Company directors excused from criminal liability after ROC failed to pass reasoned orders under section 463(2) Companies Act

Calcutta HC allowed a writ petition filed by company directors seeking relief from criminal liability regarding alleged defaults in a ROC notice dated 6.10.2020. The court found that ROC failed to pass reasoned orders after receiving the company's detailed reply on 17.11.2020, and criminal proceedings were initiated after nearly 3 years. The court excused petitioners from criminal liability and restrained ROC from instituting or proceeding with criminal proceedings related to the impugned notice under section 463(2) of Companies Act, 2013.

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Issues Involved:
1. Criminal liability and injunction against the Registrar of Companies (ROC).
2. Application under Section 463(2) of the Companies Act, 2013.
3. Limitation period for initiating criminal proceedings.
4. Due process before initiating criminal proceedings.
5. Jurisdiction of the High Court under Section 463(2).

Summary:

Issue 1: Criminal liability and injunction against the ROC
The petitioners sought to be excused from any criminal liability and to restrain the ROC, West Bengal, from initiating criminal proceedings based on the notice dated 6.10.2020. The petitioners argued that they had acted honestly and with due diligence, and thus should be relieved of the alleged defaults.

Issue 2: Application under Section 463(2) of the Companies Act, 2013
The case was filed under Section 463(2) of the Companies Act, 2013, which allows the High Court to grant relief to an officer of a company who apprehends proceedings for negligence, default, breach of duty, misfeasance, or breach of trust. The High Court has the same power as a Special Court to relieve the officer if they have acted honestly and reasonably.

Issue 3: Limitation period for initiating criminal proceedings
The petitioners contended that the alleged offences were barred by limitation under Section 468(2) of the Code of Criminal Procedure, 1973. The offences related to the years 2014-2019, and the limitation period for such offences is 6 months to 1 year. The Court agreed that the offences were barred by limitation, referencing previous judgments that supported this view.

Issue 4: Due process before initiating criminal proceedings
The Court found that the ROC did not follow due process before initiating criminal proceedings. Citing the case of Venkatesan Thyagarajan vs. Registrar of Companies, Tamil Nadu, the Court emphasized that a show cause notice should result in an adjudication considering the replies of the concerned person. The ROC did not pass any reasoned order after the Company's detailed reply to the notice dated 6.10.2020.

Issue 5: Jurisdiction of the High Court under Section 463(2)
The Court rejected the respondent's contention that only Special Courts have the power to grant relief under Section 463(2). The High Court has jurisdiction to grant relief, even if criminal proceedings have been initiated. The Court referenced several cases, including Visram Financial Services (P) Ltd. vs. V. Rajendran, which affirmed the High Court's power to grant relief even after the initiation of criminal proceedings.

Conclusion:
The Court allowed the prayers in the writ petition, excusing the petitioners from any criminal liability and restraining the respondent from proceeding with any criminal proceedings related to the notice dated 6.10.2020. The judgment was disposed of along with all connected applications, and urgent certified copies were to be supplied upon fulfillment of requisite formalities.

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