Quashing of prospectus misstatement complaint refused where certified records showed petitioners as signatories and authorised issuers.

Inherent jurisdiction under Section 482 CrPC is exercised sparingly and only where the allegations, even if accepted, do not disclose an offence. The Court held that quashing was unwarranted because the certified prospectus obtained from the stock exchange showed the petitioners as directors and signatories, so the plea that the Magistrate had been misled was not accepted. It also noted that criminal liability for misstatements in a prospectus under Section 63 of the Companies Act attaches to persons who authorised the issue, distinct from civil liability under Section 62. On the material available, the cognizance order could not be faulted and the quashing challenge failed.

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Issues: Whether the complaint and the order taking cognizance for offences relating to misstatements in the prospectus were liable to be quashed under the inherent powers of the Court on the ground that the petitioners were not signatories to the prospectus and that the complaint was allegedly misled by incorrect averments.

Analysis: The petition invoked the inherent jurisdiction under Section 482 of the Code of Criminal Procedure, 1973, which is to be exercised sparingly and only to prevent abuse of process or to secure the ends of justice. In proceedings of this nature, quashing is justified only where the allegations, even if accepted as true, do not disclose an offence. The Court noted that the certified copy of the prospectus obtained from the Delhi Stock Exchange showed the petitioners as directors and signatories, and therefore the foundational plea that the Magistrate had been misled was not accepted. The distinction between civil liability for misstatements in a prospectus under Section 62 of the Companies Act, 1956 and criminal liability under Section 63 of the Companies Act, 1956 was also noted, with criminal liability attaching to persons who authorised the issue of the prospectus. On the material available at this stage, the prospectus circulated to the public and deposited with the stock exchange was treated as having been signed by the petitioners, so the cognizance order could not be faulted.

Conclusion: The petition for quashing was not maintainable on the facts disclosed, and the challenge to the complaint and cognizance order failed.

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