Criminal prosecution under the Companies Act: limitation runs from knowledge of the offence, and factual Rule 3 disputes are for trial.

Limitation for prosecution under the Companies Act was held to run, for offences not immediately known, from the date the competent authority gained knowledge under Section 469 CrPC; the complaint was treated as timely because knowledge was taken from the show-cause notice date, not the later sanction date. A quashing challenge based on Rule 3 of the Companies (Cost Records and Audit) Rules, 2014 also failed because the company's industry classification raised a disputed factual issue, including its own description as an edible oil seeds and oils business, which had to be examined by the trial court on evidence. The criminal proceedings were allowed to continue.

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Issues: (i) Whether the criminal complaints were barred by limitation under the Code of Criminal Procedure, 1973; (ii) Whether the proceedings were liable to be quashed on the ground that seed manufacturing companies did not fall within the coverage of Rule 3 of the Companies (Cost Records and Audit) Rules, 2014.

Issue (i): Whether the criminal complaints were barred by limitation under the Code of Criminal Procedure, 1973.

Analysis: The applicable punishment under Section 147 of the Companies Act, 2013 was one year, attracting Section 468(2)(b) of the Code of Criminal Procedure, 1973. For offences not immediately known, limitation begins under Section 469 of the Code of Criminal Procedure, 1973 from the date when the offence comes to the knowledge of the aggrieved authority. The date of knowledge was taken as the date of the show-cause notice issued by the Registrar of Companies, and not the later date on which sanction for prosecution was obtained. The filing date of the complaint was therefore within the prescribed period.

Conclusion: The complaints were not barred by limitation.

Issue (ii): Whether the proceedings were liable to be quashed on the ground that seed manufacturing companies did not fall within the coverage of Rule 3 of the Companies (Cost Records and Audit) Rules, 2014.

Analysis: The contention required examination of the industry classification and the factual basis on which the Registrar initiated prosecution. The record showed that the company itself had entered its industry description as "Edible Oil Seeds and Oils (including vanaspati)" for the purpose of filing returns and uploading documents. In quashing proceedings, such a factual dispute could not be conclusively determined, and the question whether the description was correctly used had to be examined by the trial court on evidence.

Conclusion: The challenge based on Rule 3 did not warrant quashing of the proceedings.

Final Conclusion: The petitions failed and the criminal proceedings were permitted to continue, leaving the factual objections open for consideration by the trial court.

Ratio Decidendi: For offences under the Companies Act, limitation runs from the date when the offence comes to the knowledge of the competent authority under Section 469 of the Code of Criminal Procedure, 1973, and disputed factual issues affecting the applicability of regulatory coverage cannot ordinarily be decided in quashing proceedings.

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