Gujarat High Court
Khs Machinery Private Limited, Through ... vs Registrar Of Companies on 7 July, 2025
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R/SCR.A/9563/2017 JUDGMENT DATED: 07/07/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CRIMINAL APPLICATION (QUASHING) NO. 9563 of 2017
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE J. C. DOSHI
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Approved for Reporting Yes No
✔
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KHS MACHINERY PRIVATE LIMITED, THROUGH MANISHA VRAJLAL
THAKKAR AUTHORISED SIGNATORY & ANR.
Versus
REGISTRAR OF COMPANIES, & ANR.
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Appearance:
MR SACHIN D VASAVADA(3342) for the Applicant(s) No. 1,2
MR SAMRAT N MEHTA(3949) for the Applicant(s) No. 1,2
MR HARSHEEL D SHUKLA(6158) for the Respondent(s) No. 1
MR. CHINTAN DAVE, APP for the Respondent(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE J. C. DOSHI
Date : 07/07/2025
ORAL JUDGMENT
1. The present petition under Section 482 of the Code of Criminal
Procedure, 1973 (hereafter 'Cr.P.C') has been filed on behalf of the
petitioners seeking quashment of the complaint i.e. Special
Company Act Case No. 12 of 2017, as well as the process issued by
the learned Principal District and Sessions Judge, Ahmedabad, Rural.
2. Briefly stated, the impugned complaint was filed by the
respondent against petitioner no. 1 - KHS Machinery Private
Limited, including the petitioner no. 2, alleging the contravention of
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Section 134(3)(o) and Section 135 of the Companies Act, 2013
(hereafter 'Companies Act') pertaining to Corporate Social
Responsibility (CSR). It has been alleged by the respondent that the
petitioner company has been in default of its CSR obligations for the
financial year 2014-15.
3. It is the case of the petitioner that Petitioner No.1-Company,
upon satisfying the eligibility criteria prescribed under Section 135
of the Companies Act, 2013, constituted a Corporate Social
Responsibility (CSR) Committee and framed its own CSR Policy in
accordance with the statutory mandate. In line with its CSR
obligations, the Company began spending amounts towards social
causes as stipulated in its CSR Policy. All relevant disclosures,
including the constitution of the CSR Committee, CSR Policy, and
details of expenditure, were duly made in the Board of Directors'
Report, in compliance with Section 134(3)(o) of the Companies Act.
Despite adherence to the statutory provisions and due disclosures,
Respondent No.1 has filed a criminal complaint against the
Petitioners with an ulterior motive and in abuse of the process of
law. Hence, the present petition.
4. The relevant portion of the questioned complaint is as under:-
"5. That, the company has violated the provisions of section
135г/w section 134(3) (o) of the Companies Act, 2013w section 134(3) (o) of the Companies Act, 2013
[hereinafter refer as "the Act"] by not Disclosing the details
about the policy developed and implemented by the company
on corporate social responsibility
initiatives taken during the year and not specifying any reason
for under spending the Corporate Social Responsibility
[hereinafter refer as "CSR"] amount in its Boards Report for the
financial year 2014-15.
6. That the matter regarding violation/w section 134(3) (o) of the Companies Act, 2013contravention as
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aforesaid was taken up with the accused hereof vide this office
Show Cause Notice (SCN) dated 20.09.2017, a copy thereof is
enclosed herewith as Annexure-"A". The Accused no. 1 has
responded to show cause notice vide their letter dated
27.09.2017 and it is not considered
satisfactory. A copy of the said letter is annexed herewith and
marked as "ANNEXURE- B".
7. That the Ministry vide letter no. 12/w section 134(3) (o) of the Companies Act, 201303/w section 134(3) (o) of the Companies Act, 20132017-CSR (PART-III-A)
dated 14.08.2017 and the Regional Director (NWR),
Ahmedabad vide their letter no. RD (NWR)/w section 134(3) (o) of the Companies Act, 2013Section
135/w section 134(3) (o) of the Companies Act, 20132016/w section 134(3) (o) of the Companies Act, 20132648 dated 06.09.2017 has directed this office to
launch the prosecution for violation of Section 135г/w section 134(3) (o) of the Companies Act, 2013w 134 (3)
(0) of the Companies Act, 2013 against the Company and /w section 134(3) (o) of the Companies Act, 2013 or
its officers/w section 134(3) (o) of the Companies Act, 2013 directors in default. The said sanction was received
by the Complainant's office on 07.09.2017 and therefore, this
complaint is well within the limitation period under section 468
as well as under other provisions of chapter XXXVI of Criminal
Procedure code, 1973. A Copy of the Ministry letter no.
12/w section 134(3) (o) of the Companies Act, 201303/w section 134(3) (o) of the Companies Act, 20132017-CSR (PART-III-A) dated 14.08.2017 and the
Regional Director (NWR), Ahmedabad letter no. RD
(NWR)/w section 134(3) (o) of the Companies Act, 2013Section 135/w section 134(3) (o) of the Companies Act, 20132016/w section 134(3) (o) of the Companies Act, 20132648 dated 06.09.2017 are enclosed
herewith and marked as Annexure-"C". (Colly).
