Dissolved company liability continues: prosecution may proceed through a responsible director where restoration is unavailable.
Dissolution or striking off of a company does not extinguish criminal liability for offences alleged to have been committed during its existence. The Court reasoned that section 305 CrPC contemplates representation of a corporation only while it remains in existence, but continuing liability under the Companies Act, 2013 and the Prevention of Money-Laundering Act, 2002 means the proceedings need not fail merely because the company is no longer on the register. Where restoration is not immediately possible, the prosecution may continue by naming a director or other responsible person as the company's representative so the case can proceed in law.
Issues: (i) Whether a dissolved company, which is no longer in existence, can still be prosecuted for offences alleged to have been committed during its existence; (ii) Whether the prosecution can array a director or other responsible person as the representative of such dissolved company under the criminal procedure framework.
Issue (i): Whether a dissolved company, which is no longer in existence, can still be prosecuted for offences alleged to have been committed during its existence.
Analysis: Section 305 of the Code of Criminal Procedure, 1973 contemplates prosecution of a corporation through a representative only where the corporation is in existence and capable of appointing one. Where the company has been struck off or dissolved, the Court held that the liability of the company and its officers survives by virtue of the Companies Act, 2013 and the special provisions under the Prevention of Money-Laundering Act, 2002. The Court further reasoned that a dissolved company may be restored to the register and, until appropriate legislative or procedural accommodation is made, the offence committed during its existence cannot be treated as immune from prosecution merely because the company has ceased to exist in the corporate register.
Conclusion: Yes. A dissolved company can still be proceeded against in law, and restoration to existence is the proper course where available.
Issue (ii): Whether the prosecution can array a director or other responsible person as the representative of such dissolved company under the criminal procedure framework.
Analysis: The Court held that, where restoration of the dissolved company is not immediately possible, the prosecution may indicate a person who was in charge of the company in the final report so that the proceedings can continue. The action of the prosecution in showing the petitioner, who had been a director of the company, as the representative of the dissolved company was found to be justified in the interest of justice. The Court also relied on the continuing liability provisions under the Companies Act, 2013 and the deeming scheme under the Prevention of Money-Laundering Act, 2002 to hold that dissolution does not wipe out the underlying liability.
Conclusion: Yes. The prosecution was justified in arraying the director as the representative of the dissolved company for continuation of the case.
Final Conclusion: The challenge to the order refusing removal of the petitioner as representative of the company failed, and the prosecution against the dissolved company was permitted to proceed through the person shown as its representative.
Ratio Decidendi: Dissolution or striking off of a company does not extinguish its criminal liability for offences committed during its existence, and where the procedural law is silent, prosecution may continue by restoring the company or, if necessary, by proceeding through a responsible person shown as its representative.
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