Court quashes criminal complaint under Indian Companies Act citing civil liability, no specific sanction

The court quashed the criminal complaint under sections 62 and 68 of the Indian Companies Act, 1956. It held that section 62 deals with civil liability, not criminal complaints, and compensation for violations of this section can be sought through a civil suit. Additionally, the court found that the complaint under section 68 was not maintainable as specific sanction for prosecution under this section was lacking. Consequently, the court allowed the petitions, quashed the complaint case, and disposed of all related petitions and proceedings against the petitioners.

---

---

Issues:
Quashing of criminal complaint under sections 62 and 68 of the Indian Companies Act, 1956.

Analysis:
1. The petitioners sought the quashing of criminal complaint No. 805/2002 under section 62 read with section 68 of the Act, alleging misstatements in the prospectus and failure to fulfill promises made. The petitioners argued that section 62 deals with civil liability, not criminal complaints, and that for a complaint under section 68, prior sanction of competent authority was necessary.

2. Section 62 of the Act imposes civil liability for misstatements in a prospectus, entailing compensation for losses incurred due to untrue statements. The court opined that compensation for violations of section 62 can be sought through a civil suit, not a criminal complaint. Previous cases, such as Rajeev Shukla v. Registrar of Companies, supported this interpretation.

3. Concerning the complaint under section 68, the respondent acknowledged the requirement of prior sanction for prosecution. The respondent claimed that sanction was granted by the Department of Company Affairs, but the court found the sanction letter to be a general permission for certain sections, not including section 68. Without specific sanction for section 68, the court deemed the complaint under this section not maintainable.

4. Ultimately, the court allowed the petitions and quashed the complaint case pending before the ACMM, along with all further proceedings against the petitioners. The judgment disposed of all related petitions accordingly.

---