Limitation and director liability bar prosecution where complaints were late and lacked specific averments of responsibility.

The HC held that offences under Sections 209(5), 211(7) and 628 of the Companies Act, 1956 were not continuing offences, so limitation for cognizance was not extended; complaints filed after the prescribed period were therefore time-barred and could not be entertained. It further held that the complaints did not contain specific averments showing that the petitioner-director was in charge of, or responsible for, the company's conduct, and mere formal directorship was insufficient to sustain vicarious criminal liability. On both grounds, the criminal proceedings arising from the complaints were quashed.

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Issues: (i) Whether the criminal complaints, lodged after the relevant accounting periods, were barred by limitation under the law of cognizance. (ii) Whether the complaints disclosed the requisite prima facie ingredients to proceed against a director who was only a formal director, in the absence of specific allegations of responsibility for the company's conduct.

Issue (i): Whether the criminal complaints, lodged after the relevant accounting periods, were barred by limitation under the law of cognizance.

Analysis: The alleged contraventions were referable to defaults under the Companies Act, 1956 and were punishable with imprisonment and fine. The Court held that the offences under Sections 209(5), 211(7) and 628 were not continuing offences, so the period of limitation did not keep running. Since the complaints were filed after the expiry of the limitation period prescribed for taking cognizance, the Magistrate could not validly proceed.

Conclusion: The complaints were barred by limitation and cognizance could not be taken.

Issue (ii): Whether the complaints disclosed the requisite prima facie ingredients to proceed against a director who was only a formal director, in the absence of specific allegations of responsibility for the company's conduct.

Analysis: The complaints did not contain specific averments showing that the petitioner was in charge of, or responsible for, the conduct of the business of the company. The allegations were general in nature and did not disclose any overt act or material indicating mens rea or vicarious criminal liability. On the complaint itself, the petitioner appeared to have been joined merely because of his formal directorship, which was insufficient to sustain prosecution for the alleged corporate offences and the related penal provisions.

Conclusion: The complaints did not disclose a prima facie case against the petitioner and prosecution could not continue.

Final Conclusion: The criminal proceedings arising from all four complaints were quashed, as they were both time-barred and unsupported by specific allegations against the petitioner.

Ratio Decidendi: A criminal complaint against a company director cannot be sustained when the alleged offences are non-continuing and are filed beyond limitation, and when the complaint does not contain specific averments showing that the director was responsible for the company's conduct or otherwise personally liable.

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