2025 (12) TMI 15 - HC - Companies Law

Criminal proceedings under Section 148(8) Companies Act quashed due to timely filing, clerical error and limitation bar

M/s. Rashmi Metaliks Limited & Ors. Versus Deputy Registrar of Companies, West Bengal.

HC allowed the revision and quashed the criminal proceedings under Section 148(8) of the Companies Act, 2013. It held that the cost audit report was ... Furnishing of Cost audit Report with prescribed time limit - Seeking quashing of the proceeding in connection with Complaint filed u/s 148(8) of the Companies Act, 2013 - alleged violation of Section 148(6) of the Companies Act - HELD THAT:- Upon consideration of the facts and documents supplied by the petitioner, it appears that the Board of Directors of the company, in a meeting, approved the Cost Auditor report on 30.06.2016. At the same time, this court finds that the date of signing the Cost Auditor report and Annexure by the Cost Auditor on the same date i.e. on 30.06.2016 at Kolkata and the Form CRA-4 was submitted on 27.7.2016. If we count the period of deposit, it comes within 30 days. However, it is the case of the petitioners that the date of submission was typed in Form CRA-4. It was purely a clerical mistake during the uploading of the form. The complainant should have verified other relevant documents of the company before filing the complaint before the Trial court against the petitioners. The complaint is also silent on it. Had the complainant scrutinised the accompanying documents, the factual position would have been evident, and the present proceeding may not have been instituted at all - Apart from that, the complaint being lodged after expiry of about 3 years is also unsustainable in law in view of Section 468 of Cr.P.C. This revisional application is a fit case for exercising inherent power vested upon the court under Section 482 of the Cr.P.C. - revision allowed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the statutory requirement under Section 148(6) of the Companies Act, 2013 regarding furnishing the cost audit report within thirty days was violated on the facts disclosed. 1.2 Whether prosecution for the alleged contravention was barred by limitation under Section 468 of the Code of Criminal Procedure, 1973, having regard to Section 147(1) of the Companies Act, 2013. 1.3 Whether the complaint and the consequent cognizance by the Magistrate amounted to abuse of process justifying quashing under Section 482 of the Code of Criminal Procedure, 1973. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Alleged violation of Section 148(6) - thirty days' period for furnishing cost audit report Legal framework 2.1 The Court referred to Section 148(6) of the Companies Act, 2013 which mandates that a company shall, within thirty days from the date of receipt of a copy of the cost audit report prepared in pursuance of a direction under sub-section (2), furnish the Central Government with such report along with full information and explanation on every reservation or qualification contained therein. Interpretation and reasoning 2.2 On examination of the documents produced by the petitioners, the Court found that the Board of Directors approved the cost audit report on 30.06.2016 and that the cost auditor signed the report and annexures on the same date at Kolkata. 2.3 Form CRA-4 was submitted on 27.07.2016. Calculating from 30.06.2016 to 27.07.2016, the Court held that the filing was within the thirty-day period contemplated by Section 148(6). 2.4 The reference in Form CRA-4 to the date '19.04.2016' was explained as a clerical error while typing/uploading the form. The Court noted that a co-ordinate Bench, at the admission stage, had also treated this as a clerical mistake. 2.5 The Court held that the complainant ought to have verified the relevant corporate records and accompanying documents before initiating the complaint. The complaint was silent on these foundational facts and did not reflect any such verification. 2.6 The Court observed that, had the complainant scrutinised the documents, the true factual position regarding the actual date of receipt and filing of the cost audit report would have been apparent, and the proceedings may not have been instituted at all. Conclusions 2.7 On the factual record, the Court concluded that the cost audit report had been furnished within the statutorily prescribed thirty-day period and that the alleged violation of Section 148(6) was not made out. 2.8 The complaint was founded upon an unverified and clerical error in Form CRA-4 and was therefore not sustainable on merits. Issue 2: Bar of limitation under Section 468 CrPC for offence punishable with fine under Section 147(1) of the Companies Act, 2013 Legal framework 2.9 The Court set out Section 147 of the Companies Act, 2013, which prescribes punishment for contravention of specified provisions, including that contravention of sections 139 to 146 is punishable with fine upon the company and every officer in default. 2.10 The petitioners contended, and the Court proceeded on the basis, that the alleged default under Section 148(6), if any, attracted only a monetary penalty/fine under the statutory scheme, and therefore amounted to an offence punishable with fine alone. 2.11 Reference was made to Section 468 of the CrPC, which bars any Court from taking cognizance of an offence after expiry of the period of limitation, the length of which depends on the maximum punishment prescribed. For offences punishable with fine only, the limitation period is six months. Interpretation and reasoning 2.12 The complaint in the present case was lodged about three years after the alleged default relating to the financial year 2014-15 and the filing of Form CRA-4 in July 2016. 2.13 Having regard to the nature of the punishment (fine/monetary penalty) and the time gap, the Court considered that the prescribed limitation period under Section 468 CrPC for such an offence had long expired by the time the complaint was filed. Conclusions 2.14 The Court held that the complaint was unsustainable in law as it was filed well beyond the statutory period of limitation applicable to an offence punishable with fine alone, and that Section 468 CrPC operated as a bar to taking cognizance. Issue 3: Propriety of cognizance and exercise of inherent powers under Section 482 CrPC to quash the proceedings Legal framework 2.15 The revisional application was brought under Section 482 of the CrPC, invoking the inherent power of the Court to prevent abuse of the process of any court and to secure the ends of justice. Interpretation and reasoning 2.16 The Court found that the learned Magistrate had taken cognizance without adverting to the true factual position emerging from the corporate records, particularly the actual dates of approval and signing of the cost audit report and the date of filing Form CRA-4. 2.17 In light of (i) the absence of any real contravention of Section 148(6), (ii) the failure of the complainant to verify the relevant documents, and (iii) the bar of limitation under Section 468 CrPC, the Court held that the Magistrate had travelled beyond jurisdiction in taking cognizance and had committed an error. 2.18 The Court reasoned that allowing the criminal proceedings to continue in these circumstances would cause prejudice to the petitioners and would amount to an abuse of the process of law. Conclusions 2.19 The Court held that the case was a fit one for the exercise of its inherent powers under Section 482 CrPC. 2.20 The revisional application was allowed, and the entire proceeding in the complaint case, arising from the alleged violation of Section 148(6) of the Companies Act, 2013, was quashed to prevent abuse of the process of law and to secure the ends of justice.