Proceedings under Sections 185 and 447 of Companies Act quashed due to improper complaint and time-bar

Delhi HC quashed proceedings under Sections 185 and 447 of Companies Act against petitioners. Court held Section 447 cognizance requires Director/SFIO complaint, not private shareholder complaint. Section 185 offence was time-barred as complaint filed in 2017 for 2002-2008 alleged offences exceeded one-year limitation period. However, Section 452 (continuing offence) cognizance was upheld as property remained in wrongful possession. Trial court's order taking cognizance under Sections 185/447 was set aside, while Section 452 proceedings were allowed to continue.

---

---

Issues Involved:
1. Cognizance of offence u/s 447 of the Companies Act.
2. Limitation period for taking cognizance of offence u/s 185 of the Companies Act.
3. Continuing nature of offence u/s 452 of the Companies Act.
4. Effect of pending complaint by M/s Glory Apartment Pvt. Ltd.

Summary:

1. Cognizance of offence u/s 447 of the Companies Act:
The court noted that u/s 212(6) of the Companies Act, cognizance of an offence u/s 447 can only be taken on a complaint made by the Director, Serious Fraud Investigation Office (SFIO) or an authorized officer of the Central Government. A private complaint by a shareholder is not maintainable. This was supported by precedents from the High Courts of Telangana, Madras, and Karnataka. Consequently, the Order dated 05.01.2019 summoning the petitioners for the offence u/s 447 of the Companies Act was set aside.

2. Limitation period for taking cognizance of offence u/s 185 of the Companies Act:
The court observed that the offence u/s 185, punishable with imprisonment up to six months or fine, attracts a limitation period of one year u/s 468(2) of the Cr.P.C. Since the alleged offence occurred between 2002-2008 and the complaint was filed in 2017, it was barred by limitation. The court dismissed the argument that the offence under Section 120B of the IPC could extend the limitation period for the offence u/s 185 of the Companies Act.

3. Continuing nature of offence u/s 452 of the Companies Act:
The court held that the offence u/s 452, involving wrongful withholding of company property, is a continuing offence. As long as the property is wrongfully withheld, a fresh period of limitation begins to run every day. Therefore, the cognizance of the offence u/s 452 was within the period of limitation and was upheld.

4. Effect of pending complaint by M/s Glory Apartment Pvt. Ltd.:
The court found that the existence of a similar complaint under Section 630 of the Companies Act, 1956 by M/s Glory Apartment Pvt. Ltd. does not preclude the present complaint at this stage. This issue should be considered by the Trial Court during the trial.

Final Findings:
The court set aside the Order dated 05.01.2019 taking cognizance of the offence u/s 185/447 of the Companies Act read with Section 120B of IPC. However, the cognizance of the offence u/s 452 of the Companies Act read with Section 120B of IPC was upheld. The respondent no. 2 was granted liberty to move an application u/s 473 of the Cr.P.C. to seek an extension of the period of limitation for the offence u/s 185 of the Companies Act, which the Trial Court should consider in accordance with law. The petition was allowed with no order as to costs.

---