TaxTMI 
TaxTMI 
2024 (5) TMI 555
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....trict, Delhi (hereinafter referred to as the 'Trial Court') in Complaint Case No. 11205 of 2017, titled as K.K. Goel & Sons HUF v. Sh. Yogesh Chandra Goyal & Ors., summoning the petitioners herein for the offence under Sections 185/447/452 of the Companies Act, 2013 (in short, 'Companies Act') read with Section 120B of the Indian Penal Code, 1860 (in short, 'IPC'). The Complaint filed by the Respondent no. 2: 3. The abovementioned complaint has been filed by the respondent no. 2 herein, as the complainant no. 1, with M/s Himgiri Fincap Ltd., the company in question, as complainant no. 2, alleging therein that the respondent no. 2 is a shareholder of the complainant no. 2 company. It is further alleged that the petitioner no. 1 herein was a Whole-Time director of the complainant no. 2 company and was in control of the day-to-day affairs and the management of the said company. It is further alleged that the petitioner no. 1, along with the petitioner nos. 2 and 3 herein, managed the entire sale/purchase of the shares, transactions, management control, and functioning of the company. 4. It is alleged that the petitioner no. 3 was appointed as the director of the said company ....
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.... Company is also the chairman/ director of Accused No. 5 Company. In fact Accused No. 1 has diverted these funds to Accused No. 6 Company, a company controlled by him and his family, in the form of loan. Such transaction with a company in which a director of the company is director in both the companies, is prohibited under the provisions of Section 185 of the COMPANIES ACT 2013. xxxx 21. That Accused No. 1 and 2 have violated section 185 of the Companies Act by giving loan to companies and concern in which they are director. They have diverted/ siphoned the funds of Complainant No. 2 Company (as is evident from the Balance sheet of Accused No. 6) (Annexure-A4 Colly) to Accused No. 5." 8. For the purposes of attracting the offence under Section 452 of the Companies Act, the respondent no. 2 in the complaint alleges as under: "16. That with predetermined and premeditated illegal / unlawful and ulterior / vested motives, the Accused No. 1, 2 & 4 shifted the registered office of the Company to C-15, Preet Vihar, Delhi, a premises co-owned by him and shifted entire records/ books/assets etc at their own will and are liable to restore the assets of the Comp....
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....omplaint made by the Director, Serious Fraud Investigation Office (in short, 'SFIO') or any officer of the Central Government authorized by a General or Special Order in writing in this behalf by that Government. He submits that the cognizance of the said offence cannot be taken on a private complaint filed under Section 200 of the Cr.P.C. by an alleged shareholder of the Company. In support, he places reliance on: a) Sivananda Rajaram v. New Shipping Kaisha Ship Management Pvt. Ltd., Judgment dated 03.07.2023 of the High Court of Madras in Criminal Original Petition No. 19154 of 2021; b) Suman Paruchuri v. Jakka Vinod Kumar Reddy & Ors., Judgment dated 06.06.2022 of the High Court of State of Telangana in Criminal Petition No(s) 8025 of 2021 and 8024 of 2021; and, c) Ashish Bhalla v. State & Ors., of this Court 2023 SCC OnLine Del 5818. 13. For the offence under Section 185 of the Companies Act, he submits that the offence is alleged to have been committed by the petitioners in the years 2002 to 2008. He submits that even assuming that the petitioners may have committed such an offence, in terms of Section 468(2) of the Cr.P.C., there is a bar on taki....
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....52 of the Companies Act is a continuing one, therefore, in terms of Section 472 of the Cr.P.C., there would be no period of limitation. In support, he places reliance on the judgment of the Supreme Court in Krishna Bhattacharjee v. Sarathi Choudhury & Anr., (2016) 2 SCC 705. 18. He submits that Section 452 of the Companies Act has more severe punishment than that under Section 185 of the Companies Act, therefore, Section 452 of the Companies Act shall, for purposes of Section 468(3) of the Cr.P.C. would have to be treated as prescribing more severe punishment. 19. He further submits that the petitioners have also been summoned under Section 120B of the IPC, which would be punishable with the same punishment as Section 447 of the Companies Act and therefore, no period of limitation would apply. He submits that, in terms of Section 468(3) of the Cr.P.C. read with Section 472 of the Cr.P.C., since offence under Section 452 of the Companies Act, Section 185 of the Companies Act, and Section 120B of the IPC are being tried together, the complaint was within the period of limitation for each of the offence charged. In support, he places reliance on Mohan Baitha & Ors. v. State of B....
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....ntral Government authorized, by a general or special order in writing in this behalf by that Government. The said provision is reproduced as under: "212. Investigation into affairs of Company by Serious Fraud Investigation Office- xxxx (6) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), offence covered under section 447 of this Act shall be cognizable and no person accused of any offence under those sections shall be released on bail or on his own bond unless- (i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail: Provided that a person, who, is under the age of sixteen years or is a woman or is sick or infirm, may be released on bail, if the Special Court so directs: Provided further that the Special Court shall not take cognizance of any offence referred to this subsection except upon a complaint in writi....
