Continuing offence and limitation principles under company law: daily fine clauses do not by themselves extend default or cure expired complaint limitation.

A penalty clause that adds a further fine for each day of default does not by itself make the offence continuing; a default is complete when the prescribed time expires unless the statute clearly says otherwise. For offences punishable with fine only, the six-month limitation under the Code of Criminal Procedure applies, and cognizance cannot be validly taken after expiry of that period without condonation under section 473. Liability under section 58A also depends on proof that the person was an officer in default, including control over the company's affairs or participation in the relevant resolution; absent such material, liability is not established.

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Issues: (i) Whether contravention of rule 11 of the Companies (Acceptance of Deposits) Rules, 1975 was a continuing offence; (ii) Whether the criminal complaints filed for non-filing of returns were barred by limitation so that cognizance could not be taken without condonation of delay; (iii) Whether the petitioners were officers in default so as to attract liability under section 58A of the Companies Act, 1956.

Issue (i): Whether contravention of rule 11 of the Companies (Acceptance of Deposits) Rules, 1975 was a continuing offence.

Analysis: The penalty structure in rule 11, including the additional fine for every day after the first, was held to be only a measure of punishment and not a legislative declaration that the default continued from day to day. The reasoning adopted the principle that a default is complete on the expiry of the prescribed time unless the statute clearly makes it continuing.

Conclusion: The contravention was not a continuing offence.

Issue (ii): Whether the criminal complaints filed for non-filing of returns were barred by limitation so that cognizance could not be taken without condonation of delay.

Analysis: Offences punishable with fine only attracted the six-month limitation under Chapter XXXVI of the Code of Criminal Procedure, 1973. Since no application under section 473 of that Code had been filed and no order condoning delay was shown, mere filing of the complaint did not amount to cognizance of the offence within the meaning of sections 468 and 473.

Conclusion: The complaints were treated as barred by limitation and cognizance was not validly taken.

Issue (iii): Whether the petitioners were officers in default so as to attract liability under section 58A of the Companies Act, 1956.

Analysis: The materials did not show that the petitioners participated in any resolution authorising the borrowings or deposits, controlled the day-to-day affairs, or were in possession of the company records. The managing director alone was shown to be in control, and the petitioners were not established to be persons in default within the meaning of section 5.

Conclusion: The petitioners were not officers in default and were entitled to relief from the alleged liability.

Final Conclusion: Relief was granted to the petitioners from the alleged prosecution liabilities arising out of the non-filing of returns and the consequential complaints.

Ratio Decidendi: A penalty clause providing an additional fine for every day of default does not by itself make the offence continuing, and where limitation has expired without condonation under section 473 of the Code of Criminal Procedure, 1973, cognizance cannot be validly taken.

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