High Court relief against threatened prosecution may survive later criminal steps, while limitation and due process remain decisive safeguards.
Section 463(2) of the Companies Act, 2013 permits an officer who reasonably apprehends prosecution for negligence, default, breach of duty, misfeasance or breach of trust to seek relief from the High Court, and the later initiation of criminal proceedings does not by itself defeat that jurisdiction. The text also states that proposed prosecution may be barred where limitation under section 468(2) of the Code of Criminal Procedure has expired, because cognizance cannot then be taken. It further notes that criminal escalation should follow due process, including fair consideration of the company's reply and a reasoned decision before further action.
Issues: (i) whether relief could be granted under section 463(2) of the Companies Act, 2013 even after initiation of criminal proceedings and whether the High Court had jurisdiction to entertain the application; (ii) whether the impugned notice and proposed prosecution were barred by limitation under section 468(2) of the Code of Criminal Procedure, 1973; and (iii) whether the respondent failed to follow due process before proceeding further on the alleged defaults.
Issue (i): whether relief could be granted under section 463(2) of the Companies Act, 2013 even after initiation of criminal proceedings and whether the High Court had jurisdiction to entertain the application.
Analysis: Section 463(2) permits an officer who has reason to apprehend that proceedings will or might be brought against him in respect of negligence, default, breach of duty, misfeasance or breach of trust to apply to the High Court for relief. The provision confers power on the High Court itself and is not confined to any Special Court alone. The apprehension existed when the petition was filed, and the later initiation of criminal proceedings did not take away the jurisdiction to consider relief under the section.
Conclusion: The application under section 463(2) was maintainable and the jurisdictional objection was rejected, in favour of the petitioners.
Issue (ii): whether the impugned notice and proposed prosecution were barred by limitation under section 468(2) of the Code of Criminal Procedure, 1973.
Analysis: The alleged contraventions related to a period long prior to the institution of proceedings, and the offences alleged carried limitation periods of six months or one year depending on punishment. Even reckoning limitation from the earliest inquiry notice, the inspection notice, or the preliminary findings letter, the proposed prosecution remained beyond time. The consequence was that cognizance of the alleged offences could not be taken.
Conclusion: The alleged offences were barred by limitation and cognizance was held to be unavailable, in favour of the petitioners.
Issue (iii): whether the respondent failed to follow due process before proceeding further on the alleged defaults.
Analysis: The notices and replies showed repeated disclosures by the company, but no reasoned order was passed on the detailed reply to the preliminary findings letter before criminal steps were pursued. The procedure adopted did not adequately consider the reply or culminate in a reasoned decision before escalation of the matter.
Conclusion: The respondent did not follow due process before proceeding further, in favour of the petitioners.
Final Conclusion: Relief was warranted against the threatened criminal liability, and further proceedings on the impugned notice were restrained.
Ratio Decidendi: A High Court may grant relief under section 463(2) of the Companies Act, 2013 where an officer has a reasonable apprehension of prosecution, and such relief is available even if criminal proceedings have subsequently been initiated, provided the claim is otherwise within the statutory scope and the alleged offences are not barred by limitation.