TaxTMI 
TaxTMI 
2026 (8) TMI 167
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....xternal professional experts under the statutory corporate framework versus the expansive, penal net cast by the legislature against systemic corporate deception. 2. The Petitioner, being the Registrar of Companies, West Bengal (hereinafter referred to as the ROC), has invoked the revisional jurisdiction of this Court under Section 482 read with Section 401 of the Code of Criminal Procedure, 1973 (Cr.P.C.), assailing the legal propriety, correctness, and validity of the order dated July 13, 2021, passed by the learned Judge, 2nd Special Court, Calcutta, in Complaint Case No. 16 of 2020. By the said order, the learned trial court was pleased to allow the application filed under Section 245(2) of the Cr.P.C. and discharged the private opposite parties namely Ranjan Meghani (Accused No. 10) and Bhal Chandra Khaitan (Accused No. 12), from a criminal prosecution principally launched under Sections 58A, 58AA, 60, 67, 69, 73, 75, 81, and 628 of the Companies Act, 1956 (hereinafter the 1956 Act), as well as Section 448 read with Sections 61(1)(a) and 117(1) of the Companies Act, 2013 (hereinafter the 2013 Act). II. STRUCTURAL CHANGE IN THE ARRAY OF PARTIES & ABATEMENT 3. Before en....
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....ng widespread financial irregularities, the Central Government in the Ministry of Corporate Affairs ordered an investigation under Section 210(1) of the 2013 Act, conducted by a joint inspection team comprising Shri K.S. Pradhan, Joint Director, Ministry of Corporate Affairs, Government of India and Shri Vikram Singh, Deputy Registrar of Companies, West Bengal. 7. The statutory investigation unmasked a massive financial arrangement whereby this exponential capital expansion was engineered almost exclusively by creating and issuing Non-Convertible Redeemable Preference Shares, while the core equity share capital of the company remained entirely static. The inspection team concluded that these capital expansions were executed through ordinary resolutions under the guise of special business, completely bypassing the strict, protective shareholder protocols mandated under Section 81(1A) of the 1956 Act. 8. Furthermore, the company allotted these redeemable preference shares to thousands of investors on single, isolated days e.g., to 1,431 individuals on September 15, 2011, and to 9,120 individuals on July 1, 2013. Under Section 67(3) of the 1956 Act, any invitation or offer of se....
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....scharge under Section 245(2) of the Cr.P.C. The learned trial court, by its judgment and order dated July 13, 2021, allowed the application and discharged the opposite parties. The trial court reasoned that a practicing Chartered Accountant certifying e-Forms does not fall within the statutory definition of an "officer" under Section 2(30) of the 1956 Act (or Section 2(59) of the 2013 Act), and consequently, the ROC lacked the requisite locus standi to institute and prosecute criminal proceedings directly against them under the Act. Assailing this order of discharge, the ROC has approached this Court by way of the instant revisional application. IV. ISSUES FOR DETERMINATION 12. To ensure a comprehensive and exhaustive adjudication that resolves every facet of this dispute, the following core issues are formulated for determination: i. Whether a practicing Chartered Accountant who verifies and certifies statutory e-Forms in a professional capacity fall within the statutory definition of an "officer" or "officer-in-default" of a company under the Companies Act, 1956 and the Companies Act, 2013, so as to render him amenable to criminal prosecution instituted directly by....
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....y supported the legality and reasoning of the trial court's discharge order. He submitted that the opposite party is an independent, practicing professional bound by professional standards, and is neither an "officer" nor an "officer-in-default" of the company under Sections 2(30) and 2(31) of the 1956 Act [Sections 2(59) and 2(60) of the 2013 Act]. In fact, Section 2(60)(v) of the 2013 Act explicitly insulates persons who give advice in a professional capacity from being deemed officers in default. Consequently, under Section 439(2) of the 2013 Act, the ROC lacks the statutory locus standi to launch a direct prosecution against him. 17. It was further urged that the complaint itself completely exonerates the opposite party of any independent wrongdoing, squarely attributing all mala fide intent, fabrication, and physical filing to the executive director, Shri Biswajit Biswas. There is not a single averment in the complaint pleading the essential ingredients of mens rea, active connivance, conspiracy, or personal knowledge of falsification against the certifying Chartered Accountant. 18. Crucially, learned counsel underscored that the criminal prosecution is hopelessly an....
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.... the 1956 Act, which strictly disqualifies company officers and employees from acting as independent auditors, the fundamental dichotomy between internal executive management and external professional advisors becomes crystal clear. 22. An independent Chartered Accountant engaged to verify and certify statutory e-Forms or returns acts strictly in a professional capacity as an external expert. Their duties are governed by professional standards, statutory audit guidelines, and the rigorous ethical code of the Institute of Chartered Accountants of India (ICAI), rather than by internal corporate commands. Expanding the definition of an "officer" to encompass an independent professional certifier would distort the statutory architecture of company law. 23. Consequently, under Section 439(2) of the 2013 Act (and Section 621 of the 1956 Act), which restricts the ROC's competence to file complaints primarily against the company and its responsible managerial officers, the ROC lacks the direct statutory locus standi to prosecute an independent professional under provisions designed specifically for internal corporate default, unless active criminal complicity is prima facie estab....
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....n is fundamentally crippled by the absolute and insurmountable bar of limitation under Chapter XXXVI of the Code of Criminal Procedure, 1973. 28. The penal provisions invoked against the opposite party, Section 628 read with Section 75 of the 1956 Act, carry a maximum substantive punishment of imprisonment for a term of up to two years. Under Section 468(2)(c) of the Cr.P.C., the strict period of limitation prescribed for taking cognizance of an offence punishable with imprisonment exceeding one year but not exceeding three years is three years. 29. The schedule of allotments and e-Forms detailed in the complaint itself establish that the documents in question were uploaded and filed by the company between March 2011 and March 2014. The cause of action, if any, accrued concurrently during those years. Yet, the Registrar of Companies instituted the criminal complaint before the learned Special Court on March 17, 2020, reflecting an inordinate, unexplained, and colossal delay of nearly nine years, which is three times the outer limit prescribed by Parliament under Section 468. 30. The law governing the computation of limitation under Chapter XXXVI of the Cr.P.C. has been aut....