IN THE HIGH COURT AT CALCUTTA

CRIMINAL REVISIONAL JURISDICTION

Appellate Side

Present:

The Hon’ble Justice Ajay Kumar Gupta

C.R.R. 1806 of 2020

With

CRAN 1/2021

Apurba Mookerjee

Versus

The Registrar of Companies, West Bengal

For the Petitioner : Mr. Ratul Das, Adv.

Mr. Prasanta Naskar, Adv.

Mr. Abhrajit Roy Chowdhury, Adv.

For the Registrar of Companies : Mr. Debapriya Gupta, Adv.

Ms. Sucharita Biswas, Adv.

Mr. Goutam Malik, Adv.

Heard on : 22.12.2025

Judgment on : 04.02.2026

2

Ajay Kumar Gupta, J:

1. This instant Criminal Revisional application has been filed by the

petitioner under Section 482 of the Code of Criminal Procedure, 1973

(in short ‘Cr.P.C.’) seeking quashing of proceeding being Complaint

Case No. 44/2019 now pending before the Learned Judge, 2

nd

Special

Court at Kolkata under Sections 129/448 of the Companies Act,

2013 and all orders passed therein including the orders dated

22.11.2019, 23.12.2019, 14.02.2020 and 09.10.2020.

FACTS OF THE CASE:-

2. The specific case of the petitioner herein is that she is the wife of

Arup Mookherjee, who is one of the Directors of M/s Marco Polo

Restaurant Pvt. Ltd., a company duly incorporated under the

Companies Act, 1956. The petitioner’s name was inducted as a

director of the aforesaid company on and from 14

th

June, 2001.

However, she had no role to play in the day-to-day business affairs of

the said company. Her name was incorporated as a director only for

statutory compliance.

3. One Prakash Kumar Ray had lodged a complaint against the Marco

Polo Restaurant. Based on such complaint, a notice was issued

against the said company on 4

th

October, 2018 and on the basis of

the reply given by the company dated 26

th

November, 2018,

contravention of Section 129 of the Companies Act, 2013 along with

3

Section 448 of the said Act was found to the effect that the company

did not make disclosures in accordance with Schedule-III of the

Companies Act, 2013 notified on 30

th

March, 2017 regarding

Specified Bank Notes (SBN) which was transacted upon during 8

th

November, 2016 to 30

th

December, 2016.

4. Moreover, in respect of the balance sheet relevant to the period

ending on 31

st

March, 2017, “borrowings” are shown to the extent of

Rs. 80,50,450/-. However, the company did not disclose any related

party transactions as prescribed in Accounting Standard 18, violating

Section 129 of the Companies Act, 2013.

5. In addition to that, the company allegedly refrained from disclosing

details of Specified Bank Notes, which amounts to an offence under

Section 448 of the Companies Act, 2013, as the company illegally

transacted in Specified Bank Notes.

6. The company did not disclose any related party transactions,

violating the Accounting Standard – 18, thereby also allegedly

violating Section 448 of the Companies Act, 2013. The petitioner’s

case is that she is totally innocent, and has been falsely implicated

into this case, including her husband, Arup Mookerjee and the

statutory Auditor of Marco Polo, namely, Vishal Sharma, in the

present case. Accordingly, the Learned Judge had taken cognizance

and issued process against the petitioner and others vide order dated

4

22.11.2019 as such the instant Revisional application preferred by

the petitioner herein.

ARGUMENTS ON BEHALF OF THE PETITIONER:-

7. Learned counsel appearing on behalf of the petitioner vehemently

argued and submitted that the present Criminal Revisional

application arises out against the Complaint Case No. 44 of 2019

pending before the Court of the Learned 2

nd

Special Judge at Kolkata

is baseless and liable to be quashed since the case is bereft of the

following reasons:-

8. Firstly, it is not maintainable since it has been filed in contravention

of Section 439 (2) of the Companies Act, 2013. Neither the registrar, a

shareholder or a member of the company, nor a person authorised by

the Central Government on that behalf filed it. As the instant

complaint has been filed by Deputy Registrar of Companies (Vineet

Rai) which is not a complaint in writing by the Registrar or not a

person authorized by the Central Government, the complaint is filed

without any authorization. In support of this contention, the

Petitioner has relied on the decision of this Hon'ble Court in Usha

Martin Telematics Limited & Ors. Vs. Registrar of Companies

1

1

2022 SCC Online Cal 1792

5

which places reliance on the decision of the Hon'ble Supreme Court

in Pepsi Foods Limited vs. Special Judicial Magistrate

2

.

