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TMI Blog2008 (1) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant. Tilak Bose for the Respondent. JUDGMENT 1. We have heard learned counsel for the parties. Let there be an order in terms of prayer ( a ) of the application admitting the appeal. 2. This appeal is against an order dated 9-4-2007, of the learned Single Judge in an application of the appellants under section 633(2) of the Companies Act, 1956, to the extent that the appellants have not been excused from liability for contravention of sections 211(1), (2) and 628 of the said Act, as alleged in a show-cause notice dated 5-5-2005. The appellants have, however, by the order under appeal, been absolved of all liabilities for violation of section 299(1) of the Companies Act, 1956, as alleged in five other show-cause notices also dated 5-5-2003. 3. Pursuant to a notice dated 28/29-5-2003, the books of account and other relevant documents of the appellant-company were inspected by the office of the Eastern Regional Director, Department of Company Affairs of the Government of India. 4. By a letter No. JD Inspn./Cal./01/03/3572 dated 12-12-2003 the Deputy Director (Inspection) alleged, that in course of inspection of the books of account and other documents of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... knowing the same to be material, either in the letter dated 12-12-2003, of the Deputy Director (Inspection) or in the show-cause notice. There were thus no ingredients of an offence under section 628 of the Companies Act, 1956. 10. Even though there was a bare allegation of contravention of section 628 in the letter dated 12-12-2003, the appellants were not required to show cause against penal action under section 628 of the Companies Act, 1956. 11. It may thus be inferred that the authorities concerned, being satisfied that there was no dishonest intent on the part of the appellants, chose not to proceed against the appellants under section 628 of the Companies Act, 1956. 12. By a letter dated 28-7-2004, the appellants gave a composite reply to the show-cause notices dated 16-7-2004, inter alia, submitting that their letter dated 22-12-2003, be treated as reply to the show-cause notices. 13. No proceedings were initiated against the appellants. Upon expiry of one year from the date of inspection, cognizance of the offence, if any, of contravention of section 211(1) and (2) of the Companies Act, 1956, punishable under section 211(4) of the said Act, became barred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he earlier show-cause notice dated 16-7-2004, for contravention of section 211(1) and (2) of the Companies Act, 1956. 17. At the time of issuance of the sixth show cause notice, penal action under section 211(7) for contravention of section 211(1) and (2) had become time-barred. There being no allegation even in the sixth show-cause notice, of any of the concerned appellants making any false statement, knowing the same to be false, or of suppressing any material fact, knowing the same to be material, the sixth show-cause notice did not contain the ingredients of an offence under section 628 of the Companies Act, 1956. 18. On 27-7-2005, the appellants moved an application under section 633(2) in the company court praying that the petitioners be excused from liability under the provisions of sections 211(1), (2), 299(1) and 628 of the Companies Act, 1956. 19. Sometime in June 2006, while the application under section 633(2) of the Companies Act, was pending in the company court, the appellants received a letter from the Deputy Registrar of Companies, the contents of which are for convenience, extracted hereinbelow : "Sub : Inspection under section 209A of the Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any of the show-cause notices of 16-7-2004. The show-cause notice of 16-7-2004, or the sixth show-cause notice issued in May/June 2005, did not contain the requisite allegations that would constitute an offence under section 628 of the Companies Act, 1956. 24. Even otherwise, conclusion of dishonest and deliberate suppression of material facts cannot be drawn just because the appellants went before the Settlement Commission and settled excise demands by making payment. The respondent authorities have apparently proceeded on the basis of settlement of demands of the excise authorities. The materials disclosed in the proceedings do not reveal any independent scrutiny of the accounts. 25. By the order impugned, the learned Single Judge excused the appellants of the liability in respect of first 5 show-cause notices pertaining to violation of section 299(1) of the Companies Act, subject to payment of Rs. 5,000. In respect of the sixth charge, the learned Single Judge was of the view that the appellants should face appropriate criminal proceedings. 26. The learned Single Judge found that although there had been transgression of section 299(1) of the Companies Act, 1956, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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