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TMI Blog2006 (10) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company have committed several contraventions, namely, that the funds of the company were regularly being used by the directors for their personal gains, and that Shri S.K. Parasrampuria withdrew during the financial year 31-3-1993, an average amount of more than Rs. 2 lakhs and thereafter, in the year 1993-94 more than Rs. 5 lakhs for his personal use without paying any interest. He made several investments in other group concerns, namely, M/s. Tirupati Roller and Flour Mills (P.) Ltd., Kalpana Mercantile Ltd., Macro International Ltd., and Radha Roller and Flour Mills Ltd., without charging interest. He also found that various activities were made in the company without furnishing any statutory information. The company became a public limited company under section 43A of the Companies Act, 1956 ("the Act") with effect from 1-10-1985, but the company did not make any disclosure and it is only when the matter was taken up with the company by the Central Government on 24-3-1995, that the turnover has increased beyond Rs. 1 crore, the company made the disclosure. 3. The inspector further found that the appointment of the directors and their remuneration after the company b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, Sri Vishnu Kant Misra, Smt. Chandra Kala Parasram Puria and Shri Sudhir Kumar Parasram Puria, ex-directors of M/s. Parasram Puria Trading and Finance Ltd., (in liquidation) (wound up on 25-3-1998) made investments of the amounts detailed in para 5.2 of the report of the Assistant Inspecting Officer dated 31-7-1995, appointed by the Central Government under section 209A of the Companies Act, 1956, in Kanpur Cigarettes Ltd., Kalpana Mercantile Ltd., Vishwa Jyoti Marketing (P.) Ltd., Nath Mercantile Ltd., and Ambar Mercantile Ltd., in the shares of State Bank of India during the year 31-3-1994; in violation of section 371( i ) and section 372(6) and (7) of the Companies Act, 1956, and failed to make statutory entries within seven days of the investment under section 372( vi ) and ( vii ) and thereby conducted the business of the companies in a manner prejudicial to the interest of the shareholders and creditors, violating the provisions of sections 542 and 543 of the Companies Act, 1956, punishable under section 542(3) of the Companies Act, 1956. 2. That you, Sri Gopal Pandey, Sri Vishnu Kant Misra, Smt. Chandra Kala Parasram Puria and Shri Sudhir Kumar Parasram Puria, ex-directo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion), office of the Regional Director (NR), Noida, appeared and filed his affidavit in evidence, and was cross-examined by Shri R.P. Agrawal. 7. Before proceedings to make submissions on charges on its merits Shri R.P. Agrawal raised preliminary objection regarding jurisdiction of the court to try the offences, which are criminal in nature and the issue of limitation. He submits that inspections were not carried out either two years immediately preceding the commencement of winding up, i.e ., 20-5-1997, when the company petition was filed or within three years, the limitation provided for initiating criminal prosecution under section 468 of the Criminal Procedure Code. He further submits that the inspections were not carried out even after the winding up order was made. There were no complaints by any person. The period of inspection was 31-3-1990 to 31-3-1994, and that the report was submitted on 31-7-1995. 8. I have heard Shri R.P. Agrawal for the ex-directors and Shri Rajnath N. Shukla, learned counsel for the official liquidator. Pre-winding up prose-cution for misfeasance including withholding or defalcation of money, maintenance of accounts, and other offences under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re it is found that the company had conducted its business fraudulently and has submitted false statements, the offence is punishable with imprisonment, which may extend to two years and also liable to fine. He submits that the directors were maintaining personal accounts in the company. They were not showing investments and were taking out money at their Will. They did not prepare accounts properly and declare that the company s turnover exceeds Rs. 1 crore under section 43A of the Act. It is contended by Shri Shukla that these acts contributed to the losses on account of which the company was ultimately wound up and thus these acts squarely fall within the mischief of misfeasance. 11. I have given careful consideration to the submissions of both the parties on the issue of jurisdiction and limitation. It is apparent from the record that there was no complaint against the company. The inspections were carried out in the year 1995 for the period beginning from 31-3-1990, to 31-3-1994. The report was submitted confirming certain violations on 31-7-1995. The company petition was filed on 20-5-1997, on which notices were issued and the company was wound up on 25-3-1998. The Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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