9. Neither from the complaint, or documents in support thereof nor the

order passed by Learned Judge reflects submission of any

authorization. The said order dated 22

nd

November, 2019 in detailed

specifies that the case is filed by Deputy Registrar of Companies and

he is the complainant who sought for dispensation of personal

attendance which was exempted and application was allowed. No

record of any authorization on behalf of Registrar of Companies is

recorded in the said order. The exemption granted under Section 256

of CrPC read with Section 439(3) of Companies Act, 2013 is different

from authorization necessary under the other provision.

10. It was further submitted that before arraigning the petitioner as an

accused, the company must be entangled in the present case

otherwise whole complaint is not maintainable in law. It is settled law

declared by the Hon'ble Supreme Court in the decision of Santosh

Kumar Lahoti vs. Registrar of Companies, West Bengal

3

and

decision of this Hon'ble Court in Raj Sahai vs. The State of West

Bengal & Anr.

4

, which held that no vicarious liability can be

attributed on the Directors in any criminal proceedings unless the

2

(1998) 5 SCC 749 at para 28

3

2024 SCC Online Cal 3220 (para 52, 53 and 54)

4

CRR No. 100 of 2020 dated 2nd February, 2024

6

Company is made an accused. Further reliance is also placed on the

judgment of Sunil Bharti Mittal vs. Central Bureau of

Investigation

5

and Daily De'Souza vs. Government of India

6

.

11. The Complaint is bad in law as it suffers from non-joinder and

misjoinder of the Company being the primary accused being arrayed

as a party in the present case.

12. The Deputy Registrar has initiated a complaint on the basis of

information received by one interloper/third party on a purported tip

and alleged contravention of Section 129 (Financial Statement) and

Section 448 (Punishment for false statement) of Companies Act, 2013

which is complained of after more than six months which is the

period within which any discrepancy ought to have been noticed and

complaint filed, but the purported concealment of transactions all

arose prior to 30

th

December, 2016 and the information was received

by letter dated 4

th

October, 2018 and complaint was filed on 22

nd

November, 2019.

13. Further, the complaint is based on inability to provide information

and not on act of concealment of records or false statement. At best,

the Petitioner has mistaken to provide all records or informed of their

inability to produce all records, but have not made a false statement

or concealed any record from the Respondent authorities.

5

(2015) 2 SCC (Cri) 687

6

(2021) 20 SCC 135

7

14. The notification dated 30

th

March, 2017 under the Gazette of India,

proposed disclosure of details of Specified Bank Notes by amendment

to General instructions in preparation of Balance Sheets under

Schedule III by insertion of Clause K, was effected retrospectively,

therefore, the Central Government being aware of such

implementation had also introduced. The Specified Bank Notes

(Cessation of Liabilities) Act, 2017 notified on 27

th

February, 2017

which imposed restriction on penalty against contravention and

offences.

15. Proviso to Section 8 of the said Act emphasizes that any person who

commits a default without knowledge and exercises all due diligence

to prevent contravention or default cannot be made liable. This

provision is also to be considered along with section 9 of the said Act,

which restricts punishment to a fine for contravention of the

provisions of the said Act.

16. Once such punishment is expressly restricted by the said Act, there

cannot be any proceedings against the Petitioner for charges in

excess of these provisions, such as Section 448 of the Companies Act.

17. It is an admitted position that the complaint is made beyond the

prescribed period with regards to the application under Section 447

of the Companies Act. For such provision to apply the Complaint has

to be supported by any finding of fraud, guilty mind or mens rea, but

8

in the present case, no such case is made out, as the complaint

proceeds on the basis of inability to disclose specified bank notes, for

which offenses, related to fraud, cannot be ex facie made applicable

on account of the provisions of The Specified Bank Notes (Cessation

of Liabilities) Act, 2017 notified on 27

th

February, 2017.

18. In the aforesaid contentions raised by the Petitioner, the said

complaint is not maintainable on multiple grounds. In any event, the

purported grounds in the complaint, as alleged by the Opposite Party,

are also not maintainable on the respective submissions.

