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TMI Blog2024 (5) TMI 555X X X X Extracts X X X X X X X X Extracts X X X X ..... ners for the offence under Section 447 of the Companies Act, cannot be sustained and are, accordingly, set aside. Time Limitation - HELD THAT:- As the offence under Section 185 of the Companies Act is punishable with imprisonment for a term which may extend to six months or with fine and, therefore, in terms of Section 468 Cr.P.C., the period of limitation shall be one year - In the present case, as the complainant himself is a shareholder of the Complainant no. 2 company, and, in any case, has not pleaded that he did not know of the offence having been committed by the petitioners, the cognizance taken of the offence under Section 185 of the Companies Act which is stated to have been committed between the years 2002-2008, on a complaint filed in 2017, was barred by limitation and is, therefore, bad in law. As Section 452 of the Companies Act is a continuing offence , it continues to be committed as long as the property of the company is withheld by the accused officer of the company. A fresh period of limitation begins to run at every moment such property is in the wrongful possession of such a person - As far as cognizance taken by the learned Trial Court of the offence under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Riya Rathi, Advs. for R-2. JUDGMENT 1. This petition has been filed under Section 482 of the Code of Criminal Procedure, 1973 (in short, Cr.P.C. ), challenging the Order dated 12.02.2020 (hereinafter referred to as the Impugned Order ) passed by the learned Additional Sessions Judge, Central District, Tis Hazari Courts, Delhi (hereinafter referred to as the ASJ ) in Crl. Rev. No. 169/2019, titled as Yogesh Chandra Goyal Ors. v. K.K. Goel Sons (HUF), dismissing the said Revision Petition filed by the petitioners herein. 2. By way of the above Revision Petition, the petitioners had impugned the Order dated 05.01.2019, passed by the learned Additional Chief Metropolitan Magistrate (Special Acts), Central District, Delhi (hereinafter referred to as the Trial Court ) in Complaint Case No. 11205 of 2017, titled as K.K. Goel Sons HUF v. Sh. Yogesh Chandra Goyal Ors., summoning the petitioners herein for the offence under Sections 185/447/452 of the Companies Act, 2013 (in short, Companies Act ) read with Section 120B of the Indian Penal Code, 1860 (in short, IPC ). The Complaint filed by the Respondent no. 2: 3. The abovementioned complaint has been filed by the respondent no. 2 herein, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the petitioner nos. 1 and 2. 7. As regards as the allegations for the offence under Section 185 of the Companies Act, the same are contained in paragraphs 13 and 21 of the complaint, and are reproduced herein below: 13. That under the head of Loans And Advances of Balance Sheet dated 31/03/2002 (Annexure - A2) includes Rs. 6536355.35 (Rs. Sixty Five Lacs Thirty Six Thousand Three Hundred Fifty Five) due from a company (Philco Exports Pvt. Ltd. i.e. Accused No. 6) in which Accused No. 1, 2 3 are also directors. It is pertinent to mention that the Accused No. 1, the whole-time director of Complainant No. 2 Company is also the chairman/ director of Accused No. 5 Company. In fact Accused No. 1 has diverted these funds to Accused No. 6 Company, a company controlled by him and his family, in the form of loan. Such transaction with a company in which a director of the company is director in both the companies, is prohibited under the provisions of Section 185 of the COMPANIES ACT 2013. xxxx 21. That Accused No. 1 and 2 have violated section 185 of the Companies Act by giving loan to companies and concern in which they are director. They have diverted/ siphoned the funds of Complaina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies Act read with Section 120B of the IPC. By the Impugned Order, as noted hereinabove, the Revision Petition filed by the petitioners against the said Order stands dismissed by the learned ASJ. Submissions of the Learned Counsel for the Petitioners: 12. The learned counsel for the petitioners submits that as far as the offence under Section 447 of the Companies Act is concerned, in terms of the second Proviso to Section 212(6) of the Companies Act, cognizance of the said offence can be taken only on a complaint made by the Director, Serious Fraud Investigation Office (in short, SFIO ) or any officer of the Central Government authorized by a General or Special Order in writing in this behalf by that Government. He submits that the cognizance of the said offence cannot be taken on a private complaint filed under Section 200 of the Cr.P.C. by an alleged shareholder of the Company. In support, he places reliance on: a) Sivananda Rajaram v. New Shipping Kaisha Ship Management Pvt. Ltd., Judgment dated 03.07.2023 of the High Court of Madras in Criminal Original Petition No. 19154 of 2021; b) Suman Paruchuri v. Jakka Vinod Kumar Reddy Ors., Judgment dated 06.06.2022 of the High Court o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot filed by an officer specified under Section 212(6) of the Companies Act. In support, he places reliance on the judgments of the Supreme Court in State of Andhra Pradesh v. Cheemalapati Ganeshwara Rao and Anr., AIR 1963 SC 1850; State of Madhya Pradesh v. Sheetla Sahai Ors. (2009) 8 SCC 617, and Ajay Agarwal v. Union of India (UOI) Ors. (1993) 3 SCC 609. 