Companies Act prosecution fails where a corrected board minute shows inadvertent error and no intent to deceive is disclosed.

A complaint alleging false board minutes and violation of the Companies Act was held unsustainable because the record showed the NBFC reference was an inadvertent error later corrected by board resolution, and no material disclosed a prima facie intent to deceive, obtain undue advantage, or injure the company or any other person. In the absence of the requisite fraudulent intent for offences under sections 447 and 448, the proceedings were treated as an abuse of process and were quashed.

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Issues: Whether the complaint proceedings alleging violation of sections 118(2) and 118(7) read with sections 447 and 448 of the Companies Act, 2013 were liable to be quashed for absence of a prima facie offence and abuse of process.

Analysis: The minutes of the board meeting recorded an incorrect reference to de-registration as an NBFC, but the contemporaneous application to the Reserve Bank of India showed that no such request had been made. The record also showed that the company was not an NBFC at the relevant time and that the mistaken entry was subsequently corrected by board resolution. For offences under sections 447 and 448, the essential element is intent to deceive, gain undue advantage, or injure the interests of the company or another person. The complaint did not disclose such intent on its face, and the explanation and rectification were not met with any material showing fraud or a knowingly false statement.

Conclusion: The complaint did not disclose a prima facie offence under sections 118(2) and 118(7) read with sections 447 and 448 of the Companies Act, 2013. The proceedings were therefore liable to be quashed.

Final Conclusion: The revisional application succeeded and the criminal complaint proceedings were set aside as an abuse of process.

Ratio Decidendi: A prosecution under the penal provisions of the Companies Act cannot be sustained where the alleged incorrect entry is shown to be an inadvertent and corrected error and the complaint does not disclose the requisite intent to deceive, gain undue advantage, or cause injury.

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