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2012 (6) TMI 311

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..... table practice or an arguably tenable practice. There is also assertion of existence of the remuneration committee to justify remuneration paid to the directors. In this kind of a proceeding it should always be the endeavour of the court to come to a finding on For the above reason that is the ground of limitation and non-existence of an offence I relieve the petitioners by discharging them. This application is accordingly, allowed. - C.P. NO. 29 OF 2011 - - - Dated:- 26-7-2011 - I.P. MUKERJI, J. S.N. Mookherjee, Debangsu Basak, Ratnanko Banerji, Prantik Garai and Abhijit Gutta Ray for the Applicant . P. Tarafdar and Ms. Kanta Roy for the Respondent. JUDGMENT I.P. Mukerji, J .- This is an application under section 633(2) of the Companies Act, 1956 (hereafter "the Act"). It is made by five persons and a company. The first three describe themselves as non-executive directors. The first petitioner is the promoter of the company AI Champdany Industries Ltd., which is the sixth petitioner. He is 72 years old. The second petitioner is the chairman of this company. He is 84 years old. The fourth petitioner is a whole-time director. The fifth is the company .....

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..... ed without deducting the depreciation on assets of book value of Rs. 31,89,779. Hence there was violation of section 205(1)(a) of the Act. The company replied to this notice on January 6, 2011. They said that these assets had been bought by the company in the years 1994-95 and 1995-96. They were not in active use. Hence, they were non-depreciable assets. The company got them valued by a chartered valuer whose report was enclosed with the reply. According to such valuation the value of these assets was over their book value. It was also said that no advantage was gained by the company. The total fixed asset was Rs. 106 crores in the financial year 2008-09. Rs. 31,89,779 was a very small percentage of that. Depreciation on the said value would only be 1.50 lakhs per annum whereas the total depreciation claimed by the company was Rs.846 lakhs. 5. I was shown the provisions of the Code of Criminal Procedure, 1973. Sections 467 to 469 of the Code of Criminal Procedure, 1973, inter alia , states that the period of limitation for an offence starts on the date of the offence or where the date is unknown from the date the person aggrieved by the offence acquires knowledge of such offen .....

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..... he Assistant Director (Inspection) of the office of the Regional Director, Eastern Region, Ministry of Corporate Affairs of the Government of India issued a show-cause notice to the petitioner. Therefore, by July 20, 2009, the Central Government, being the person aggrieved by the alleged offence had knowledge of all the alleged offences. 13. However, in my opinion, the date the inspection is ordered can be taken as the date when the Central Government has knowledge of the alleged offence, just like a police officer can be fixed with knowledge of a crime when he orders an enquiry." 9. The case of Mishra Dhathu Nigam Ltd. v. State [1998] 92 Comp Cas 730 (AP), makes it explicit that the knowledge of the department is equivalent to the knowledge of the Registrar. Therefore, by the time this application was filed on January 10, 2011, cognizance of the offence was barred. 10. Moreover on merits it was submitted that the question whether depreciation was to be claimed or to what extent it could be claimed or the assertion that the value of the machinery was above its book value and hence there was no depreciation, were matters of opinion or view in accounting. Since the view .....

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..... ear 2008-09 dividend was similarly paid within one day of declaration of dividend. Hence according to the company there was substantial compliance with the requirements of the Act as there was no distributable dividend, not deposited in a separate account, as required under section 205(1A). 13. The fifth show-cause notice was also issued on the same day, i.e. , December 28, 2010. In this show-cause notice the department raised some accounting dispute. According to it the company suffered loss in the financial year 2008-09. Hence the company was not entitled to pay any remuneration to the whole-time directors in the absence of a remuneration committee. The company replied to this notice by their letter dated January 6, 2011. They said that there was a remuneration committee and remuneration to the directors was paid accordingly. 14. With regard to the alleged violations also, complained of in these four show-cause notices issued after the first show-cause notice the petitioners have taken the point of limitation as their defence. If all the alleged offences were proved the petitioners would face the punishment of fine only. Now, all these alleged offences did not extend bey .....

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..... aint as if it is a criminal complaint. Therefore, as in other criminal proceedings, on receipt of a complaint a criminal court is to examine whether it should take cognizance of the offence under section 190 of the Code of Criminal Procedure, 1973. Thereafter, it is to examine whether any case has been made out against the accused. If it decides that no case has been made out, it is to discharge the accused. When a prima facie case has been established against him, the trial proceeds by framing of charges and so on. If the charge cannot be established at the trial the accused is acquitted. These are the elementary principles of our criminal procedure. 9. A very relevant consideration in initiating criminal proceedings is the law of limitation. Section 468 of the Code enacts that no court is to take cognizance of an offence after expiry of the period of limitation. The court takes such cognizance when, inter alia , a complaint petition is filed before it under section 190. Considering section 468, the Magistrate has the power under section 203 to dismiss the complaint on the ground of limitation. 10. Therefore, the powers of the Magistrate under section 633(1) to exonerate the .....

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