19. The case of the opposite party in respect of contravention of the

financial statement is two-folds: -

20. Firstly, at paragraph 3.1, it relates to the action of the Auditor for not

making disclosure of specified bank notes but holds the

Petitioner/Directors liable as accused without any finding of guilt or

mens rea. Preparation of the balance sheet as per statutory norms is

a responsibility of the Auditors; therefore, unless there is proof of

guilt on the part of the Directors, they could not have been named as

accused in the present case. As per Section 129 of Companies Act,

financial statements are required to be in accordance with accounting

standards.

21. Further, the discussion in relation to applicability of provisions of The

Specified Bank Notes (Cessation of Liabilities) Act, 2017 notified on

9

27

th

February, 2017 has been discussed hereinabove. Therefore, in

the light of restriction to punishment provisions under Section 129 of

Companies Act, 2013 cannot be attracted in such case.

22. Secondly, at paragraph 3.2 it alleges contravention of procedure laid

down under Accounting Standard 18 in recording transaction by

related parties. The particular accounting standard is not applicable

for a company within meaning of Small and Medium Sized Enterprise

level II enterprise under Accounting Standard 18.

23. From definition of Level-II enterprise at Page 31D it would appear

that the Company (having turnover of over Rs. 5 crores) would fit this

category of enterprise having turnover in excess of Rs. 40 lakhs and

under Rs. 5 Crores.

24. When read with exemptions/relaxations for SMEs Related Party

Disclosure is not applicable for such an enterprise. Therefore, the

charge has been incorrectly levelled against the Company.

25. In addition to the fact that this provision is not applicable, from the

balance sheets on record, it would appear that such disclosure of

related party transaction has been carried forward in the Books of the

Company for several years and is not a fresh statement which was

required to be disclosed. Unsecured Borrowings from corporate Rs.

80,50,450/- is the related party transaction complained which was

reflected as on 31

st

March, 2017 and 31

st

March, 2016. Unsecured

10

Borrowings from corporate Rs. 80,50,450/- was reflected as on 31

st

March, 2016 and 31

st

March, 2015, and from corporate Rs.

80,50,450/- was reflected as on 31

st

March, 2018 and 31

st

March,

2017. This is not a new transaction that requires disclosure.

26. If there is no transaction, the question of disclosure of transaction

under Accounting Standard 18 does not and cannot arise.

27. Although there are two grounds raised by the Respondent authorities

regarding contravention of the said provision, the Petitioner restricted

submissions to paragraph 3.3 of the Complaint as the Petitioner is

not implicated as per paragraph 3.4.

28. No case of suppression of Specified Bank Notes is made out as the

Balance Sheet suffers from mere non-disclosure, and it cannot be

construed as suppression of Specified Bank Notes in respect of a

notification which was affected retrospectively. In reply, the Petitioner

relied upon a certificate from its Bankers regarding the disclosure of

Specified Bank Notes to the Registrar of Companies, which neither

violates the accounting standards nor The Specified Bank Notes

(Cessation of Liabilities) Act, 2017, notified on 27

th

February, 2017.

29. Since the ambit of its offence is restricted by a Special law, provisions

of section 448 of Companies Act cannot be attracted in such case.

30. It was further submitted that due to demonetization declared on 8

th

November, 2016 and the world pandemic in the year 2020, there was

11

almost no cash transaction whatsoever left as the cash reserve was

deposited in the account of the company. The petitioner and her

husband were the only directors of the company. The learned court

below wrongly failed to consider that without making company as an

accused, issued process against the present petitioner when all the

specific allegations are against the company. Without arraigning the

company as an accused, how the petitioner is liable for any vicarious

liability or liable for any offence as alleged at all.

31. The Trial Court further failed to consider that the complaint, lodged

after expiry of more than one and half years from the date of actual

cause of action, is barred by limitation as stipulated under section

468 of the CrPC.

32. Finally, it was submitted that a Co-ordinate Bench of this High Court

in CRR No. 4526 of 2024 [Arup Mookerjee vs. Registrar of Companies)

with CRR 1805 of 2020 [Archana Chakraborty vs. The Registrar of

Companies, West Bengal) dated 28

th

March, 2025 on identical

allegations, facts and circumstances, in relation to the same

transactions against the Directors, of another concern which has held

the complaint to be bad in law and liable to be set aside being not in

accordance with law and abuse of the process of law. One of the

Directors of the present company is a common director of the said

company named, Balailal Mookerjee & Co. Pvt. Ltd. No appeal has

12

been preferred and the said decision has attained finality. In the

aforesaid facts and circumstances, the Complaint Case No. 44 of

2019 pending before the Learned 2

nd

Special Judge at Kolkata is also

liable to be quashed on same prepositions otherwise it would be

highly prejudicial and/or an abuse of process of law.

