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TMI Blog1985 (8) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... olution of the Board the lease deed as approved was executed by Shri S.K. Jain, a director of the Company on behalf of the Company and the petitioner and his wife Smt Anju Jain on 15th September 1980 (annexure 1' being copy of the lease deed). On 19th September 1984 the respondent instituted a complaint against the petitioner under Section 299(4) of the Act read with Sub-sections (1) (2) thereof on the allegation that the inspection of the books of accounts ana other records of the Company was made by Shri O. P. Chadha, Deputy Director (Inspection) under Section 209A of the Act sometime in December 1980. During the course of inspection of the books of accounts and minutes books of the Board it transpired that the petitioners had not disclosed his interest in the contract of lease regarding the aforesaid property entered into by him and his wife with the Company. The said fact came to the notice of the respondent-complainant only on 24th January 1981 when a copy of the inspection report dated 17th January 1981 was submitted by Shri 0.P. Chadha to the Department, Finding that the petitioner being Managing Director of the Company was legally bound under the statutory provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 468, the period of limitation is six months if the offence is punishable with fine only as is admittedly the position in the instant case. Section 469 of the Code prescribes the terminus a quo for the commencement of period of limitation. It is the date of the offence or where the commission of the offence was not known to the person aggrieved by the offence, the first day on which such offence cones to the knowledge of such person whichever is earlier. In the instant case, the contention of the respondent-complainant is that he came to know of the commission of offence on 24th January 1981 when he perused the report of the Inspecting Officer Shri O.P. Chadha. Obviously, therefore, the complaint was hopelessly barred by time on the date of its institution. (7) Section 473 of the Code, however, provides that notwithstanding anything contained in the foregoing provisions the court may take cognizance of an offence after the expiry of period of limitation provided therefore if it is satisfied on the facts and in the circumstances of the case that (i) the delay has been properly explained; or that (ii) it is necessary so to do in the interests of justice. (8) It is thus m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complainant must abide by the letter of law or take the risk of the prosecution failing on the ground of limitation. (10) Obviously an accused person acquires a valuable right the moment his prosecution is barred by limitation. Hence, that right cannot be taken away except in accordance with the provisions of law. It is, therefore, imperative for the court taking cognizance of the offence to apply its judicial mind as to whether the prosecution has satisfactorily explained the delay in launching prosecution at the pre-cognizance stage i.e. when the Magistrate applies his mind for the purpose of proceeding under Section 200 and the succeeding Sections in Chapter 15 of the Code. Since the discretion vesting in the Magistrate to condone the delay or not has to be judicially exercised, the principles of natural justice require that the accused must be afforded an opportunity before he is called upon to face the prosecution in a time barred matter. As observed by a Division Bench of this Court in State ( Delhi Administration) v. Anil Puri and others : And in those cases where the court finds it necessary to take cognizance in the interests of justice it is but just and proper tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of limitation prescribed. (13) In State v. Diamond Prabhu, 1980 (1) Karnataka Law Journal 23, a Division Bench of the High Court of Karnataka expressed the view that: The question as to whether the period of limitation should be extended or nut cannot be reserved for argument and cognizance of the offence taken, because without taking cognizance of the offence in accordance with the provisions of law, the Court will not have the necessary power to issue process against the accused and try the case. (14) In Anil Mohan Banerjee v Registrar of Companies, West Bengal Others. 1978 (1) Cal. L. J. 617, a learned Single Judge of Calcutta High Court expressed the view that : It was incumbent upon the learned Magistrate to condone the delay before taking cognizance of the offence. He was not competent to condone the delay provisionally and then to take cognizance of the offence. (15) It is thus manifest that the weight of authority supports the view that the Magistrate must apply his judicial mind to the question of condoning the delay before taking cognizance of the offence and he cannot, after making cognizance, rectify the illegality by passing an order unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat : The said inspection report was examined at the various levels in the Department regarding various contraventions of the provisions of the Companies Act, 1956. After complete examination obtaining explanation from the company and after issue of show cause notices to the Company and its directors vide No. ROC/ lnspn/5139/7845-52 dated 9-6-1982 (copy enclosed as annexure-II), the Department further accorded sanction/instruction to file the present only on 17-7-1984. (19) Evidently the explanation furnished by the respondent is very vague and too general in nature, the only justification being proverbial red tape in the functioning of beauracracy. It is rather strange that the respondent took more than a year in issuing a show-cause notice to the company and its directors. Still worse, it took more than two years to launch the prosecution. No cause much less sufficient cause for this inordinate delay has been spelt out by the respondent. As for the interests of justice as envisaged in Section 473, suffice it to say that there is no magic in these words and the court has to hold the scales even when deciding whether it is really in the interests of justice that prosecuti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosure of all material facts to the members of the company, who then approve the contract. (21) NO man, said Lord Cairns L.C. in Parker V. Mckenna, (1874) 10 Ch. Appeals 96 (118), can in this court, acting as an agent, be allowed to put himself in a position in which his interest and duty will be in conflict. (22) As stated above, the Board of Directors passed a resolution on 29th August 1980 in which a draft of the lease agreement regarding the premises in question between the petitioner and his wife Smt. Anju Jain on the one hand and the Company on the other was approved. An extract of the aforesaid resolution as reproduced by the respondent in the complaint itself reads as under: Resolved that the draft of the rent agreement in respect of the flat in the 'Arcadia' Building, Bombay to be entered between the Company and Shri Vinod Kumar Jain, Managing Director and Mrs. Anju Jain, wife of Shri Vinod Kumar Jain be and is hereby approved. Further resolved that Shri S.K. Jain, a Director of the Company be and is hereby authorised to sign for and on behalf of the Company. (23) Admittedly it was pursuant to the aforesaid resolution that a lease-deed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the prosecution case. It may be pertinent to notice in this context that there was no prescribed format or mode for disclosure of his interest by a director at the relevant time and it was only in September 1982 that Form No. 24 Aa was prescribed by Gsr No. 555E dated 2nd September 1982, for this purpose. So, the disclosure could be made by any method whatsoever. (25) The learned counsel for the respondent has urged rather vehemently that the truth, veracity and the effect of evidence which the prosecutor proposes to adduce are not to be meticulously judged at the stage of issuing process under Section 204 of the Code. Certainly no exception can be taken to this proposition of law which is well settled but the court can not blink at facts which appear in the complaint itself and render the prosecution case highly doubtful Such a Course would certainly be prejudicial to the rule of law and may work hardship and result in avoidable harassment to the accused. It is more so when the complaint itself is instituted after the expiry of' more than three years of the offence coming to the notice of the complainant i.e. the person compete it to institute a complaint for such offe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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