Limitation and vicarious criminal liability bar prosecution for alleged Companies Act offences by a resigned director

Complaints alleging offences under the Companies Act were held time-barred where cognizance was sought after the three-year limitation period under section 468 CrPC for acts said to have occurred in 1995-96 but complained of only in 2002. The complaints under sections 63, 68 and 62 were therefore liable to be quashed. The court also held that a former director who had resigned and had authorised another person to sign the prospectus could not be fastened with criminal liability merely because the agent signed the statement; absent a statutory basis for vicarious criminal liability, the prosecution under section 628 could not stand.

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Issues: (i) Whether the complaints alleging offences under sections 63, 68, 628 and 62 of the Companies Act were barred by limitation under section 468 of the Code of Criminal Procedure, 1973. (ii) Whether the petitioner, having resigned as a director and having acted through a power of attorney, could be held criminally liable for the acts attributed to the agent in the complaint under section 628 of the Companies Act.

Issue (i): Whether the complaints alleging offences under sections 63, 68, 628 and 62 of the Companies Act were barred by limitation under section 468 of the Code of Criminal Procedure, 1973.

Analysis: The complaints in respect of the offences under sections 63, 68 and 62 were filed long after the alleged date of knowledge and beyond the period prescribed for taking cognizance. The offences attracted punishments that brought them within the three-year limitation period under section 468, and the complaints were instituted only in 2002 in relation to alleged acts of 1995-96. On that footing, cognizance was time-barred.

Conclusion: The complaints under sections 63, 68 and 62 of the Companies Act were barred by limitation and liable to be quashed.

Issue (ii): Whether the petitioner, having resigned as a director and having acted through a power of attorney, could be held criminally liable for the acts attributed to the agent in the complaint under section 628 of the Companies Act.

Analysis: The record showed that the petitioner had resigned from directorship and had authorised another person to sign the prospectus as attorney. The alleged false statement was thus signed by the attorney, and criminal liability could not automatically be fastened on the principal for every act of the agent. In the absence of a basis for vicarious criminal liability, the prosecution against the petitioner could not stand.

Conclusion: The petitioner could not be made criminally liable on the basis of the agent's act, and the prosecution under section 628 of the Companies Act was unsustainable.

Final Conclusion: The criminal original petitions succeeded and the proceedings against the petitioner in all the complaints were quashed.

Ratio Decidendi: A complaint for a time-bound offence cannot be maintained beyond the statutory limitation period, and in criminal law a principal is not vicariously liable for an agent's unlawful act unless the statute clearly creates such liability.

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