Section 633(2) relief and limitation in company prosecutions: excusal granted for stale notices, but prosecution communication left undisturbed.

Relief under Section 633(2) of the Companies Act, 1956 was available where the alleged contraventions under Sections 295 and 299 related to transactions of 2006-07, yet the show-cause notices were issued only in February 2009 and were treated as beyond the one-year limitation period under Section 468 CrPC. The petitioners were therefore excused in respect of those notices. No relief was granted against the later communication of 20 February 2009, which merely conveyed that prosecution would be launched on the basis of earlier show-cause notices under other Companies Act provisions, because no sufficient ground for interference was shown.

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Issues: (i) Whether the petitioners were entitled to be excused under Section 633(2) of the Companies Act, 1956 in respect of the show-cause notices dated 2 February 2009 and 13 February 2009 on the ground of limitation and the nature of the alleged contraventions; (ii) whether any relief was warranted in respect of the communication dated 20 February 2009 informing launch of prosecution on the earlier show-cause notices.

Issue (i): Whether the petitioners were entitled to be excused under Section 633(2) of the Companies Act, 1956 in respect of the show-cause notices dated 2 February 2009 and 13 February 2009 on the ground of limitation and the nature of the alleged contraventions.

Analysis: The notices dated 2 February 2009 and 13 February 2009 concerned alleged contraventions under Sections 295 and 299 of the Companies Act, 1956. The alleged loan transactions had occurred in 2006-07, and the relevant prosecution could be taken cognizance of only within the period of limitation. The Court treated Section 468 of the Code of Criminal Procedure, 1973 as material to the limitation question and noted that the notices were issued beyond one year from the alleged commission of the offence. In that context, the petitioners were held entitled to the protective relief contemplated by Section 633(2).

Conclusion: The petitioners were entitled to be excused under Section 633(2) of the Companies Act, 1956 in respect of the show-cause notices dated 2 February 2009 and 13 February 2009.

Issue (ii): Whether any relief was warranted in respect of the communication dated 20 February 2009 informing launch of prosecution on the earlier show-cause notices.

Analysis: The communication of 20 February 2009 merely informed the petitioners that instructions had been issued to launch prosecution pursuant to the earlier show-cause notices under Sections 209(1), 209(3)(b), 217(3) and 292(1)(e) of the Companies Act, 1956. The petitioners had not sought the underlying letter dated 2 December 2008, and no basis was shown for interference with that communication.

Conclusion: No relief was granted in respect of the communication dated 20 February 2009.

Final Conclusion: The application succeeded only to the limited extent of granting excusal in relation to the later notices under Sections 295 and 299 of the Companies Act, 1956, while the challenge to the communication informing launch of prosecution on the earlier notices failed.

Ratio Decidendi: Relief under Section 633(2) of the Companies Act, 1956 can be granted where the prosecution sought to be initiated is beyond the applicable limitation period and the alleged contravention, on the facts presented, does not justify continuing the proceedings.

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