ARGUMENTS ON BEHALF OF THE REGISTRAR OF COMPANIES:-

33. Per contra, the learned counsel appearing on behalf of the Registrar

of Companies submitted that the instant Criminal Revisional

application stems out of a complaint case being Complaint Case No.

44 of 2019 pending before the Learned Second Special Judge at

Kolkata whereby, necessary processes were issued in respect of the

accused persons so as to prosecute them for violation of Section 129

read with Section 448 of the Companies Act, 2013.

34. A notice was issued under section 206(4) of the Companies Act, 2013

upon the petitioner on 04.10.2018 on the basis of a complaint

received from Shri Prakash Kumar Roy, and in furtherance thereto,

the respondent issued summons under 207(3) of the Companies Act,

2013 on 05.11.2018 to which the petitioner furnished his reply vide

letter dated 26.11.2018 and based on the allegations made in the

complaint, reply of the company and record and materials available

on Ministry of Corporate Affairs portal, the violations of sections 129

13

and 448 of the Companies Act, 2013 have been observed by the

Opposite Party.

35. The Learned counsel representing the opposite party submitted the

following points as are appended herein below: -

a) In the present case, the opposite party had received information

about the company that the company is carrying on business for a

fraudulent or unlawful purpose or not in compliance with the

provisions of the Act, which entitled him to serve a notice under

section 206(4) of the Companies Act, 2013 upon the petitioner. The

petitioner was given a reasonable opportunity of being heard and in

pursuance thereto, a summon was issued upon the petitioner

under Section 207(3) of the Companies Act.

b) Upon enquiry, it was found that the financial statements furnished

by the company do not give a true and fair view of the state of

affairs of the company. Furthermore, it has been revealed that the

petitioner, while filing the financial statement, omitted material

facts knowing it to be material for the purposes of this Act. Thus,

the petitioner has committed fraud which tantamount to omission

and/or concealment of any fact as defined under Section 447 of the

Companies Act, 2013.

c) The Complaint Case being No. 44 of 2019 has been filed before the

Court of the Learned Second Special Judge at Kolkata by the

14

Deputy Registrar of companies, Kolkata. It has been alleged by the

petitioner that, the Deputy Registrar of companies is not

empowered to file a complaint before the Learned Court by virtue of

section 439 (2) of the Companies Act, 2013 which is an utterly

misconceived nuance of Law. As per section 2 (75) of the

Companies Act, 2013, the term "Registrar" means a registrar, an

additional registrar, a joint registrar a deputy registrar or an

assistant registrar having the duty of registering companies and

discharging various functions under the Act. Therefore, since the

terminology and definition of the term “Registrar” includes a

Deputy Registrar as well, it can be conclusively said that he is

accordingly duly empowered to file the instant complaint case

before the Court of the Learned Second Special Court at Kolkata.

d) As per the Ministry of Corporate Affairs notification dated

30.03.2017, it has been envisaged in clause 3 (K) that every

company shall disclose the details of Specified Bank Notes (SBN)

held and transacted during the period 08.11.2016 to 30.12.2016 in

the form as furnished therein. From the text and tenor of the

financial statements and the director’s report, it transpires that the

company/petitioner has not followed this statutory guideline which

thereby amounts to committing fraud under Section 129 read with

448 of the Companies Act, 2013. The petitioner has utterly and

15

miserably failed to satisfy this Hon’ble Court as to the existence of

any of their bona fides for their deliberate concealment of material

facts. The entire financial statement of the petitioner for the

disputed period has been annexed to the pleadings of the

Revisional application wherefrom, nowhere it surfaces that the

petitioner has complied with clause 3 (K) of the notification dated

30.03.2017.

