Corporate prosecution and director liability: non-joinder of the company and lack of prima facie falsity defeated the case.

A complaint by a Deputy Registrar was treated as maintainable because the statutory definition of "Registrar" includes a deputy registrar discharging functions under the Companies Act, 2013. The complaint was also held not to be barred by limitation under Section 468 CrPC. On the merits, the alleged non-disclosure in financial statements did not, on the materials placed, establish the deliberate falsity or suppression required for Section 448, so the allegations were not prima facie made out against the director. Prosecution against the director was further found unsustainable because the company, as the principal offender, had not been arraigned as an accused, and vicarious criminal liability could not be fastened in its absence.

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Issues: (i) Whether the complaint filed by the Deputy Registrar of Companies was maintainable under Section 439(2) of the Companies Act, 2013; (ii) Whether the complaint was barred by limitation; (iii) Whether the alleged contraventions of Section 129 read with Section 448 of the Companies Act, 2013 were prima facie made out; (iv) Whether prosecution of the director was sustainable in the absence of the company being arraigned as an accused.

Issue (i): Whether the complaint filed by the Deputy Registrar of Companies was maintainable under Section 439(2) of the Companies Act, 2013.

Analysis: Section 439(2) permits cognizance on a complaint by the Registrar, a shareholder or member, or a person authorised by the Central Government. The Court noted that the complaint was filed by a Deputy Registrar, and relied on the statutory definition of "Registrar" in Section 2(75), which includes a deputy registrar discharging functions under the Act.

Conclusion: The complaint was held to be maintainable.

Issue (ii): Whether the complaint was barred by limitation.

Analysis: The alleged non-disclosure related to the period from November 2016 to December 2016, while the complaint was filed in November 2019. The Court held that the alleged offences under Section 129 and Section 448 of the Companies Act, 2013 were not hit by Section 468 of the Code of Criminal Procedure, 1973, particularly because the punishment structure and the nature of the allegations did not attract the bar urged by the petitioner.

Conclusion: The complaint was not barred by limitation.

Issue (iii): Whether the alleged contraventions of Section 129 read with Section 448 of the Companies Act, 2013 were prima facie made out.

Analysis: The Court found that the complaint was vague and did not contain specific allegations that the petitioner knowingly made any false statement or suppressed a material fact. The allegations were essentially of non-disclosure in the financial statements, which did not by itself establish the requisite element of deliberate falsity or mens rea for Section 448.

Conclusion: Prima facie, the allegations under Section 448 were not made out against the petitioner on the materials placed.

Issue (iv): Whether prosecution of the director was sustainable in the absence of the company being arraigned as an accused.

Analysis: The Court held that the alleged offences arose out of the company's financial statements and were primarily attributable to the company. It applied the settled principle that vicarious criminal liability of directors can be fastened only where the statute so provides and where the principal offender, namely the company, is before the Court. Since the company was not made an accused, the complaint suffered from a fundamental defect of non-joinder.

Conclusion: The prosecution against the petitioner-director was unsustainable in the absence of the company as an accused.

Final Conclusion: The revisional court exercised inherent jurisdiction to quash the criminal proceeding against the petitioner, holding that continuation of the case would amount to abuse of process and that the impugned proceedings could not be sustained against her alone.

Ratio Decidendi: In prosecutions arising from corporate contraventions founded on the company's financial statements, directors cannot be fastened with criminal liability by way of vicarious liability unless the statute contemplates it and the company, as the principal offender, is before the Court.

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