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....dras in Sivananda Rajaram (Supra), and by the Karnataka High Court in the judgement dated 21.10.2022, passed in Criminal Petition No. 3550 of 2017, titled Sri. M. Gopal v. Sri. Ganga Reddy. 28. Recently, the Karnataka High Court, in its judgement dated 01st March, 2024 passed in Writ Petition No. 11821 of 2018, titled as Sri. Arun Ballakur & Anr. v. Sri. M. Krishna Reddy, has also quashed the proceedings for an offence under Section 447 of the Companies Act initiated on a private complaint by the shareholder therein, on the ground that the cognizance for the offence under Section 447 of the Companies Act can be taken only on a complaint filed by the Director, SFIO in terms of the Second Proviso of Section 212(6) of the Companies Act. 29. For the above reason, the Order dated 05.01.2019 of the learned Trial Court as also the Impugned Order, in so far as it summons the petitioners for the offence under Section 447 of the Companies Act, cannot be sustained and are, accordingly, set aside. Limitation: 30. Sub Section (2) of Section 185 of the Companies Act, as was then applicable, shall be relevant for deciding the question of limitation as far as the offence under Section ....
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....b) where the commission of the offence was not known to the person aggrieved by the offence or to any police officer, the first day on which such offence comes to the knowledge of such person or to any police officer, whichever is earlier; or (c) where it is not known by whom the offence was committed, the first day on which the identity of the offender is known to the person aggrieved by the offence or to the police officer making investigation into the offence, whichever is earlier. (2) In computing the said period, the day from which such period is to be computed shall be excluded." 34. In the present case, as the complainant himself is a shareholder of the Complainant no. 2 company, and, in any case, has not pleaded that he did not know of the offence having been committed by the petitioners, the cognizance taken of the offence under Section 185 of the Companies Act which is stated to have been committed between the years 2002-2008, on a complaint filed in 2017, was barred by limitation and is, therefore, bad in law. 35. However, this would not be the end of the discussion on the question of limitation. As is noted hereinabove, the learned Trial Court ha....
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.... of the Act." What then is the nature of this offence. The question then is whether it is a continuing offence. According to Black's Law Dictionary (Revised 4th edn.) continuing offence means a transaction or a series of acts set on foot by a single impulse, and operated by an unintermittent force, no matter how long a time it may occupy. In State of Bihar v. Deokaran Nenshi (1972) 2 SCC 890, the question was whether the failure to furnish returns on the part of the owner of a stone quarry under Regulation 3 of the Indian Metalliferrous Mines Regulations, 1926 even after warning from the Chief Inspector was a continuing offence. Section 79 of the Mines Act, 1952 which provided that no court shall take cognizance of an offence under the Act unless a complaint was made within six months from the date of the offence and the explanation to the section provided that if the offence in question was a continuing offence, the period of limitation shall be computed wherefore to every part of the time during which the said offence continued. Shelat, J. for the court observed : "A continuing offence is one which is susceptible of continuance and is distinguishable from the one whi....
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....d by the Companies Act, cannot be said to be terminated by a single act or fact but would subsist for the period until the property in the offender's possession is delivered up or refunded. It is an offence committed over a span of time and the last act of the offence will control the commencement of the period of limitation and need be alleged. The offence consists of a course of conduct arising from a singleness of thought, purpose of refusal to deliver up or refund which may be deemed a single impulse. Considered from another angle, it consists of a continuous series of acts which endures after the period of consummation on refusal to deliver up or refund the property. It is not an instantaneous offence and limitation begins with the cessation of the criminal act, i.e. with the delivering up or refund of the propriety. It will be a recurring or continuing offence until the wrongful possession, wrongful withholding or wrongful application is vacated or put an end to. The offence continues until the property wrongfully obtained or wrongfully withheld or knowingly misapplied is delivered up or refunded to the company. For failure to do so sub-section (2) prescribes the punishme....
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....t." (Emphasis supplied) 44. Therefore, if two or more offence can be tried together, the "period of limitation" under Sub-Section (2) of Section 468 of the Cr.P.C. shall be determined with reference to the offence which is punishable with the more severe punishment or, as the case may be, the most severe punishment. 45. Section 220 of the Cr.P.C. prescribes the circumstances where more than one offence may be tried together. It reads as under: "220. Trial for more than one offence.-(1) If, in one series of acts so connected together as to form the same transaction, more offences than one are committed by the same person, he may be charged with, and tried at one trial for, every such offence. (2) When a person charged with one or more offences of criminal breach of trust or dishonest misappropriation of property as provided in sub-section (2) of Section 212 or in sub-section (1) of Section 219, is accused of committing, for the purposes of facilitating or concealing the commission of that offence or those offences, one or more offences of falsification of accounts, he may be charged with, and tried at one trial for, every such offence. (3) I....
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....with an offence punishable with fine, and for an offence punishable with imprisonment for a term not exceeding one year, the period of limitation for taking cognizance shall be one year. If in the same trial, the accused is charged with an offence which is punishable with imprisonment for a term of upto three years, the period of limitation shall be three years. 50. In this regard, it is to be noted that the punishment for the offence under Section 452 of the Companies Act is in fine alone. In terms of Section 468(2) of the Cr.P.C., therefore, the period of limitation for filing of the same would be six months. Therefore, the same shall have no effect on the "period of limitation" for the offence under Section 185 of the Companies Act. Merely because offence under Section 185 of the Companies Act can be tried alongwith the offence under Section 452 of the Companies Act, the period of limitation does not extend as far as the cognizance of an offence under Section 185 of the Companies Act is concerned. The effect of offence under Section 452 of the Companies Act, being a 'continuing offence', only is that for the offence under Section 452 of the Companies Act, fresh period of limi....