TaxTMI 
TaxTMI 
2013 (3) TMI 885
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....26 and 127 of 2010 on the file of the Special Judge for Economic Offences, Hyderabad. In all the cases, there are nine accused. In C.C.No.125 of 2010, it is contended that the accused are liable for punishment under Section 63 of the Act. In C.C.No.126 of 2010, it is alleged that the accused are punishable under Section 68 of the Act while in C.C.No.127 of 2010 the violation was in respect of Section 628 of the Act. Accused No.1 is M/s. Sibar Software Services (India) Limited, Vijayawada. It is a Company. Accused 2, 3 and 5 to 9 are said to be the Directors of the Company. Accused No.4 is the Managing Director. Accused No.1 issued a Prospectus on 08-12-1999 calling for subscription for public issue of Rs. 35,00,000/- of equity shares from 29-12-1999 till 04-01-2000. 3. The substratum of the allegation is that the statements made in the Prospectus are knowingly false, so much so, all the accused including accused No.2 are liable for punishment under Sections 63, 68 and 628 of the Act. The complaint was lodged on 10-3-2010. The Prospectus was issued on 08-12-1999. 4. Sri Vedula Venkataramana, learned Senior Counsel for accused No.2, contended that (a) the complaint did not make out....
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....sed 2 to 9 thus knowingly and recklessly made false, deceptive and misleading or dishonest statements and concealed material facts inducing public to enter into agreement for subscribing shares in accused No.1-Company. The accused 1 to 9 thus allegedly committed the offences punishable under Sections 63, 68 and 628 of the Act. 8. Sections 63, 68 and 628 of the Act are extracted below: "63. Criminal liability for mis-statements in prospectus.-- (1) Where a prospectus issued after the commencement of this Act includes any untrue statement, every person who authorised the issue of the prospectus shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to fifty thousand rupees, or with both, unless he proves either that the statement was immaterial or that he had reasonable ground to believe, and did up to the time of the issue of the prospectus believe, that the statement was true. (2) A person shall not be deemed for the purposes of this section to have authorised the issue of a prospectus by reason only of his having given-- (a) the consent required by section 58 to the inclusion therein of a statement purporting to be mad....
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.... of 2010 and 127 of 2010 are barred by limitation. 11. Sri Ponnam Ashok Goud, learned Assistant Solicitor General, representing the 1st respondent, on the other hand, contended that the complaints are well within time and deserve to be entertained on merits. 12. As already pointed out, C.C.No.125 of 2010 from which Criminal Petition No.5428 of 2010 arose and C.C.No.127 of 2010 from which Criminal Petition No.5431 of 2010 arose are in respect of offences under Sections 63 and 628 of the Act. The contents of Sections 63 and 628 of the Act have already been extracted. The punishment provided by Section 63 as well as Section 628 of the Act, is imprisonment for a term which may extend to two years. That apart, Section 63 of the Act provides for fine up to Rs. 50,000/- while Section 628 of the Act speaks about mere imposition of fine. Chapter XXXVI of Cr.P.C provides limitations for prosecuting various offences. Section 468(2)(c) Cr.P.C provides the period of limitation as 3 years if the offence is punishable with imprisonment for a term exceeding one year but does not exceed 3 years. It is the contention of the learned Senior Counsel for the petitioner that prosecution of the petitio....
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....emption from liability. Thus, Section 63 of the Act more or less is a case of strict liability in the absence of contrary evidence. 16. On the other hand, Section 68 of the Act imposes penalty upon a person if such a person "either knowingly or recklessly" makes any statement, promise or forecast "which is false, deceptive or misleading" or such statement is made by way of "any dishonest concealment of material facts" and that if such a statement induced or attempted to induce another person to enter into any agreement etc., such a person would be liable for punishment. There are several 'ifs' in Section 68 of the Act. That apart, mens rea is part of Section 68 of the Act, viz., that the statement was made either knowingly or recklessly; further mens rea incorporated in Section 68 of the Act is that if there was concealment, such concealment must have been dishonest concealment of material facts. If all these ingredients exist, the offence under Section 68 of the Act is made out. Inasmuch as the claim relates to under Section 628 of the Act, mens rea is incorporated in the Section itself as making a statement which is false in any material particular or omits any material facts if....
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....hat the investments in Mauritius Company, USA, Australia and Singapore was Rs. 80 lakhs, Rs. 200 lakhs, Rs. 75 lakhs and Rs. 50 lakhs totalling Rs. 405 lakhs. It is urged by the 1st respondent that no monies were invested by accused No.1-Company in any of the foreign companies. I may point out that page 27 of the Prospectus dealing with the Cost of Project and Means of Finance shows the cost as apprised by Bank of Madhura Limited and not the Cost of Project as claimed by the Directors and the Company. 21. It is contended by the learned Assistant Solicitor General that the Company has not invested any monies in Overseas Associate Companies and diversified the public issue money to a local Company. It is a fact that these details emerged from various balance sheets subsequent to the date of the issuance of the Prospectus. Be that as it is, the learned Assistant Solicitor General submitted that the Directors furnished incorrect information such as exhibiting the intention of the Company to make investments in Overseas Associate Companies. 22. Curiously, this is an activity of the Company after receipt of money through public issue. I am afraid that if the Company did not invest the ....
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....ed by the Court in this case exist in the present case. It has already been found that neither overt acts were attributed against the petitioner nor the petition otherwise established any of the offences under Sections 63, 68 and 628 of the Act. Consequently, this decision relied upon by the learned Assistant Solicitor General has no application to the facts of the case. 25. In the common order in Criminal Petition Nos.5630, 5632 and 5661 of 2009, dated 12-4-2012, relied upon by the learned Assistant Solicitor General, the accused allegedly committed the offences under Sections 63, 68 and 628 of the Act. In that case, the accused made a promise to build a factory in 300 square metres and also promised to purchase a plant and machinery and other required assets for manufacture of granules worth about Rs. 83 lakhs. The statement was totally a false statement. The Prospectus projected profits for 4 years, which were prima facie false statements since the very project did not commence to operate. A learned single Judge of this Court held that the Directors were prima facie guilty of the offences under Sections 63, 68 and 628 of the Act and that it would be for the trial court to deter....