e) It has also been alleged by the petitioner that the aforesaid

notification attempted to enforce a retrospective effect, which is not

the true and proper essence of the said notification. The effect of

retrospectivity should be reckoned considering each financial year

as a block in itself, and being such, had this notification been

issued after 31.03.2017, i.e. after conclusion of the relevant

financial year, only in that instance the said notification can be

said to be retrospective in operation. Since the aforesaid

notification has been published on 30.03.2017, it applies to the

relevant financial year in its entirety, which is permissible in law.

f) It has also been alleged by the petitioner that the instant complaint

case is bad in law since the company itself has not been arraigned

as an accused. In this context, the Opposite Party intends to rely

on a Judgment in the case of Sunil Bharti Mittal (Supra) at

paragraph 39, wherein it has been held that, the directors can be

16

implicated in those cases where the statutory regime itself attract

the doctrine of Vicarious Liability by specifically incorporating such

a provision and when the company is the offender, the Vicarious

Liability of the directors cannot be imputed automatically. From

the perusal of the section 129 (7) of the Companies Act, 2013, it

culls down that the Companies Act being a special statute

specifically enumerates that when the company contravenes any of

the provisions of this section the Vicarious Liability under this Act

is cast upon the directors of the company concerned and, for

which, the company itself need not be arraigned as an accused.

g) The doctrine of Vicarious Liability in criminal law is an unknown

concept for the offences committed under the Indian Penal Code,

but is not so unknown in relation to offences committed under

sections 129 and 448 of the Companies Act, 2013. The Companies

Act is in the nature of a special statute in itself which is apparent

from the preamble of the said Act and it will consequently override

the principles enunciated under the Indian Penal code. The

quintessential fact in the instant case before this Hon’ble Court is

where by enactment, the statutory regime imposes Vicarious

Liability upon the directors for offences committed by the company

concerned which is satisfied by the dictum of the Act itself.

17

h) As regards to some other ancillary issues raised by the petitioner

herein, those are not maintainable, as being primarily triable

issues, which can only be decided upon extended full fledge trial

and after testimonial of witnesses. It has been held by series of

pronouncements by the Hon’ble Apex Court that, issues which are

triable in nature cannot be decided at the threshold and being

such, the Criminal Revisional Application should not be allowed

where issues relating to the fact are raised and germane in nature.

i) The instant purported Revisional application is also bad for non-

joinder of necessary parties, as: The State of West Bengal has not

been made a contesting party herein. The allegations forwarded in

ground numbers I, II, III, IV, V, XII, XIV, XV, XVIII, XIX, XX, XXI

and XXII of the said Revisional application can be effectively

controverted only if the State of West Bengal had been impleaded

as a party herein.

j) It has also been alleged by the petitioner that the instant

Complaint Case is barred by limitation which is also a

misconceived one. The provision of Section 448 of the Companies

Act is not subject to Section 468 of the CrPC as it is punishable by

imprisonment up to 10 years. Additionally, an offence committed

under section 447 of the Act which is in the nature of the fraud

committed is a continuing one and, therefore, Section 468 of the

18

CrPC has no manner of applicability whatsoever. Accordingly, the

instant Criminal Revisional application is not maintainable in its

tenor and form and as such, the same should be dismissed in

limine.

FINDINGS AND ANALYSIS OF THIS COURT:-

36. This Court has carefully heard the arguments and submissions made

by the learned counsels appearing on behalf of the respective parties

and upon perusal of the complaint, the principal questions which

arise for consideration are as follows: -

i. Whether the complaint filed by the Deputy Registrar of

Companies is maintainable in view of section 439(2) of the

Companies Act, 2013?

ii. Whether the complaint is barred by limitation?

iii. Whether the alleged contraventions of Section 129 read with

Section 448 of the Companies Act, 2013 are prima facie made

out?

iv. Whether the prosecution against the petitioner/Director is

sustainable in the absence of the company being arraigned as an

accused?

37. This Court finds that the present petitioner is one of the directors of

the company, namely, M/S Marco Polo Restaurant Pvt. Ltd. She

19

became a director and was inducted with the aforesaid company on

and from 14

th

June, 2001.

38. The allegation of the Deputy Registrar in the written complaint before

the Trial Court with regards to offence committed by the directors for

contravention of Section 129 along with section 448 of the Companies

Act, 2013. The company has not provided requisite disclosure of

specified bank notes during the period 8

th

November, 2016 to 30

th

December, 2016 as per Mr. Vishal Sharma, Chartered Accountant,

the auditor of the company as such same was violation of Section 129

read with Part I of the Schedule III of the Companies Act, 2013

because the same should have disclosed as per notification issued by

MCA on 30.03.2017.

