Madras High Court
Mr. Shailendra Jindal vs The Deputy Registrar Of Companies on 10 May, 2023
Crl OP No. 34584 / 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 28.04.2023
PRONOUNCED ON : 10.05.2023
CORAM :
THE HONOURABLE MR. JUSTICE SUNDER MOHAN
Criminal Original Petition No. 34584 of 2019
and
Crl.M.P. Nos. 19179 & 19181 of 2019
Mr. Shailendra Jindal ... Petitioner
Versus
The Deputy Registrar of Companies,
Tamilnadu, Chennai,
having office at
26, Haddows Road,
Nungambakkam,
Chennai – 600 006. ... Respondent
PRAYER : Criminal Original Petition filed under Section 482 of the
Criminal Procedure Code seeking to call for the records in E.O.C.C. No.
69 of 2018 on the file of the learned Additional Chief Metropolitan
Magistrate, (Economic Offences – I), Egmore, Chennai and quash the
same as far as this petitioner is concerned.
For Petitioner : Mr. Kumarpal R Chopra.
For Respondent : Mr. D. Simon,
Central Government Standing Counsel.
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1/9
Crl OP No. 34584 / 2019
ORDER
The petition is to quash the complaint in E.O.C.C. No. 69 of 2018
for the alleged offence under Section 148(8) of the Companies Act, 2013,
read with Rule 6(1) of Companies (Cost Records and Audit) Rules, 2014.
2. It is alleged in the complaint that the first accused is a public
limited company incorporated on 15.11.1995. The second accused is the
Managing Director, the third and fourth accused are the whole time
Directors of the said company, and the fifth accused is the Chief Financial
Officer of the company; that the petitioner/A6 was the Chief Financial
Officer from 02.05.2016 to 01.08.2016. The allegation is that the first
accused company did not appoint a cost auditor within the time limit
prescribed under Section 148(3) and Rule 6(2) of Companies (Cost
Records and Audit) Rules, 2014 and thereby violated Section 148(6) of
the Companies Act punishable under Section 148(8) of the Companies
Act.
3. The learned counsel for the petitioner submitted that the
proceedings against him are liable to be quashed on the ground that the
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Crl OP No. 34584 / 2019
petitioner was not a Chief Financial Officer of the company when the
alleged violation took place. According to the complaint, the cost auditor
should have been appointed on or before 01.10.2015 i.e., within 180 days
after the commencement of the financial year on 01.04.2015. The
petitioner was not in the company on the date when the alleged offence is
said to have taken place. The petitioner joined as Chief Financial Officer
on 02.05.2016 and resigned from the company on 01.08.2016. The
respondent has not disputed the said fact. However, it is their case that
since the offence under Section 148(8) of the Companies Act is a
continuing offence, the petitioner is also liable since he has not taken
steps to rectify the same during his period. The learned counsel
submitted that such an argument cannot be countenanced. The learned
counsel submitted that unless the petitioner was an officer of the
company when the alleged offence was committed, he cannot be
prosecuted merely because it is a continuing offence. The learned counsel
relied on the Judgment of the Hon'ble Supreme Court in Ajay Mitra Vs.
State of M.P. and Others reported in (2003) 3 SCC 11, wherein it has
been observed as follows:-
“18. So far as the present appellants are concerned,
they came into the picture much later in July 1999, when
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Crl OP No. 34584 / 2019
various trademarks and brands of A-1 were purchased by
A-6. The appellants were not at all in the picture at the
time when the complainant claims to have spent money in
improvement of its bottling plant on the basis of the
agreement executed with Cadbury Schweppes Beverages
India Pvt. Ltd. (A-1). Since the appellants were not in the
picture at all at the time when the complainant alleges to
have spent money in improving the bottling plant, neither
can any guilty intention be attributed to them nor can
there possibly be any intention on their part to deceive the
complainant. No offence of cheating can, therefore, be
said to have been committed by the appellants on account
of the fact that a notice was given to the complainant that
the bottling agreements will not be renewed any further
after expiry of the initial term. Thus, even if the
allegations made in the complaint are accepted to be
absolutely true and correct, the appellants cannot be said
to have committed any offence of cheating as provided in
Section 420 IPC.“
4. The learned counsel for the respondent submitted that it is true
that the petitioner was the Chief Financial Officer of the company for a
period of three months. He is an officer in default who had not taken any
steps to rectify the violation. The offence under Section 148(8) of the
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Crl OP No. 34584 / 2019
Companies Act is a continuing offence, and hence all the officers of the
company, who held the office during the period when the offence was
committed and continued, are liable for the alleged offence.
