Civil liability under prospectus misstatement provisions bars criminal prosecution; specific prior sanction is mandatory for Section 68 proceedings.

A statutory provision creating only civil liability for misstatements in a prospectus cannot support criminal prosecution; Section 62 of the Companies Act, 1956 was treated as enforceable only through a civil claim for compensation, so the complaint under that provision was unsustainable. Prosecution under Section 68 also required specific prior sanction of the competent authority, and a general permission covering other provisions was insufficient. In the absence of such sanction, the proceeding under Section 68 could not continue. The complaint and consequential proceedings were quashed.

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Issues: (i) Whether a criminal complaint was maintainable under Section 62 of the Companies Act, 1956, which provides only for civil liability for misstatements in a prospectus; and (ii) whether prosecution under Section 68 of the Companies Act, 1956 could proceed without prior sanction of the competent authority.

Issue (i): Whether a criminal complaint was maintainable under Section 62 of the Companies Act, 1956, which provides only for civil liability for misstatements in a prospectus.

Analysis: Section 62 was examined and found to create a liability to pay compensation for loss or damage caused by untrue statements in a prospectus. The provision contemplates enforcement through civil proceedings and not criminal prosecution. The complaint, insofar as it was founded on Section 62, was therefore legally unsustainable.

Conclusion: The criminal complaint under Section 62 was not maintainable and was liable to be quashed.

Issue (ii): Whether prosecution under Section 68 of the Companies Act, 1956 could proceed without prior sanction of the competent authority.

Analysis: Prosecution under Section 68 required prior sanction. The sanction relied upon was only a general permission for prosecutions concerning other provisions and did not extend to Section 68. In the absence of any specific sanction for Section 68, the prosecution could not be sustained.

Conclusion: The complaint under Section 68 was not maintainable for want of prior sanction.

Final Conclusion: The complaint and all consequential proceedings against the petitioners were quashed.

Ratio Decidendi: Where a statutory provision creates only civil liability, criminal prosecution under that provision is not maintainable, and where a statute requires prior sanction for prosecution, proceedings without such specific sanction are invalid.

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