39. In the balance sheet as on 31.03.2017 “Borrowings” (unsecured

borrowings being loans repayable on demand from related parties)

are shown as Rs. 80,50,450/- in the manner laid down in Accounting

Standard-18, which is leading to the violation of section 129 of the

Companies Act, 2013 read with Accounting Standard-18 as such

petitioner herein is liable for clear violation of the provision of Section

129 of the Companies Act, 2013.

40. Similarly, the company’s refrainment from disclosing the details of

specified bank notes prove the serious illegal involvement of the

company in regard to handling of the SBNs which have been

20

suppressed in the financial statement in spite of the Law requiring

such disclosure. Being in restaurant business, having mostly cash

transactions, the company has taken advantage of the situation to

transact in SBNs illegitimately which is leading to the violation of

Section 448 of the Companies Act, 2013. Hence, the accused nos. 1

and 2 are liable for the suppression of material fact relating to SBNs

knowing it to be material and, thus, are liable U/s 448 of the

Companies Act, 2013.

41. The complaint was made on 22

nd

November, 2019, by the Deputy

Registrar of Companies, West Bengal, Kolkata, before the Court of the

Learned Second Special Judge at Kolkata.

42. First issue raised by the petitioner herein is that the Deputy Registrar

is not the competent authorised person to lodge a complaint as

aforesaid. To decide the same, this court would like to examine the

provision stipulated in Section 439 (2) of the Companies Act, 2013.

"S. 439. Offences to be non-cognizable. -

(2) No court shall take cognizance of any offence under this Act

which is alleged to have been committed by any company or any

officer thereof, except on the complaint in writing of the Registrar, a

shareholder or a member of the company, or of a person

authorized by the Central Government in that behalf:

Provided that the court may take cognizance of offences relating to

issue and transfer of securities and non-payment of dividend, on a

complaint in writing, by a person authorised by the Securities and

Exchange Board of India:

21

Provided further that nothing in this sub-section shall apply to a

prosecution by a company of any of its officers."

43. In the instant case, it is not disputed that the complaint has been

filed by Deputy Registrar of Companies (Vineet Rai), which is not a

complaint in writing filed by the Registrar, a shareholder or a member

of the company, or of a person authorised by the Central

Government. However, as per section 2 (75) of the Companies Act

2013, the term "registrar" means a registrar, an additional registrar, a

joint registrar, a deputy registrar or an assistant registrar having the

duty of registering companies and discharging various functions

under the Act. Therefore, since the terminology and definition of the

term ‘registrar’ means and includes a Deputy Registrar as well, it can

be conclusively said that he is accordingly duly empowered to file the

instant complaint case before the Court of the Learned Second

Special Judge at Kolkata. Therefore, complaint made by the Deputy

Registrar of the company is well maintainable in law.

44. So far as the issue relating to the barred by limitation for initiation of

proceeding is concerned, this court finds the complaint is not barred

by limitation because the alleged offence committed by the company

and its director between the period 8

th

November, 2016 to 30

th

December, 2016 for non-disclosure of specified bank notes. The

complaint was made in the month of November, 2019. The offence

22

under section 129 of the Companies Act shall be punishable with

imprisonment for a term which may extend to one year or with fine

which shall not be less than Fifty Thousand Rupees but which may

extend to Five Lakh Rupees, or with both and insofar as Section 448

of the Companies Act, 2013, 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 Companies Act, 2013, which provides for

maximum imprisonment up to 10 years, Hence, the period of

limitation for instituting the case is not at all barred under Section

468 of the CrPC.

45. Another point raised by the petitioner herein with regard to the

information given by an interloper/third party is based on lack of

particulars. The complaint itself is bereft of particulars. No specific

allegation was made in the complaint against the petitioner. A vague

and general allegation attributed against the petitioner, is not a

sufficient basis to proceed with the criminal offence. There should be

specific allegations with better particulars, but in the present case,

the same is missing.

46. Regardless of the interpretational dispute, it is evident that the

allegation is of non-disclosure in the balance sheet and not of

fabrication of accounts or falsification of records. Section 448 of the

23

Companies Act contemplates punishment for “false statement”, which

necessarily imports an element of deliberate falsity and mens rea.

