement. I fail to see how this decision helps the respondent. Under section 469 of the Criminal Procedure Code, 1973, the period of limitation commences from the date of the offence or where the commission of the offence was not known to the person aggrieved by the offence, the first date on which such offence comes to the knowledge of such person. In this case, the person aggrieved by the offence is the Department which acts through the Registrar of Companies and which ordered inspection. Thus, the decision cited by Mr. Ramesh is distinguishable since one of the branches of a bank cannot be said to be an agent of another branch. Further, the decision of the Supreme Court was in the context of condoning the delay in setting aside the abatement and in bringing legal representatives on record in the suit filed by the bank for recovery of dues whereas we are concerned with the concept of limitation for launc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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