TaxTMI 
TaxTMI 
2016 (8) TMI 792
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....Sections 211(7) and 628 of the Companies Act for nonmaintenance of proper books of accounts. Therefore, prima facie though as per the Company Law, it is considered to be a punishable offence, practically, in absence of evidence regarding mens rea and intention to commit offence as alleged, practically, they are technical offences of not following the statutory provision of law, though such breach of statutory provision, may be punishable. Only in one complaint, there is reference of Sections 467 and 471 of the Indian Penal Code. However, the perusal of entire record makes it clear that, practically, there is no prima facie evidence and thereby, there is no reason or substance in the complaint itself to continue the criminal proceedings against several persons after long time of so-called and alleged commission of offence. 2. Since we are dealing with different matters together, for the sake of convenience and brevity on record, following details are necessary. a. In Special Criminal application No.3139 of 2016, the petitioner has challenged the proceedings of Criminal Case No.14 of 2006 wherein including Mardia Chemicals Ltd., in all there are 13 accused amongst which present pet....
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.... that there is substance in the submission by the applicant, which is recollected hereunder. Special Criminal Application No.3139/2012 (Criminal Case No.14 of 2006 ('complaint' fo r short) Allegations in Criminal Case No.14 of 2006 5.1 In balance sheet, by way of notes on accounts, disclosure was made as to payment of remuneration to related parties during the year 2001-2002, 2002-2003. However, disclosure as to advances paid for acquisition of mining lands from directors and their relatives was not made. Thus accounts have been falsified knowingly and intentionally to hide the fact of directors/relatives, enjoying the company's money without any tangible benefit to the company. Hence they are liable to be prosecuted under Section 628 of Companies Act, 1956. 5.2 Books of accounts for the year 1996- 1997, 1997-1998 and 1998-1999 did not present true and financial position and as such the accused being 2 to 13 are responsible and liable to be punishable under Section 209 read with Section 211 read with Section 628 of the Act. 5.3 The accused persons being 2 to 13 have knowingly and willfully approved the false annual accounts and thereby the accused persons have rendered themse....
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....ctor of the Company is not a person referred to in Section 209 (5) of the Companies Act, 1956. 5.7 There is no allegation that the Petitioner was charged by the Managing Director, Manager or Board with the duty of seeing that the requirements of Section 209(7) are complied with. 5.8 A complaint alleging offence under Section 211 would also lie only against a person referred to in Section 209 (6) of the Companies Act, 1956. 5.9 Compliance with the relevant provisions of the statute is with those in charge of the management of the company. When they certify that the relevant provisions have been complied with, the Directors approve the accounts. Petitioner being a Professional Director on the Board of the Company, would have no knowledge of any false statement made in any return, report or balance sheet. In any case, as per the provision of Section 5 of the Companies Act, 1956, the Petitioner cannot be said to be an officer in default. In this regard, the Petitioner relies upon the judgment dated 5.3.2012 of this Hon'ble Court in Special Criminal Application No.2421 of 2007 - Kalpesh Dagli v/s State of Gujarat. 5.10 There is no specific allegation made in the complaint, holding t....
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.... 4.3 of the report quoted in para 6 of the complaint which would indicate that the Petitioner has deliberately or willfully not replied to the observations/reservations, etc. There is no statement in the complaint, which would indicate as to what observation/reservation has not been replied to. Non reply of any observation/reservation does not tantamount to any offence under Section 209(5) or 211(7) of the Companies Act, 1956. 5.17 The complaint has been filed on 4.2.2006, inter alia, in respect of some allegations prior to the Petitioner's resignation on 31.8.1998. The complaint is barred by limitation. In this regard, the Petitioner relies upon the judgment dated 29.4.2015 of this Hon'ble Court in Special Criminal Application No.5550 of 2014 - Rasik Shantilal Mardia v/s State of Gujarat. Special Criminal Application No.3141/2012 (Criminal Case No.24 of 2006 ('complaint' fo r short) Allegations made in Criminal Case No. 24 of 2006: 5.18 The 30 subscribers to the allotment of 2 crores shares were involved in the mischievous movement of funds on the date of allotment i.e. 21.6.1994. Deeper analysis of the bank accounts and entries very clearly indicate that the movement of che....
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....hat the Petitioner has forged the document, which purports to be a valuable security or which purports to give to any person make or transfer any valuable security or to receive the principal interest or dividends thereon or to receive or deliver any money, movable property or valuable security or any document purporting to be an acquaintance or receipt acknowledging payment of money or delivery of movable property or valuable security. The Petitioner further submits that there is no allegation that the Petitioner has used any document as genuine, which he knows or has reason to believe to be forged. None of the ingredients of Section 463, 464 read with Section 467 and 471 of the Indian Penal Code are found to be satisfied in the allegations made in the complaint, much less against the Petitioner. Special Criminal Application No.3142/2012 (Criminal Case No.15 of 2006 ('complaint' fo r short) Allegations made in Criminal Case No. 15 of 2006: 5.24 It is seen from the annual reports containing the auditor's report, director's reports, balance sheets, profit and loss accounts etc. for the period from 1994-1995 to 2003-04 (Annexure-A) received from various agencies such as ROC, SEBI....
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....s report for the financial year 1998-1999 was received on 12.4.1999. The Petitioner is concerned only in respect of the financial years 1994-1995 to 1997- 1998. 5.32 None of the remarks made for the year 1994-1995 to 1997-1998 can be considered an adverse remark, qualification or reservation, much less an adverse remark which requires the Board to give any information or explanation. 6. The petitioner is a practicing advocate and it is his main vocation. Incidentally, he might have accepted Directorship, but merely he is a formal Director, no process can be issued against him unless specific allegation has been made against him in the complaint or primafacie ingredients of the offence has been established against him. Here in this case, it is established from the complaint itself that, though the present petitioner has been named as an accused in the said complaint, neither there is specific allegation made nor prima-facie ingredients of the offence established from the said complaint against the petitioner. It seems that he has been joined as an accused in the said proceedings merely because he is a formal Director in the Company. In absence of any specific averments or ingredie....