47. From the complaint and materials placed, this Court does not find

any specific allegation that the petitioner made any statement

knowing it to be false. At best, the allegation is of omission to disclose

particulars in a particular format.

48. It is not a disputed fact that the company has not been named as an

accused in the present case. Only the directors and the statutory

Auditor have been made out as the accused in the instant case.

49. The petitioner is one of the directors of the company, namely, M/s

Marco Polo Restaurant Pvt. Ltd. Whatsoever, alleged offence has

committed by the company and its director. Without making the

company as an accused, how its director will be liable for

punishment. The allegation of commission of offence under section

129 or 448 of the Companies Act, 2013 is not an offence committed

by an individual. The alleged offence is related with the disclosure of

true account is concerned with the company affairs rather than

individual. Without making the company as an accused, how its

directors will be liable for commission of offence and/or punishment.

No vicarious liability can be imposed on the directors in any criminal

proceedings unless the company is an accused. In the present

proceedings, company has not made an accused. The complaint is

24

bad in law as it suffers from non-joinder and misjoinder of the

company being the primary accused being arraigned as a party in the

present proceedings.

50. It is a settled principle of criminal jurisprudence that vicarious

liability can be fastened upon directors only when the statute

specifically provides so and when the primary offender i.e., the

Company is before the Court.

51. Section 129 of the Companies Act, 2013 reads as follows: -

“129. Financial statement. —

(1) The financial statements shall give a true and fair view of the

state of affairs of the company or companies, comply with the

accounting standards notified under section 133 and shall be in

the form or forms as may be provided for different class or classes

of companies in Schedule III:

Provided that the items contained in such financial statements

shall be in accordance with the accounting standards:

Provided further that nothing contained in this sub-section shall

apply to any insurance or banking company or any company

engaged in the generation or supply of electricity, or to any other

class of company for which a form of financial statement has been

specified in or under the Act governing such class of company:

Provided also that the financial statements shall not be treated as

not disclosing a true and fair view of the state of affairs of the

company, merely by reason of the fact that they do not disclose—

(a) in the case of an insurance company, any matters which are

not required to be disclosed by the Insurance Act, 1938 (4 of

1938), or the Insurance Regulatory and Development Authority

Act, 1999 (41 of 1999);

(b) in the case of a banking company, any matters which are not

required to be disclosed by the Banking Regulation Act, 1949

(10 of 1949);

(c) in the case of a company engaged in the generation or supply

of electricity, any matters which are not required to be disclosed

by the Electricity Act, 2003 (36 of 2003);

25

(d) in the case of a company governed by any other law for the

time being in force, any matters which are not required to be

disclosed by that law.

(2) At every annual general meeting of a company, the Board of

Directors of the company shall lay before such meeting financial

statements for the financial year.

(3) Where a company has one or more subsidiaries, it shall, in

addition to financial statements provided under sub-section (2),

prepare a consolidated financial statement of the company and of

all the subsidiaries in the same form and manner as that of its

own and in accordance with applicable accounting standards,

which shall also be laid before the annual general meeting of the

company along with the laying of its financial statement under

sub-section (2):

Provided that the company shall also attach along with its

financial statement, a separate statement containing the salient

features of the financial statement of its subsidiary or subsidiaries

in such form as may be prescribed:

Provided further that the Central Government may provide for the

consolidation of accounts of companies in such manner as may be

prescribed.

Explanation. —For the purposes of this sub-section, the word

“subsidiary” shall include associate company and joint venture.

(4) The provisions of this Act applicable to the preparation,

adoption and audit of the financial statements of a holding

company shall, mutatis mutandis, apply to the consolidated

financial statements referred to in sub-section (3).

(5) Without prejudice to sub-section (1), where the financial

statements of a company do not comply with the accounting

standards referred to in sub-section (1), the company shall disclose

in its financial statements, the deviation from the accounting

standards, the reasons for such deviation and the financial effects,

if any, arising out of such deviation.

(6) The Central Government may, on its own or on an application

by a class or classes of companies, by notification, exempt any

class or classes of companies from complying with any of the

requirements of this section or the rules made thereunder, if it is

considered necessary to grant such exemption in the public

interest and any such exemption may be granted either

unconditionally or subject to such conditions as may be specified

in the notification.

