KARNATAKA v. (BY SMT. SHRIDEVI BHOSALE MARUTI, ADV.)

(BY SRI SAJI P. JOHN, ADV.) AND: THE REGISTRAR OF COMPANIES KARNATAKA, II FLOOR, E WING KENDRIYA SADAN KORAMANGALA BANGALORE - 560 034. B A KRISHNA KUMAR Location: HIGH COURT OF KARNATAKA …PETITIONERS (BY SMT. SHRIDEVI BHOSALE MARUTI, ADV.) …RESPONDENT - 2 - NC: 2024:KHC:9883 CRL.P No. 1679 of 2024 THIS CRL.P FILED U/S.482 CR.P.C PRAYING TO QUASH THE ENTIRE PROCEEDINGS IN C.C.NO.112/2023 WHICH IS PENDING BEFORE THE SPECIAL COURT FOR ECONOMIC OFFENCES, BENGALURU PRODUCED AT ANNEXURE-A. THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER

1. This petition under Section 482 of Cr.P.C. is filed with a prayer to quash the entire proceedings in C.C.No.112/2023 pending before the Special Court for Economic Offences, Bengaluru, for the offence punishable under Section 207(4) of the Companies Act, 2013 (hereinafter referred to as 'the Act' for short)

2. Heard the learned counsel for the parties.

3. Respondent had filed a private complaint before the Special Court for Economic Offences, Bengaluru against the petitioner herein alleging that the petitioner Company and its Directors had failed to comply with the provisions of Section 207 of the Act by producing all books of accounts, papers, records, documents, registers and other supporting documents and inspite of show cause notice issued to the Company and its - 3 - NC: 2024:KHC:9883 CRL.P No. 1679 of 2024 Directors, the same was not complied and it is under these circumstances, a complaint was filed. Learned Judge of Special Court for Economic Offences has taken cognizance for the offence punishable under Section 207(4) of the Act by order dated 12.12.2023 and having directed to register a case against the Company and its Directors had issued summons against them under Section 204 of Cr.P.C. Being aggrieved by the same, accused Nos.1 to 3 are before this Court.

4. Learned counsel for the petitioners submits that the complaint is barred under Section 468 of Cr.P.C. as the same is filed beyond the period of limitation. He submits that petitioner Nos.2 and 3 were suffering from serious ailments and therefore, show cause notice was not replied.

5. The allegations against the petitioners, who are accused of offence punishable under Section 207(4) of the Act is that they had failed to comply with the provisions of Section 207 (3) of the Act and inspite of they being notified, they had failed to produce all the books of accounts, papers, documents, registers and other supporting documents. They also had failed to - 4 - NC: 2024:KHC:9883 CRL.P No. 1679 of 2024 respond to the show cause notice, which was issued to them on

30.06.2022, which admittedly has been served on them.

6. Section 207(3) and Section 207(4) of the Act, read as follows:- "207.xxx (3) Notwithstanding anything contained in any other law for the time being in force or in any contract the contrary, the Registrar or inspector making an inspection r inquiry shall have all the powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit in respect of the following matters, namely:- (a) the discovery and production f books of account and other documents, at such place and time as may be specified by such Registrar or inspector making the inspection or inquiry; (b) summoing and enforcing the attendance of persons and examining them on oath; (c) inspection of any books, registers and other documents of the company at any place. - 5 - NC: 2024:KHC:9883 CRL.P No. 1679 of 2024 (4) (i) If any director or officer of the company disobeys the direction issued by the Registrar or the inspector under this section, the director or the officer shall be punishable with imprisonment which may extend to one year and with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees. (ii) If a director or an officer of the company has been convicted of an offence under this section, the director or the officer shall, on and from the date on which he is so convicted, be deemed to have vacated his office as such and on such vacation of office, shall be disqualified from holding an office in any company."

7. From a reading of the same, it is very clear that if the director or officer of the company disobeys the direction issued by the Registrar or the inspector under the said section, the director or the officer shall be punishable with imprisonment which may extend to one year and also with fine which shall not be less than Rs.25,000/- but may extend to Rs.1 lakh and if the director or an officer of the company is convicted for the aforesaid provision of law, the said director or officer shall be deemed to have vacated his office and on such vacation of office, they shall be disqualified from holding an office in any - 6 - NC: 2024:KHC:9883 CRL.P No. 1679 of 2024 company. Non-compliance of Section 207(3) of the Act is a continuing offence. The material on record would go to show that prior to issuing the show cause notice, notices were issued to the accused to comply Section 207(3) of the Act and inspite of repeated demands made, accused had not bothered to comply the requirement of Section 207(3) of the Act.

8. Learned counsel for the petitioners has placed reliance on Section 468 of Cr.P.C. and has made a submission that the maximum punishment for the alleged offences is one year and in view of the bar under Section 468 of Cr.P.C., since the complaint is filed after the period of limitation, the Court could not have taken cognizance of the same.

9. Since the alleged offence is a continuing offence, the bar under Section 468 of Cr.P.C. cannot be made applicable to the case on hand. Section 472 of Cr.P.C. reads as follows:- 'Continuing offence.-In the case of a continuing offence, a fresh period of limitation shall begin to run at every moment of the time during which the offence continues.' - 7 - NC: 2024:KHC:9883 CRL.P No. 1679 of 2024

10. From a reading of Section 472 of Cr.P.C., it is evident that a fresh period of limitation shall begin to run at every moment of the time as long as the offence is continuous and therefore, I do not find any merit in this petition. Accordingly, the petition is dismissed. Sd/- JUDGE DN