8. That the Complainant hereinabove submit in view of the
findings herein above in Para 3 -5 of this complaint, that the
Accused 1 & 2 have contravened the provision of Section 135г/w section 134(3) (o) of the Companies Act, 2013
w Section 134 (3) (o) of the Companies Act, 2013 and rendered
themselves liable to be punished under section 134 (8) of the
Companies Act, 2013."
5. The learned counsel appearing for the petitioners states that the
present case pertains to Section 134(8) of the Companies Act and
the said offence has been decriminalized vide Companies
(Amendment) Act, 2020 [hereafter 'Amendment Act‟] by the] by the
Parliament and the punishment in the said provision has been
reduced to fine. It is therefore prayed that the benefit of ex-post
facto reduction in punishment should be given to the petitioners
herein. In support of these arguments, the learned counsel has
placed reliance on various judgments of the Hon‟] by theble Supreme
Court and High Courts.
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6. The learned counsel appearing for the respondent ROC fairly
submits that the position of law has changed after the Amendment
Act, inasmuch as the offence in question has been decriminalized,
and the benefit of ex-post facto can be granted to the petitioners as
per decision of Hon‟] by theble Supreme Court in T. Barai v. Henry Ah
Hoe and Anr.: (1983) 1 SCC 177.
7. The learned counsel appearing for both the parties concede that
the complaint pending before the concerned Court can be quashed
and the matter can be sent to the Adjudicating Authority.
8. This Court has heard arguments addressed on behalf of both the
parties and perused the material available on record.
9. This Court‟] by thes attention has been drawn to the decision of the
Hon‟] by theble Supreme Court in case of T. Barai v. Henry Ah Hoe and
Anr.(supra) wherein it has been held that in case the punishment
prescribed is reduced by the Amendment Act, then the benefit is
given to the accused. The relevant paras are reproduced
hereunder:-
"22. It is only retroactive criminal legislation that is prohibited
under Art. 20(1). The prohibition contained in Art. 20(1) is that
no person shall be convicted of any offence except for violation
of a law in force at the time of the commission of the act
charged as an offence prohibits nor shall he be subjected to a
penalty greater than that which might have been inflicted under
the law in force at the time of the commission of the offence. It
is quite clear that insofar as the Central Amendment Act creates
new offences or enhances punishment for a particular type of
offence no person can be convicted by such ex post facto law
nor can the enhanced punishment prescribed by the
amendment be applicable. But insofar as the Central
Amendment Act reduces the punishment for an offence.
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punishable under s. I6(l)(a) of the Act, there is no reason why
the accused should not have the benefit of such reduced
punishment. The rule of beneficial construction requires that
even ex post facto law of such a type should be applied to
mitigate the rigour of the law. The principle is based both on
sound reason and common- sense. This finds support in the
following passage from Craies on Statute Law, 7th edn. at pp.
387-88 :
"A retrospective statute is different from an e x post facto
statute. "Every ex post facto law ......... " said Chase J. in the
American case of Calder v. Bull(') "must necessarily be
retrospective, but every retrospective law is not an ex post facto
law. Every law that takes away or impairs rights vested
agreeably to existing Jaws is retrospective, and is generally
unjust and may be oppressive ; it is a good general rule that a
law should have no retrospect, but in cases in which the laws
may justly and for the benefit of the community and also of
individuals relate to a time antecedent to their commencement :
as statutes. of oblivion or of pardon. They are certainly
retrospective, and literally both concerning and after the facts
committed. But I do not consider any law ex post' facto within
the prohibition that mollifies the rigour of the criminal law, but
only those that create or aggravate the crime, or increase the
punishment or change the rules of evidence for the purpose of
conviction ...There is a great and apparent. difference between
making ai: unlawful act lawful and the making an innocent
action criminal and punishing it as a crime.
23. To illustrate, if Parliament were to re-enact s. 302 of the
Indian Penal Code, 1860 and provide that the punishment for
an offence of murder shall be sentence for imprisonment for
life, instead of the present sentence death or imprisonment for
life, then it cannot be that the Courts would still award a
sentence of death even in pending cases."
10. Thus, the position of law stands crystal clear from the
aforesaid judgment. Evidently, the benefit of decriminalization of
the offence ought to enure to the benefit of the petitioner, inasmuch
as the Amendment Act passed by the Central Government has
decriminalized the punishment in cases pertaining to Corporate
Social Responsibility (CSR) violations and reduced the consequences
to imposition of fine only. There appears to be no justifiable reason
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to deny the retrospective benefit of such decriminalization to the
petitioner-accused.
11. In view of the above, this Court is of the considered opinion
that the complaint pending before the learned Trial Court cannot
legally sustained and the matter deserves to be referred to the
concerned Adjudicating Authority, as contemplated under the
relevant provisions of the Companies Act, for adjudication of
penalty in accordance with law. Consequently, the impugned
complaint and the order issuing process against the petitioners are
hereby quashed and set aside. It is further directed that the
impugned complaint shall stand transferred to the competent
Adjudicating Authority. All parties shall be at liberty to raise all
issues and contentions before the said authority in accordance with
law.
12. It is clarified that this Court has not examined the matter on
merits and all observations are confined to the legal sustainability of
the complaint in its present form.
(J. C. DOSHI,J)
MANISH MISHRA