17. As far as the question of limitation is concerned, he submits that the offence under Section 452 of the Companies Act is a continuing one, therefore, in terms of Section 472 of the Cr.P.C., there would be no period of limitation. In support, he places reliance on the judgment of the Supreme Court in Krishna Bhattacharjee v. Sarathi Choudhury Anr., (2016) 2 SCC 705. 18. He submits that Section 452 of the Companies Act has more severe punishment than that under Section 185 of the Companies Act, therefore, Section 452 of the Companies Act shall, for purposes of Section 468(3) of the Cr.P.C. would have to be treated as prescribing more severe punishment. 19. He further submits that the petitioners have also been summoned under Section 120B of the IPC, which would be punishable with the same punishment as Section 447 of the Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l loss means the loss by unlawful means of property to which the person losing is legally entitled. 23. The Second Proviso to sub-section (6) of Section 212 of the Companies Act bars the Special Court from taking cognizance of an offence under Section 447 of the Companies Act, except upon a complaint in writing made by the Director, SFIO or any officer of the Central Government authorized, by a general or special order in writing in this behalf by that Government. The said provision is reproduced as under: 212. Investigation into affairs of Company by Serious Fraud Investigation Office- xxxx (6) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), offence covered under section 447 of this Act shall be cognizable and no person accused of any offence under those sections shall be released on bail or on his own bond unless (i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fences to be non-cognizable . Hence, cognizance of the offence under Section 447 of the Act could not have been taken by the trial Court on a private complaint, as it is a cognizable offence. 27. Similar is the view taken by the High Court of Madras in Sivananda Rajaram (Supra), and by the Karnataka High Court in the judgement dated 21.10.2022, passed in Criminal Petition No. 3550 of 2017, titled Sri. M. Gopal v. Sri. Ganga Reddy. 28. Recently, the Karnataka High Court, in its judgement dated 01st March, 2024 passed in Writ Petition No. 11821 of 2018, titled as Sri. Arun Ballakur Anr. v. Sri. M. Krishna Reddy, has also quashed the proceedings for an offence under Section 447 of the Companies Act initiated on a private complaint by the shareholder therein, on the ground that the cognizance for the offence under Section 447 of the Companies Act can be taken only on a complaint filed by the Director, SFIO in terms of the Second Proviso of Section 212(6) of the Companies Act. 29. For the above reason, the Order dated 05.01.2019 of the learned Trial Court as also the Impugned Order, in so far as it summons the petitioners for the offence under Section 447 of the Companies Act, cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) The period of limitation, in relation to an offender, shall commence, (a) on the date of the offence; or (b) where the commission of the offence was not known to the person aggrieved by the offence or to any police officer, the first day on which such offence comes to the knowledge of such person or to any police officer, whichever is earlier; or (c) where it is not known by whom the offence was committed, the first day on which the identity of the offender is known to the person aggrieved by the offence or to the police officer making investigation into the offence, whichever is earlier. (2) In computing the said period, the day from which such period is to be computed shall be excluded. 34. In the present case, as the complainant himself is a shareholder of the Complainant no. 2 company, and, in any case, has not pleaded that he did not know of the offence having been committed by the petitioners, the cognizance taken of the offence under Section 185 of the Companies Act which is stated to have been committed between the years 2002-2008, on a complaint filed in 2017, was barred by limitation and is, therefore, bad in law. 35. However, this would not be the end of the discussion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under Section 630(1)(b) of the Act. What then is the nature of this offence. The question then is whether it is a continuing offence. According to Black's Law Dictionary (Revised 4th edn.) continuing offence means a transaction or a series of acts set on foot by a single impulse, and operated by an unintermittent force, no matter how long a time it may occupy. In State of Bihar v. Deokaran Nenshi (1972) 2 SCC 890, the question was whether the failure to furnish returns on the part of the owner of a stone quarry under Regulation 3 of the Indian Metalliferrous Mines Regulations, 1926 even after warning from the Chief Inspector was a continuing offence. Section 79 of the Mines Act, 1952 which provided that no court shall take cognizance of an offence under the Act unless a complaint was made within six months from the date of the offence and the explanation to the section provided that if the offence in question was a continuing