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Issues: (i) Whether the complaint alleging contravention of section 73 of the Companies Act, 1956 was maintainable at the instance of a person who was neither a shareholder nor authorised by the Central Government in view of section 621 of the Act; (ii) Whether a director, who was not shown to be a managing director, whole-time director, manager, secretary, or otherwise an officer in default, could be prosecuted under section 73.
Issue (i): Whether the complaint alleging contravention of section 73 of the Companies Act, 1956 was maintainable at the instance of a person who was neither a shareholder nor authorised by the Central Government in view of section 621 of the Act.
Analysis: Section 621 places a clear restriction on cognizance of offences under the Companies Act, 1956 and permits prosecution only on a complaint by the Registrar, a shareholder, or a person authorised by the Central Government, save for the limited exception relating to section 545. The complainant did not fall within any of these categories. The attempt to treat the alleged offence as outside the reach of section 621 was rejected, as the alleged failure to refund the debenture application money was still an offence under the Act attracting the statutory bar.
Conclusion: The complaint was not maintainable and the complainant had no locus standi to file it.
Issue (ii): Whether a director, who was not shown to be a managing director, whole-time director, manager, secretary, or otherwise an officer in default, could be prosecuted under section 73.
Analysis: Liability under section 73(2B) extends to the company and every officer of the company who is an officer in default. Section 5 defines that expression by reference to specified categories of officers and, in the case of directors, only where the statutory conditions are satisfied. A person who is merely a director does not, by that description alone, become an officer in default for the purpose of prosecution under section 73. The complaint did not disclose facts showing that the petitioner belonged to any category attracting such liability.
Conclusion: The petitioner, being only a director on the material before the Court, was not shown to be prosecutable under section 73.
Final Conclusion: The complaint, summoning order, and consequent proceedings were quashed because the prosecution was incompetent in law and the petitioner was not shown to incur criminal liability under the provision invoked.
Ratio Decidendi: Cognizance of offences under the Companies Act, 1956 is barred unless the complaint is by a person recognised by section 621, and penal liability under section 73 attaches only to the company and those officers who fall within the statutory definition of officer in default.
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