Decided on July 27,2007



S.Ravindra Bhat, J. - (1.) The present petition seeks a quashing order, under Section 482, Code of Criminal Procedure, (hereafter "the Code") in respect of criminal proceedings, filed by the Registrar of Companies.
(2.) The petitioner avers and it is so contended by his counsel, that the prosecution for commission of offences is not maintainable on two counts. One, the allegation about violation of Section 62 does not result in commission of an offence, since that provision relates to a civil wrong; Two, that the prosecution as far as the offence under Section 68, Companies Act, is concerned, is not maintainable, because no sanction was obtained for the purpose. Reliance was placed upon the decision reported as Rajeev Shukla v. Registrar of Companies 135 (2006) DLT 599. In that decision, the court held as follows: "Registrar of Companies has filed a criminal complaint under Section 62 read with section 68 of the Indian Companies Act, 1956 (for short, 'the Act') against the petitioner, which is pending in the Court of ACMM. Tis Hazari, Delhi. This Petition is filed seeking quashing/dismissal of the said complaint. The submission of learned Counsel for the petitioner is that no criminal complaint can be filed under Section 62 of the Act inasmuch as this provision deals with 'Civil liability for mis-statement in the prospectus'. Insofar as the complaint under Section 68 of the Act is concerned, his submission is that for filing complaint under this Section, prior sanction of the competent authority is required and no such sanction is obtained or available to the officer/complainant who has filed the complaint. 2. After hearing the Counsel for the parties, I am of the considered view that the petition warrants to succeed on both counts. If in the prospectus some mis-statements are given, it entails civil as well as criminal liability. For civil liability provision is made in section 62 of the Act and for criminal liability the proper provision is Section 63 of the Act. It is pointed out by learned Counsel for the petitioners, which is not disputed by the respondent, that on the same allegations the Registrar of Companies has already filed a separate complaint under Section 63 of the Act as well. Section 62 of the Act, inter alia, provides for payment of compensation in case of mis-statements in the prospectus and reads as under : "62. Civil liability for mis-statements in prospectus. (1) Subject to the provisions of this section, where a prospectus invites persons to subscribe for shares in or debentures of a company, the following persons shall be liable to pay compensation to every person who subscribes for any shares or debentures on the faith of the prospectus for any loss or damage he may have sustained by reason of any untrue statement included therein, that is to say.... xxxx xx" 3. Since this is a civil remedy, such a compensation can be claimed by filing appropriate civil suit. The criminal complaint under Section 62 (sic. 63) of the Act is, thus not maintainable. 4. Insofar as the complaint under Section 68 of the Act is concerned, learned Counsel for the respondent did not dispute that prior sanction of the competent authority is required. The petitioner has filed, along with this petition, copy of DCA letter dated 13.03.2002 as per which the Department of Company Affairs in the Ministry of Law, Justice and Company affairs had granted general permission to the Regional Directors for launching prosecution for violation of Sections 62, 63 and 628 of the Act in respect of 229 vanishing companies identified originally. This sanction, however, does not include launching of prosecution under Section 68 of the Act as well. Reply of this petition is filed but apart from bald denial, no other sanction is brought on record to show that the concerned officer was authorised to file complaint under Section 68 of the Act. The petition is accordingly allowed and the Complaint No. 469/2002 pending in the Court of ACMM, Tis Hazari, Delhi is hereby dismissed".
(3.) Learned counsel for the respondent, Shri Baldev Malik, submitted that the proceedings should not be quashed, as regards the offence under Section 68, since the sanction was validly obtained.;

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