Quashing of prospectus-related prosecution refused where limitation, jurisdiction, and prima facie offence issues required evidence.

A limitation objection to prosecution was not accepted at the quashing stage because the point depended on when the alleged offence came to the complainant's knowledge and required evidence. Territorial jurisdiction was upheld because the prospectus was circulated and acted upon at Jaipur, application money was paid there, and the alleged failure to allot or deliver debentures had consequences there, so the cause of action arose within that court's jurisdiction. Inherent powers were held unsuitable for quashing, as the complaint disclosed a prima facie offence under section 63 of the Companies Act and the defence required trial-level examination.

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Issues: (i) Whether the complaint and cognizance were barred by limitation; (ii) Whether the Jaipur court had territorial jurisdiction to entertain the complaint; (iii) Whether the proceedings under section 63 of the Companies Act deserved to be quashed in exercise of inherent jurisdiction.

Issue (i): Whether the complaint and cognizance were barred by limitation.

Analysis: The limitation plea depended upon when the alleged offence came to the complainant's knowledge and whether the filing of the complaint was within the permissible period. The question was not capable of being decided finally without evidence, and the material placed did not justify quashing at the threshold on limitation alone.

Conclusion: The limitation objection was not accepted as a ground for quashing.

Issue (ii): Whether the Jaipur court had territorial jurisdiction to entertain the complaint.

Analysis: The prospectus was circulated and acted upon at Jaipur, the application money was paid there, and the alleged failure to allot or deliver the debentures had consequences there. On that footing, the cause of action was held to have arisen at Jaipur, making the local court competent to proceed.

Conclusion: The Jaipur court was held to have territorial jurisdiction.

Issue (iii): Whether the proceedings under section 63 of the Companies Act deserved to be quashed in exercise of inherent jurisdiction.

Analysis: Inherent powers under section 482 of the Code are to be used sparingly and only where no prima facie case exists or continuation would amount to abuse of process. The complaint and accompanying material disclosed sufficient basis to proceed on the allegation of a false or untrue statement in the prospectus, and the defence raised required trial-level examination.

Conclusion: The proceedings were not liable to be quashed.

Final Conclusion: The revisional challenge failed, and the criminal proceedings were allowed to continue before the trial court.

Ratio Decidendi: Inherent jurisdiction to quash criminal proceedings should not be exercised where the complaint discloses a prima facie offence and the issues raised, including limitation and jurisdiction, require evidence or trial-level determination.

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