offence, the period of limitation shall be computed wherefore to every part of the time during which the said offence continued. Shelat, J. for the court observed : A continuing offence is one which is susceptible of continuance and is distinguishable fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be said to be terminated by a single act or fact but would subsist for the period until the property in the offender's possession is delivered up or refunded. It is an offence committed over a span of time and the last act of the offence will control the commencement of the period of limitation and need be alleged. The offence consists of a course of conduct arising from a singleness of thought, purpose of refusal to deliver up or refund which may be deemed a single impulse. Considered from another angle, it consists of a continuous series of acts which endures after the period of consummation on refusal to deliver up or refund the property. It is not an instantaneous offence and limitation begins with the cessation of the criminal act, i.e. with the delivering up or refund of the propriety. It will be a recurring or continuing offence until the wrongful possession, wrongful withholding or wrongful application is vacated or put an end to. The offence continues until the property wrongfully obtained or wrongfully withheld or knowingly misapplied is delivered up or refunded to the company. For failure to do so sub-section (2) prescribes the punishment. This, in our view, is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he period of limitation under Sub-Section (2) of Section 468 of the Cr.P.C. shall be determined with reference to the offence which is punishable with the more severe punishment or, as the case may be, the most severe punishment. 45. Section 220 of the Cr.P.C. prescribes the circumstances where more than one offence may be tried together. It reads as under: 220. Trial for more than one offence.-( 1) If, in one series of acts so connected together as to form the same transaction, more offences than one are committed by the same person, he may be charged with, and tried at one trial for, every such offence. (2) When a person charged with one or more offences of criminal breach of trust or dishonest misappropriation of property as provided in sub-section (2) of Section 212 or in sub-section (1) of Section 219, is accused of committing, for the purposes of facilitating or concealing the commission of that offence or those offences, one or more offences of falsification of accounts, he may be charged with, and tried at one trial for, every such offence. (3) If the acts alleged constitute an offence falling within two or more separate definitions of any law in force for the time being by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance shall be one year. If in the same trial, the accused is charged with an offence which is punishable with imprisonment for a term of upto three years, the period of limitation shall be three years. 50. In this regard, it is to be noted that the punishment for the offence under Section 452 of the Companies Act is in fine alone. In terms of Section 468(2) of the Cr.P.C., therefore, the period of limitation for filing of the same would be six months. Therefore, the same shall have no effect on the period of limitation for the offence under Section 185 of the Companies Act. Merely because offence under Section 185 of the Companies Act can be tried alongwith the offence under Section 452 of the Companies Act, the period of limitation does not extend as far as the cognizance of an offence under Section 185 of the Companies Act is concerned. The effect of offence under Section 452 of the Companies Act, being a continuing offence , only is that for the offence under Section 452 of the Companies Act, fresh period of limitation begins to run with each day that the accused wrongfully withholds the property of the Company; the period of limitation however, remains to be six months. 51. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Trial Court shall consider whether two complaints are raising similar allegations against the petitioners and if it would amount to the petitioners facing two trials for the same offence. If the court finds so, it would then take necessary action, in accordance with law. Final Findings: 55. In view of the above, the Order dated 05.01.2019 passed by the learned Trial Court, taking cognizance of the offence under Sections 185/447 of the Companies Act read with Section 120B of IPC as against the petitioners, cannot be sustained and is liable to be set aside. 56. As far as the Order 05.01.2019 passed by the learned Trial Court, taking cognizance of the offence under Section 452 of the Companies Act read with Section 120B of the IPC is concerned, the same is upheld. 57. As noted hereinabove, the learned counsel for the respondent no. 2 has submitted that the respondent no. 2 be granted liberty to move an application under Section 473 of the Cr.P.C. before the learned Trial Court to seek an extension of the period of limitation as far as offence under Section 185 of the Cr.P.C. is concerned. This Court would only clarify that the present Order shall not bar the respondent no. 2 from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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