Mandatory statutory condition breach under Companies Act attracts section 629A penalty; summons-form defect does not quash proceedings.

Non-compliance with section 294(2) of the Companies Act, 1956, in appointing a sole selling agent was held punishable under section 629A, because the statutory restriction attached to the appointment itself and no separate punishment was provided for its breach. The High Court rejected the contention that the complaint should be quashed merely because summons were not issued in Form No. 30, treating that defect as insufficient to defeat the proceedings. The petition for quashing was therefore rejected, subject to liberty for the petitioners to raise limitation before the trial court at the appropriate stage.

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Issues: (i) whether non-compliance with section 294(2) of the Companies Act, 1956, in appointing sole selling agents attracts penal liability under section 629A of the Act; (ii) whether the complaint was liable to be quashed on the ground that summons were not issued in Form No. 30.

Issue (i): whether non-compliance with section 294(2) of the Companies Act, 1956, in appointing sole selling agents attracts penal liability under section 629A of the Act.

Analysis: Section 294(2) imposes mandatory restrictions on the board while appointing a sole selling agent, and the required condition attaches to the very act of appointment. The Court held that where the Act provides no specific punishment for breach of that provision, section 629A supplies the penalty for contravention of a statutory provision or condition, limitation, or restriction subject to which the approval or appointment is made. The absence of a separate alternative remedy under the Act distinguished the case from authorities dealing with other provisions.

Conclusion: The non-compliance was punishable under section 629A, and the challenge on this ground failed.

Issue (ii): whether the complaint was liable to be quashed on the ground that summons were not issued in Form No. 30.

Analysis: The defect in the form of summons, by itself, was not treated as a ground sufficient to quash the proceedings. The petitioners were noted to have the further statutory option of seeking compounding of the offence.

Conclusion: The objection based on Form No. 30 was rejected.

Final Conclusion: The petition for quashing was rejected, while liberty was left to the petitioners to raise the question of limitation before the trial court at the appropriate stage.

Ratio Decidendi: Where a statutory provision imposes a mandatory condition or restriction and the Act prescribes no specific punishment for its breach, section 629A of the Companies Act, 1956, applies to the contravention.

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