Relief from company default proceedings may follow once the breach is cured and criminal process has not validly commenced.

Relief for company officers under section 633 of the Companies Act, 1956 may be available where the default has been made good and the surrounding criminal process is not validly in motion. The text notes that the complaint was presented while an injunction restraining further proceedings was operative, and that an ex parte order under section 473 of the Code of Criminal Procedure was obtained without notice. It also states that the underlying loan default was cured by repayment and resignation of the concerned director. On that basis, the commentary treats the statutory contravention as relieved and the protection against proceedings as sustained.

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Issues: Whether relief could be granted under section 633 of the Companies Act, 1956, after a complaint had been presented but before valid cognizance of the offence was taken, and whether the petitioners should be relieved from the consequences of default arising from the loan transaction under section 295 of the Companies Act, 1956.

Analysis: Relief under section 633 depends on whether the Court is satisfied that the default ought fairly to be excused and that the relevant prejudice has ceased. The complaint had been presented while a judicial injunction restraining further proceedings was in force, and the order under section 473 of the Code of Criminal Procedure, 1973, was passed ex parte without notice to the accused. On the facts found, cognizance and the criminal proceeding were treated as not having validly commenced before the present application, and the court held that the subsequent criminal steps were ineffective because they were taken in breach of the injunction and without observance of natural justice. The underlying default had also been cured by repayment of the loan and resignation of the concerned director.

Conclusion: The petitioners were entitled to be relieved from the consequences of the alleged default, and the request for protection against proceedings succeeded.

Final Conclusion: The court confirmed interim protection and granted relief from the consequences of the statutory default, treating the contravention as having been made good.

Ratio Decidendi: Where the default has been made good and the surrounding criminal process is not validly in motion, the court may exercise its discretion under section 633 to relieve the officers from the consequences of the default.

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