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TMI Blog2006 (1) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... ,58,159.12, but did not file the Return of Deposits as envisaged under section 58A of the Companies Act, 1956 and the rules framed therein. On the basis of such allegation, the petitioner was asked to show cause as to why prosecution should not be launched against the company and every officer of the company under section 58A of the Companies Act, 1956, read with rule 11 of the Companies (Acceptance of Deposits) Rules, 1975 a copy of the notice has been annexed to the writ petition as Annexure-I. 4. On receipt of the aforesaid notice dated 5-2-1998, the petitioner No. 2 on behalf of the Company wrote a letter on 3-3-1998 to the respondent No. 2 furnishing therein a list of 10 items of 'unsecured loans' for different amounts totalling to Rs. 22,58,159 showing its breakup, nature, character and year of receipt. According to the petitioner the amounts in question were not "deposits" under rule 2(b)( ix) and 2(b)( vi) of the Companies (Acceptance of Deposits) Rules, 1975 and section 58A of the Companies Act, 1956 and thus, the company was not required to file any Return of Deposits and consequently there was no violation of the provisions of the Act and the Rules. 5. On 31-3-1998 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said complaint was registered as C.R. case No. 364/98 vide order dated 31-3-1998 passed by the learned Chief Judicial Magistrate, Shillong and the case was made over to the learned Judicial Magistrate, 1st Class, Shillong for disposal. The learned Judicial Magistrate took cognizance of the offence lodged and ordered issuance of the summons to the petitioners. After a long delay of about two years from the date of issuance of summons and warrants due to non-appearance, the petitioner No. 3 appeared before the Court on 22-2-2001 and thereafter approached this Court by filing the instant writ petition. Primary ground on which section 482, Cr.P.C. has been invoked towards quashing the complaint case and the proceeding thereof is that the offence alleged being punishable with fine only, the complaint having been filed beyond the period of limitation from relevant date, i.e., 31-3-1997, the date on which the plaint was submitted, no cognizance of the alleged offence could have been taken by the learned Magistrate. Referring to the provision of section 468 of the Cr.P.C., it is the case of the petitioners that the alleged offence being punishable with fine only, the complaint ought to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the petitioners the amount in question "being not deposits" under rule 2(b)( ix) and 2(b)( vi) of the Rules of 1975 and section 58A of the Act, 1956, the Company was not required to file any 'Return of Deposits' and thus, there was no violation of the provision of the Act, 1956 and the Rules 1975. 11. While definition of "deposits" in rule 2 of the Rules, 1975 indicates the exclusion of deposit of money of any amount borrowed by a company, clause (ix) thereof requires furnishing to the company of the time of giving the money by a Director or by a shareholder of the company, a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting from others. Rule 1 of the Rules, 1975 deals with "Return of Deposits to be filed with the Registrar. Every Company to which these rules apply, shall or before the 30th day of June of every year file with the Registrar, a return in the form annexed to these rules and furnishing the information contained therein as on the 31st day of March of that year to be duly certified by the Auditor of Company. Further requirement of the rule is that the copy of the return shall also be simu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch deposits or within such further time, not exceeding 30 days, as the Central Government may on sufficient cause being shown by the company allow. Sub-section (5) deals with the consequence of omission or failure on the part of the company to make payment of a deposit in terms of which apart from the punishment by way of fine, every officer of the company which is in default is liable for payment with imprisonment for a term which may extend to five years shall also be liable to be fined. 17. Sub-section (6) of section 58A provides that where a company accepts, or allows or causes any other person to accept or invite on its behalf any deposit in excess of the limits prescribed under sub-section (1) or in contravention of the manner or condition prescribed under that sub-section or its contravention of the provisions of sub-section (2), as the case may be - (a) the Company shall be punishable with fine as indicated therein and (b) every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to five years and shall also be liable to fine. 18. From the above reading of the provisions of section 58A, it will be seen that apart from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies is also attracted. This is precisely the reason as to why apart from arraying the company as accused, his Officers/Directors have also been arrayed as accused in the complaint. 21. I have gone through the decisions on which the learned counsel for the petitioner placed reliance. In fact, the decision of the Karnataka High Court is based on the decision of the Apex Court in Deokaran Nenshi (supra). In both the cases, the Courts were concerned with the provisions of rules 10 and 11 of the Rules, 1975. It was held that the offence covered by rule 11 cannot be said to be a continuing one. The facts involved in the Karnataka High Court was held to be similar to that of the Apex Court case in Deokaran Nenshi (supra). In that case, the company concerned had omitted to furnish the Return as required by section 66 read with section 79 of the Mines Act. The Apex Court held that non-filing of the return under the provision of said sections, amounted to an offence which can be committed once for all and it is not a continuing offence. The learned single Judge of the Karnataka High Court drawing an analogy of the provisions of the sections 66 and 79 of the Mines Act with that of rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision of section 58A of the Act, 1956 has been alleged. The petitioners also understood the same in that manner and accordingly in their reply also agitated that there was no violation of the provision of section 58A. 24. As to whether the alleged violation is within the ambit of section 58A of the Act will be a matter of evidence to be adduced during the trial of the criminal proceeding initiated pursuant to the complaint filed by the Registrar of Companies. At this stage, there is no basis to arrive at the conclusion that the provisions of section 58A are not attracted. This is a question of fact which will have to be established on evidence during trial. As this stage, there is no question of quashing the complaint merely on the basis of the assertion made by the petitioners. As has been held by the Apex Court in the case of MMTC Ltd. v. Medchl Chemicals and Pharma (P.) Ltd. [2002] 1 SCC 234. It is the well-settled law that the power of quashing criminal proceeding should be exercised very sparingly and with circumspection. It is a settled law that at this stage the Court is not justified in embarking upon an inequity as to the liability or genuineness or otherwise of the al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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