HARISH CHANDER BHASIN Vs. STATE

JUDGEMENT

(1.) This petition under Section 482, Criminal Procedure Code, seeks quashing of proceedings, taken out pursuant to a complaint by the Registrar of Companies, alleging commission of offence under Section 211(7) of the Companies Act, (hereinafter referred to as "the Act").

(2.) The allegation of the complainant, Registrar of Companies, Govt. of NCT of Delhi in his complaint dated 8.4.2003 were that M/s H.P. Stock Holdings Ltd., the Company had contravened provisions of the Act. It was alleged that a technical scrutiny of balance sheet as of 30.11.2000, conducted by the Registrar revealed that investments made by the company were valued at levels lower than the market price and, therefore, not in accordance with AS-13 issued by the Indian Chartered Accountants Association. Consequently, the loss was higher by Rs.15,45,61,675.51. It was also alleged that according to Schedule-VI, details of market investments were not properly classified. The further allegations revealed in the complaint were that according to the report of scrutiny, income from investments were not classified as trade investments or other investments, as required under provisions of Schedule-VI, to the Act. It was, therefore, alleged that the balance sheet did not reflect the true and correct state of affairs. It is contended that the Registrar had issued a show cause notice on 27.11.2002, to the Company alleging violation of Section 211 of the Act. The Company, replied, on 12.12.2002 furnished its explanation thereafter the complaint was preferred in 2003.

(3.) Learned counsel made two-fold submissions as to the maintainability of the complainant. It was argued that the petitioner an ordinary, non-executive part-time Director, though designated as Chairman, did not fall within the description Officer in default under Section 211(7) of a plain reading of Section 209(6) of the Act. It is argued that at the relevant time there was an Executive Director, working whole time and in-charge of the day-to-day affairs of the Company. Therefore, the petitioner could not have been settled with the liability under the Act.