TaxTMI 
TaxTMI 
2025 (4) TMI 18
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....ion of section 129 along with section 448 of the Companies Act 2013 at the behest of the Opposite Party. The Learned Judge Second Special Court at Calcutta was pleased to take cognizance and issued outright process against the petitioner vide his order dated November 22, 2019, on the basis of the said petition of complaint. The petitioners are the directors of the company namely Balai Lal Mukherjee Private Limited Company duly incorporated under the companies Act 1956 having its registered office at 25 Swallow Lane Calcutta 1, West Bengal and the petitioners have been falsely arraigned and implicated in the instant case where the company has not been arrayed as an accused. 3. The argument advanced by the Learned Advocate appearing on behalf of the petitioner primarily rests on the point of maintainability on the following grounds :- a) The Complaint Case No. 43 of 2019 filed by the Deputy Registrar of Companies, West Bengal is without jurisdiction as it violates provisions of Section 439 (2) of the Companies Act, 2013 which requires cognizance to be taken only in case of complaint by the Registrar of Companies. b.) Company is not made an accused which is mandat....
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....t any verification or application of mind. This issue has been raised in the reply to summon dated 26.11.2018 and Reply to show Cause Notice dated 04.11.2019 and the same has not been dealt with by the Deputy Registrar. h.) Charges against the petitioners under Section 448 of the Companies Act, 2013 is not made out without first establishing fraud as explained under Section 447 of the said Act. Since essential ingredients of fraud as explained in the aforementioned Sections are not made out, a complaint case could not have been taken cognizance of by the Learned Special Court. Accordingly prayed that the entire proceeding as mentioned above and be quashed all the orders passed by the Learned Court should be set aside. Heard the submission of the Learned Advocate of the petitioner. 4. None appears on behalf of the Registrar of Companies. The Learned Advocate of the petitioners was directed to serve a letter upon the Opposite Party and in compliance thereof on 3rd March, 2025 the communication was made to the Registrar of Companies, the Opposite Party herein. It further appears that since the inception of the proceeding the opposite party did not turn up. 5. T....
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....sure required to be made according to schedule III to the Companies Act 2013 as notified by MCA on 30.03.2017 thereby leading to the violation of Section 129 read with Part I of Schedule III of the Companies Act, 2013. 3.2 In its Balance Sheet as on 31.03.2017, the company has shown short term loans and advances given Rs. 91.69 lakhs out of which Advances given was Rs. 80, 50,450 without disclosing the specifications thereof as required by schedule III to the Companies Act, 2013. It is the same amount that Marco Polo Restaurants P Ltd, which is a related party, has shown as "Borrowings" (unsecured borrowings being loans repayable on demand from related parties) in its balance sheet as at 31.03.2017. Therefore, the company did not disclose (i) the loans given as "Loan" violating the said Schedule III (ii) did not disclose as loan given to related party violating the said Schedule III (iii) did not disclose any related party transactions violating accounting standard-1 Hence, the accused nos. 1 and 2 herein have violated the provisions of Section129 of the Companies Act, 2013 as stated in para 3.1 and 3.2 herein. CONTRAVENTION OF SECTION 448 OF THE COMPANIE....
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.... Standard-18. But the auditor reported that "In our opinion the aforesaid financial statements comply with the Accounting Standards specified under section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014." The auditor has violated the provisions of Section 448 of the companies Act, 2013. Hence the accused nos.3 herein is liable U/s 448 of the companies Act, 2013. 3.6 According to the profit and loss account for 2016-17 total income for the year was Rs.22.11 lakhs. But trade receivable lying due for within six months was stated as Rs.47.83 lakhs. If total income was only around of Rs. 22.00 lakhs how Rs. 47.00 is trade receivable having ageless than6 months. i.e. arising within the year 2016-17 itself ? The accounts are fudged and fiddled. The Auditor being in connivance with management. Did not report anything .The Auditor being in connivance with management, did not report anything. The Auditor and the Directors violated section 448 of the Companies Act, 2013. Hence, the accused nos.1, 2 and 3 are liable U/s 448 of the Companies Act, 2013 for suppression of material fact knowing it to be material. 8. The instant Revisional appli....
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....rned Second Special Court Calcutta, West Bengal. 11. In another decision relied upon by the Learned advocate of the petitioner the Hon'ble Justice Sampa Dutta Paul in CRR 100 of 2020 (Mr. Raj Sahai vs State of West Bengal and another), quashed the proceeding filed under section 10/12/16/18(1) of The Bengal Excise (Foreign Liquor ) Rules 1998 considering the various judgement of the Hon'ble Supreme Court including Daily De' Souza V Government of India through Deputy Chief Labour Commissioner (c) and another the Hon'ble Supreme Court reported in (2021) 20 SCC 135,where it was held: 12. "Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company" appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own res....
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....the complaint of Prakash Kumar Roy only and how the Registrar of companies while taking cognizance was satisfied about the veracity of the complaint and thereafter issued the show cause notice on 30th October 2019 impleading actions against the company under section 448 of the said Act is nowhere expressly by found. However, despite repeated challenges been made by the petitioner about the very existence of the complainant /informant no considered response was received on behalf of the Registrar of Companies. 15. Section 206 (4) of the said Act reads as ; If the Registrar is satisfied on the basis of information available with or furnished to him or on a representation made to him by any person that the business of a company is being carried on for a fraudulent or unlawful purpose or not in compliance with the provisions of this Act or if the grievances of investors are not being addressed, the Registrar may, after informing the company of the allegations made against it by a written order, call on the company to furnish in writing any information or explanation on matters specified in the order within such time as he deems fit after providing the company a reasonable opportu....
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.... "28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused." 19. On perusal of the judgement of Santosh Kumar Lahoti vs Registrar of companies (sup....
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.... 20. In the light of the legal parlance as above in view of the defence taken by the petitioner being one of the Director of the Company, regarding the maintainability of 448 of companies Act coupled with the facts and circumstances of the case, let the said provision be looked into. Section 448 of the company's Act is as follows : Save as otherwise provided in this Act, if in any return, report, certificate., financial statement, prospectus, statement or other document required by, or for, the purpose of any of the provisions of this Act or the Rules made thereunder, any person makes a statement,- a) which is false in any material particulars, knowing it to be false; or b) which omits any material fact, knowing it to be material, he shall be liable under section 447 of the Act . The above provision is clear to that extent that in case of any contravention to this provision he shall be liable under section 447 of the Act and section 447 of the Act deals with punishment for fraud and reads as: Without prejudice to any liability including repayment of any debt under this Act or any other law for the time being in force,any person who is fo....
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.... them as accused in the petition of complaint. The petitioner gave a reply to the said letter of Complaint to the said complainant challenging the identity of the complainant .The stand taken by the petitioner was that the cash dealings of the companies were reflected in the cash book maintained by the companies for the relevant period and majority of the cash receipts were also deposited in the companies' bank account .The reply of the Auditor, who has also arrayed as an accused submitted duly filled up the declaration forms pursuant to the requirement and admitted in his reply to the show cause that there may be some minor discrepancies on account of inadvertent mistake .It was further pointed out that the directors of both the companies are closely held families and the recipients of the advance amount as alleged is equally close family. Mere divisions of one common family business with no third party being ever prejudiced by any stretch of imagination consequent to the option of any such non -disclosure,if at all . The petitioner also prayed for withdrawal of the show cause notice issued but without any response. 22. In course of argument the Learned Advocate also pointed ou....