Madras High Court
M/S.Sri Matha Spinning Mills ... vs The Registrar Of Companies on 19 June, 2023
Crl.O.P.Nos.14587, 14596, 14597, 14603, 14605, 14610, 14611 & 14619 of 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 19.06.2023
CORAM
THE HONOURABLE MR. JUSTICE SUNDER MOHAN
Crl.O.P.Nos.14587, 14596, 14597, 14603, 14605, 14610, 14611 & 14619
of 2019
and
Crl.M.P.Nos.7053, 7062, 7066, 7050, 7059, 7052, 7061 & 7057 of 2019
[Crl.OP.No.145847 of 2019]
1.M/s.Sri Matha Spinning Mills Private Limited,
Rep. by its Managing Director,
Smt. Kandaswamy Indira
Registered Office at:
207, Mangalam Road, Karuvampalayam,
Tirupur – 641604, Coimbatore District.
2.Smt. Kandaswamy Indira
3.Shri Kandaswamy Sivaraj
4.Smt.Veluswamy Dhanalakshmi
5.Shri Veluswamy Pallipalayam Sennimalai Gounder
6.Shri Chennimalai Gounder Kandasamy
... Petitioners
Vs.
The Registrar of Companies
Tamilnadu - Coimbatore,
Rep. by Addl. Standing Counsel, Govt. of India,
No.7, AGT Business Park,
Phase II, I Floor Civil Aerodrome Post,
Avinashi Road, Peelamedu,
Coimbatore - 641014. ... Respondent
https://www.mhc.tn.gov.in/judis
Crl.O.P.Nos.14587, 14596, 14597, 14603, 14605, 14610, 14611 & 14619 of 2019
PRAYER :- Criminal Original Petitions are filed under Section 482 of the
Criminal Procedure Code to call for the records in the complaint filed by the
respondent in Spl.CC.Nos.44 of 2019 on the file of the I Additional District
and Sessions Judge, Coimbatore and quash the same as against the
petitioners herein.
For Petitioner : M/s.M.Vijaya Mehanath
For Respondent : M/s.S.Janarthanam, Senior Panel
Central Govt.Counsel.
COMMON ORDER
These petitions are to quash the complaint filed for the offences
under Section 135 read with Section 134(3)(o) of the Companies Act, 2013
(herein after referred to as 'the Act' for the sake of convenience). The said
violation is punishable under Section 134(8) of the Act.
2. It is alleged in the complaint that the company had not disclosed
the composition of the CSR Committee and the details of CSR Policies for
the financial years 2014-15 and 2015-16.
https://www.mhc.tn.gov.in/judis
Crl.O.P.Nos.14587, 14596, 14597, 14603, 14605, 14610, 14611 & 14619 of 2019
3. Though the learned counsel for the petitioners canvassed several
points on merits, he ultimately confined himself to one submission. He
submitted that Section 134(8) of the Act which prescribed the punishment
of fine and punishment of imprisonment in certain cases has now been
amended. The relevant amendment is as follows:-
26. In section 134 of the principal Act, for sub-section (8),
the following sub-section shall be substituted, namely:—
"(8) If a company is in default in complying with the
provisions of this section,the company shall be liable to a penalty
of three lakh rupees and every officer of the company who is in
default shall be liable to a penalty of fifty thousand rupees.".
In view of the amendment which is beneficial to the accused, the learned
counsel submitted that the violation is no longer an offence and the penalty
has to be determined by the adjudicating authority. The learned counsel
relied upon the judgment of this Court in Crl.OP.No.30374 of 2019 dated
06.04.2023 where, under similar circumstances, this Court had observed
that for violation of Sections 92(5) and 137(3) of the Act, which only attract
a penalty and the prosecution has to be transferred to the adjudicating
authority appointed under the Act pursuant to the amendment in the Act.
https://www.mhc.tn.gov.in/judis
Crl.O.P.Nos.14587, 14596, 14597, 14603, 14605, 14610, 14611 & 14619 of 2019
4. The learned Senior Panel Central Govt. Counsel for the respondent
submitted that it is true that there is an amendment which modified the
punishment prescribed for the offences alleged in the impugned complaints.
He has also filed counters justifying the complaints filed by the respondent.
5. This Court is of the view that the points raised by the petitioners on
the merits of the complaint cannot be adjudicated in these quash petitions.
However, in view of the Amendment the violation is liable to pay penalty.
The violation is no longer an offence. The prosecutions hence have to be
transferred to the adjudicating authority appointed under the Act. The
observations of this Court in Crl.OP.No.30374 of 2019 dated 06.04.2023
and the judgement reported in 2023(1) LW.Crl. 71 - D.Kannan Vs. The
Deputy Registrar of Companies, would squarely apply to the facts of this
Case. The relevant observations are extracted hereunder for better
understating.
7. In this case, the complaint is of the year 2017. The law
as stood on the date of complaint for the alleged violation
committed by the petitioner is as follows:
“...(6) If a person accepts an appointment as a director in
contravention of sub-section (1), he shall be punishable with fine
which shall not be less than five thousand rupees but which may
https://www.mhc.tn.gov.in/judis
Crl.O.P.Nos.14587, 14596, 14597, 14603, 14605, 14610, 14611 & 14619 of 2019
extend to twenty-five thousand rupees for every day after the first
during which the contravention continues.”
8. At the relevant point of time, contravention was
considered as an offence. Further, there was no Explanation II,
which specifically clarified for the purpose of reckoning in the
limit of Directorship of the 20 companies, the dormant companies
shall not be included. By virtue of the Companies (Amendment)
Act, 2019 and the Companies (Amendment) Act 2020, the
contravention is now liable for penalty by the adjudicating officer
appointed by the Central Government. If the contravention is
liable for fine, it is triable by a Magistrate and it is an offence
and therefore, triable by a Magistrate. Penalty, however, is
imposed by the adjudicating officer by the Central Government
and hence, the contravention is no longer an offence. The Act not
only mollifies the punishment prescribed for contravention, but
also the procedure, for determining the penalty."
6. The amendment in the instant case took place with effect from
21.12.2020. This amendment would apply to the pending prosecutions as
well. Hence, the impugned complaints are transferred to the adjudicating
authority appointed under the Act to adjudicate the contravention committed
by the petitioners in terms of Section 134(3) read with Section 135 of the
Act, punishable under Section 134 (8) of the said Act.
https://www.mhc.tn.gov.in/judis
Crl.O.P.Nos.14587, 14596, 14597, 14603, 14605, 14610, 14611 & 14619 of 2019
7. With the above observations, the Criminal Original Petitions are
disposed of. Consequently, connected Criminal Miscellaneous Petitions are
closed.
19.06.2023
Index : Yes/No
Internet : Yes/No
Neutral Citation :Yes/No
shr
To,
The I Additional District and Sessions Judge,
Coimbatore.
https://www.mhc.tn.gov.in/judis
Crl.O.P.Nos.14587, 14596, 14597, 14603, 14605, 14610, 14611 & 14619 of 2019
SUNDER MOHAN. J,
shr
Crl.O.P.Nos.14587, 14596, 14597, 14603, 14605, 14610, 14611 & 14619
of 2019
and
Crl.M.P.Nos.7053, 7062, 7066, 7050, 7059, 7052, 7061 & 7057 of 2019
19.06.2023
https://www.mhc.tn.gov.in/judis
