Limitation and director liability in prospectus misstatement complaints cannot be decided on disputed facts at the quashing stage.

Criminal complaints alleging mis-statements in a prospectus were not liable to be quashed on limitation grounds where the complainant's asserted date of knowledge was disputed and depended on contested facts that required trial. The Court held that, in such circumstances, limitation could not be conclusively decided in quashing proceedings. It also held that a director could not avoid prosecution merely by claiming to be an ordinary director, because the Companies Act, 1956 contemplates liability of an officer in default based on the role actually played and the complaint alleged responsibility of all directors for the prospectus statements. The prosecution was permitted to proceed because a prima facie case was disclosed.

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Issues: (i) Whether the criminal complaints alleging mis-statements in the prospectus were barred by limitation. (ii) Whether the petitioner, as a director, could be proceeded against as an officer in default for the alleged offences under the Companies Act, 1956.

Issue (i): Whether the criminal complaints alleging mis-statements in the prospectus were barred by limitation.

Analysis: The complaints alleged that the complainant acquired knowledge of the offending mis-statements only upon receipt of the Regional Director's letter in 2002. Under the limitation scheme for criminal complaints, the period runs from the date of knowledge where the offence first comes to the knowledge of the aggrieved person. The plea of earlier knowledge was based on disputed facts, including whether balance-sheets had been filed and whether the complainant had prior notice of the omission. Such a factual dispute could not be resolved in proceedings for quashing.

Conclusion: The complaints were not held to be barred by limitation, and the plea of limitation failed.

Issue (ii): Whether the petitioner, as a director, could be proceeded against as an officer in default for the alleged offences under the Companies Act, 1956.

Analysis: The statutory definition of officer in default is inclusive and extends beyond the managing director to other directors and persons responsible for compliance, depending on the role actually played in the company. The complaints specifically alleged that all directors were responsible for the statements in the prospectus, and the petitioner had not shown, on the face of the record, that he was outside the class of persons liable under the Act. In proceedings for quashing, the Court would not stifle a prosecution where the pleadings disclosed a prima facie case and the matter required trial.

Conclusion: The petitioner was not entitled to quashing on the ground that he was merely an ordinary director, and the prosecution could proceed.

Final Conclusion: The inherent jurisdiction was not attracted to terminate the prosecution, as no legal bar or patent absence of liability was established on the material placed before the Court.

Ratio Decidendi: In a quashing petition, limitation and liability objections that turn on disputed facts, especially as to the complainant's knowledge and the director's role in the company, cannot be ined finally without trial where the complaint otherwise discloses a prima facie offence.

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