Court rules CFO not liable for violation predating tenure, emphasizes timing of offence for liability.

The Court allowed the petition to quash the complaint under Section 148(8) of the Companies Act, 2013, emphasizing that liability for a continuing offence should be based on the time of the offence, not when the complaint is filed. The petitioner, as the Chief Financial Officer for a limited period, was not held liable for the violation that occurred before his tenure, highlighting that individuals cannot be held accountable for offences committed before their involvement.

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Issues involved:
The petition to quash a complaint under Section 148(8) of the Companies Act, 2013, read with Rule 6(1) of Companies (Cost Records and Audit) Rules, 2014.

Details of the Judgment:

Issue 1: Alleged violation of appointing a cost auditor within the prescribed time limit
The complaint alleged that a public limited company did not appoint a cost auditor within the specified time limit, thereby violating the Companies Act. The petitioner, who was the Chief Financial Officer for a limited period, argued that he should not be held liable as he was not in the company when the violation occurred. The respondent contended that since the offence is continuing, all officers during the period of violation are liable.

Issue 2: Liability of officers for continuing offences
The respondent argued that as the petitioner was an officer during the period of the offence, he should be held accountable for not rectifying the violation. However, the Court held that the petitioner cannot be prosecuted for a violation that occurred before his tenure, emphasizing that liability should be based on the time of the offence, not when the complaint is filed.

Judgment Summary:
The Court acknowledged that the petitioner was the Chief Financial Officer within a specific period, but the offence occurred before his tenure. It was clarified that liability for a continuing offence should not extend to officers who were not present when the violation initially took place. Relying on legal precedents, the Court emphasized that individuals cannot be held accountable for offences committed before their involvement. Consequently, the Court allowed the petition to quash the complaint, highlighting the importance of establishing liability based on the timing of the offence, not subsequent events or filings.

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