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Issues: (i) Whether the criminal complaint for non-payment and delayed payment of declared dividend was barred by limitation on the ground that the default was a continuing offence; (ii) Whether prosecution could be maintained under the Companies Act, 1956 after the Companies Act, 2013 came into force; (iii) Whether subsequent payment of dividend with interest exonerated the accused from criminal liability.
Issue (i): Whether the criminal complaint for non-payment and delayed payment of declared dividend was barred by limitation on the ground that the default was a continuing offence.
Analysis: The default related to failure to deposit the declared dividend in a separate account within the stipulated period and failure to disburse it within thirty days. The letters exchanged with the complainant showed that the default continued until the amount was ultimately paid on 28-6-2013. In such circumstances, the offence was treated as continuing in nature, and limitation was computed with reference to the date on which the default ceased.
Conclusion: The complaint filed in March 2016 was held to be within limitation and not barred under Section 468 of the Code of Criminal Procedure, 1973.
Issue (ii): Whether prosecution could be maintained under the Companies Act, 1956 after the Companies Act, 2013 came into force.
Analysis: The dividend declaration and the statutory default occurred in 2012, when the Companies Act, 1956 governed the obligations. The later commencement of the Companies Act, 2013 did not erase liability for an offence already committed under the old Act. The savings provision relied upon by the petitioners was not in force at the relevant time, and Article 20 of the Constitution of India was not attracted so as to invalidate the prosecution.
Conclusion: The prosecution under the Companies Act, 1956 was held maintainable.
Issue (iii): Whether subsequent payment of dividend with interest exonerated the accused from criminal liability.
Analysis: The statutory obligation was to deposit and disburse the declared dividend within the prescribed time. Payment made years later, and even after regulatory notice and partial steps to regularise the default, did not obliterate the completed statutory breach. The cited precedent was found inapplicable on its facts.
Conclusion: Subsequent payment did not wipe out the offence or justify quashing of the proceedings.
Final Conclusion: The petitions seeking quashing of the criminal proceedings were rejected, and the accused were directed to face trial.
Ratio Decidendi: A statutory default in payment of declared dividend is a continuing offence until compliance is made, and later payment does not extinguish criminal liability for an offence already committed under the governing company law.
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