Corporate prosecution under RBI law may proceed where affidavit material supports contravention by the company and its directors.

Leave under section 446 of the Companies Act, 1956 was granted to continue prosecution of the company and its directors for alleged contravention of the Reserve Bank of India Act, 1934 and the relevant Directions. Liability under section 58C(1) depends on proof that the company itself committed the contravention attracting section 58B. The Gujarat HC distinguished the earlier precedent relied on by the applicant because the proposed prosecution here was against both the company and its officers, and the unrebutted affidavit material showed a sufficient basis to permit continuation of the prosecution.

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Issues: Whether leave under section 446 of the Companies Act, 1956, should be granted to prosecute the company and its directors for alleged contravention of the Reserve Bank of India Act, 1934 and the relevant Directions.

Analysis: The liability under section 58C(1) of the Reserve Bank of India Act, 1934 depends on proof that the company itself committed the contravention attracting section 58B. The court distinguished the earlier decision relied upon by the applicant because, on the facts here, the prosecution was directed against the company as well as its officers. On the unrebutted affidavit material, there was sufficient basis to permit continuation of the proposed prosecution.

Conclusion: Leave under section 446 of the Companies Act, 1956 was granted, and the prosecution against the company and its directors was permitted to proceed.

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