5. This Court finds that admittedly, the petitioner was the Chief
Financial Officer of the Company from 02.05.2016 to 01.08.2016. The
company ought to have appointed the cost auditor for the financial year
2015-2016 within 180 days from 01.04.2015 i.e. on or before
01.10.2015. The case of the respondent, therefore, is that the company
committed the offence on 01.10.2015. The offence under Section 148(8)
of the Companies Act may be a continuing offence. However, it cannot be
said that the petitioner, who was not in the company when the offence
was first committed, is liable merely because he did not rectify the alleged
violation during the period when he held the office. The company and the
officers, who are in default at the time when the offence was committed,
could only be made liable. The submission of the respondent that since
the offence is a continuing one, those who joined the company, after the
violation was committed, are also liable as they had not taken steps to
rectify the violation, is fallacious. This can be demonstrated. For
instance, if the complaint is filed in the year 2020 for the alleged violation
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Crl OP No. 34584 / 2019
that had taken place in the year 2015, can all the officers who were in
charge of the company between 2015 and 2020 be prosecuted since the
offence is continuing. The answer is 'No'. If such an interpretation is
given, the persons/accused in the complaint would be based on when the
respondent had filed the complaint. In the instant case, the respondent
could have filed the complaint immediately after the violation. If they had
filed the complaint immediately, the petitioner would not have been an
accused. The persons/accused of an offence cannot be based on the date
on which the complaint is filed. The accused would and should remain
the same whenever the complaint is filed since the offence is committed
on a particular date. Persons who came to know of the offence
subsequently cannot be made liable merely because the offence is
continuing. Any interpretation to the contrary as submitted by the
respondent, would lead to an illogical and absurd situation. Whether an
offence is continuing or not is relevant only for the purpose of
determining as to whether the complaint is barred by limitation. In this
case, the company had already committed the offence and the persons
who ceased to be the Directors before the alleged offence or had joined
the company after the alleged offence cannot be held liable for the said
offence. Further, the observation of the High Court of Calcutta in
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Crl OP No. 34584 / 2019
Jagadish Singh Vs. Santosh Iyer and Others reported in 2013 SCC
OnLine Cal 22914, relevant for the instant case is extracted hereunder:-
“48. In the case at hand, the petitioner was in no
way in the picture when the alleged incident took place in
1992-94. He came in 2005. It will be preposterous to hold
guilty anybody for offence, if any, committed well before
by the other person. To attract the theory of “continuing
offence” the accused must take part in the conspiracy
from the starting point. Mere subsequent joining the
company will not do. The signing of Director's report
cannot establish continuing offence to rope the
petitioner.“
6. In view of the admitted fact that the petitioner joined on
02.05.2016 and resigned on 01.08.2016, and the offence was committed
on 01.10.2015, he cannot be held liable for the alleged violation. Hence,
the impugned complaint against the petitioner is liable to be quashed.
7. Accordingly, this Criminal Original Petition is allowed by
quashing the E.O.C.C. No. 69 of 2018 on the file of the learned
Additional Chief Metropolitan Magistrate (Economic Offences – I),
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Crl OP No. 34584 / 2019
Egmore, Chennai. Consequently, the connected Miscellaneous Petitions
are closed.
10.05.2023
ay
Index: Yes/No
Speaking Order / Non-Speaking Order
Neutral Citation: Yes / No
SUNDER MOHAN, J
ay
To
The Deputy Registrar of Companies,
Tamilnadu, Chennai,
having office at
26, Haddows Road,
Nungambakkam,
Chennai – 600 006.
Crl.O.P. No. 34584 of 2019
and
Crl.M.P. Nos. 19179 & 19181 of 2019
https://www.mhc.tn.gov.in/judis
Crl OP No. 34584 / 2019
Dated: 10.05.2023
https://www.mhc.tn.gov.in/judis