26

(7) If a company contravenes the provisions of this section, the

managing director, the whole-time director in charge of finance, the

Chief Financial Officer or any other person charged by the Board

with the duty of complying with the requirements of this section

and in the absence of any of the officers mentioned above, all the

directors shall be punishable with imprisonment for a term which

may extend to one year or with fine which shall not be less than

fifty thousand rupees but which may extend to five lakh rupees, or

with both.

Explanation.-For the purposes of this section, except where the

context otherwise requires, any reference to the financial statement

shall include any notes annexed to or forming part of such

financial statement, giving information required to be given and

allowed to be given in the form of such notes under this Act.”

52. It appears from the provision cited above that the liability lies

primarily on the company and then its directors and others.

53. The Hon’ble Supreme Court in the case of Sunil Bharti Mittal

(Supra) and Santosh Kumar Lahoti (Supra) and subsequent

decisions has consistently held that the company is the principal

offender and directors are roped in on the principle of vicarious

liability only when the company is prosecuted.

54. In the present complaint, the allegations primarily relate to defects in

the financial statements of the company and alleged non-disclosures

in the balance sheet. The acts complained of are primarily attributed

to the company. The petitioner is sought to be prosecuted only in her

capacity as a director.

55. Section 129(7) of the Companies Act, 2013 provides for punishment

where a company contravenes the provisions of the section and casts

27

responsibility upon the managing director, whole-time director in

charge of finance, Chief Financial Officer or any other person charged

with the duty of compliance. However, such a provision presupposes

contravention by the company. In the absence of the company being

arraigned, fastening criminal liability solely upon the directors runs

contrary to the settled position of law.

56. This Court finds substance in the submission of the petitioner that

the complaint suffers from a fundamental defect of non-joinder of the

principal offender.

57. It is settled law by the Hon'ble Supreme Court in judgment in the

case of Santosh Kumar Lahoti vs. Registrar of Companies, West

Bengal

7

and decision of this Hon'ble Court in Raj Sahai vs. The

State of West Bengal & Anr.

8

which holds that no vicarious liability

can be imposed on the Directors in any criminal proceedings unless

the Company is an accused. Further reliance is also placed on the

judgment of Sunil Bharti Mittal vs. Central Bureau of

Investigation

9

and Daily De'Souza vs. Government of India

10

.

58. In addition, no specific allegation with regards to non-discloser of any

statement knowing it to be false or suppression are not mentioned in

the complaint lodged by the complainant. The whole allegations

7

2024 SCC OnLine Cal 3220 (paragraphs 52, 53 and 54)

8

CRR No. 100 of 2020 dated 2

nd

February, 2024

9

(2015) 2 SCC (Cri) 687

10

(2021) 20 SCC 135

28

contend in the complaint are not sufficient to allow to continue the

proceedings against the present petitioner because it would be only

abuse of process of law since allegations are vague and general in

nature. Even for the sake of argument, if it continued, it would be

merely useless because possibility of conviction is remote and bleak

and continuation of criminal cases would put the accused to great

oppression and prejudice and extreme injustice would be caused to

her by not quashing the criminal case.

59. Upon consideration of the above factors, this Court is of the view that

continuation of the proceeding against the petitioner would amount

to abuse of process of law and for securing ends of justice; proceeding

against the petitioner is required to be quashed.

60. Consequently, CRR No. 1806 of 2020 is allowed. CRAN 1/2021

and all connected applications, if any, are, also thus, disposed of.

61. The proceeding being Complaint Case No. 44/2019 now pending

before the Learned Judge, 2

nd

Special Court at Kolkata under

Sections 129/448 of the Companies Act, 2013 is quashed insofar as

the petitioner herein is concerned and all orders passed therein

including the orders dated 22.11.2019, 23.12.2019, 14.02.2020 and

09.10.2020 are hereby set aside.

62. Let a copy of this Judgment be sent to the Learned Trial Court for

information.

29

63. Interim order, if any, stands vacated.

64. Case diary, if any, be returned to the learned counsel for the State.

65. All parties shall act on the basis of server copy of this judgment duly

downloaded from the official website of this Court.

66. Urgent photostat certified copy of this Judgment, if applied for, is to

be given as expeditiously to the parties on compliance of all legal

formalities.

(Ajay Kumar Gupta, J)

P. Adak (P.A.)