Bangalore District Court
Register Of Companies vs Suddimoola Pblishers India Ltd on 20 December, 2024
KABC090001772023
Presented on : 04-11-2023
Registered on : 10-11-2023
Decided on : 20-12-2024
Duration : 1 years, 1 months, 16 days
BEFORE THE SPECIAL COURT FOR ECONOMIC
OFFENCES: AT BENGALURU
Dated this the 20th day of December 2024
:Present:
Sri. VISHWANATH C GOWDAR., B.A.L., LL.M.,
Presiding Officer,
Special Court for Economic Offences,
Bengaluru
C.C. No.98/2023
Complainant : The Registrar of Companies,
II Floor, 'E' Wing, Kendriya Sadan,
Koramangala,
Bengaluru - 560 034.
(Reptd. By Sri. NCS., Advocate)
V/s.
Accused : 1. SUDDIMOOLA PUBLISHERS INDIA LTD.,
No.12-7-81/2, Basavana Bavi Circle,
Gunj Road, Raichur,
Karnataka - 584 102.
2. Mr. VISHWANATH BASAVARAJ SWAMY
Managing Director,
SUDDIMOOLA PUBLISHERS INDIA LTD.,
House No.12-7-196,
Gunj Road, Siya Talab,
Raichur - 584 102.
2 C.C. No.98/2023
3. Mr. BASAVARAJ SWAMY,
Former Managing Director,
SUDDIMOOLA PUBLISHERS INDIA LTD.,
House No.12-7-196,
Gunj Road, Siya Talab,
Raichur - 584 102.
(Reptd. By Sri. MSH., Advocate)
:JUDGMENT:
The instant complaint emanates from the complaint
made by complainant against the accused persons for the
offence punishable U/s.129(7) of the Companies Act, 2013
(hereinafter referred as to “the Act”).
2. The complainant’s case in nutshell is as under:
The accused No.1 is a Public Limited Company,
incorporated on 19.12.1996. The accused Nos.2 & 3 are the
Directors of the accused No.1 company at the relevant point
of time, they are claimed to be officers in default as
contemplated U/s.2(60) of the Act. Further, it is the case of
the complainant that, as per Section 129(1) of the Act, the
financial statements of the company shall give a true and fair
view of the state of affairs of the company, comply with the
accounting standards notified U/s.133 and shall be in the
form or forms as may be provided for different class or classes
of companies in Schedule-III.
3. It is the specific case of the complainant that, the
Regional Director, Hyderabad vide letter dated 16.10.2018
directed the complainant to conduct inquiry of the accused
3 C.C. No.98/2023
No.1 company U/s.206(4) of the Act, infurtherance of letter
dated 10.09.2018 of the complainant to the Regional Director
reporting the Statutory Auditor having resigned from
Auditorship after the appointments.
4. During the course of inquiry conducted by the
complainant U/s.206 of the Act, it was noticed that the
accused No.1 company having not disclosed the bank
deposits as at 31.03.2017, 31.03.2016 & 31.03.2015 with
more than 12 months maturity with SUCO Co-Operative
Bank separately under the head “Cash & Cash Equivalent” as
required under Schedule-III of the Act. The complainant
issued the preliminary finding letter dated 28.01.2019 to the
accused No.1 company calling upon for the explanation for
non-compliances within seven days from the receipt of the
said letter. In response to the said letter, the accused No.1
company offered explanation vide letter dated 07.02.2019 and
claimed that the company has availed Over Draft Facility with
SUCO Co-Operative Bank to a limit of Rs.25 lakhs and the
said facility will be utilized as and when there is necessity of
funds. It is also explained as to the credit to the said OD
account would be made available on the basis of the
availability of funds in such a way that the OD limit will not
be crossed. Further, claimed that the Fixed Deposits were
started for certain period with an instructions to the bank to
credit the FD amount to the OD account in order to reduce
the debit balance of the OD facility and claimed the FD to be
treated as Current Account.
4 C.C. No.98/2023
5. Thereafter, the letter dated 28.02.2019 along with
Inquiry report dated 28.02.2019 was submitted by the
complainant to the Regional Director, Hyderabad seeking for
further directions on the recommendations made in the
aforesaid report. Wherein, in the said Inquiry report dated
28.02.2019, the complainant did not accept the explanations
offered by the accused No.1 company vide letter dated
07.02.2019. Pursuant to the directions of the Regional
Director, Hyderabad vide letter dated 08.02.2023, the
complainant has lodged the complaint, after issuing the show
cause notices dated 08.02.2023 to the accused Nos.2 & 3.
The response by the accused Nos.2 & 3 by way of reiteration
of justifications vide reply dated 28.02.2023 were not
satisfactory. Hence, this complaint.
6. Upon receiving the complaint, the sworn statement is
dispensed with as the complainant is a public servant, as
provided U/s.200(a) of the Cr.P.C. Thereafter, this court took
cognizance of an offence against the accused persons.
7. In pursuance of the summons, accused Nos.2 & 3
appeared before this court and were enlarged on bail.
Substance of the accusation was recorded by reading over
and explaining its contents in the language known to them.
They pleaded not guilty and claimed to be tried. As such, the
complainant was called upon to adduce his evidence.
8. In order to bring home the guilt of the accused, the
complainant has examined its Junior Technical Assistant as
5 C.C. No.98/2023
PW-1 and got marked nine documents as Ex.P-1 to Ex.P-9
and got closed its side of evidence.
9. Thereafter, the statements of the accused persons
were recorded U/s.313 of Cr.P.C., The accused Nos.2 & 3
denied the incriminating materials appearing against them in
the testimony of PW-1 and not chosen to adduce any defence
evidence on their behalf.
10. Heard the arguments advanced by both the
counsels for the complainant and accused persons.
11. Upon hearing their arguments and on going through
the materials on record, the following points would arise for
the consideration of this court viz.:
1. Whether the complainant proves beyond all
reasonable doubts that the accused No.1
company having not disclosed the bank
deposits as at 31.03.2017, 31.03.2016 &
31.03.2015 with more than 12 months
maturity with SUCO Co-Operative Bank
separately under the head “Cash & Cash
Equivalent” as required under Schedule-III of
the Act and contravened Section 129(1) of the
Act and thereby accused Nos.2 & 3 being the
officers in default have committed offence
punishable U/s.129(7) of the Companies Act,
2013?
2. What order?
12. The findings of this court, on the above said points
are as under:
Point No.1: In the Affirmative
Point No.2: As per final order
for the following:
6 C.C. No.98/2023
:REASONS:
13. Point No.1: The complainant in order to substantiate
and establish its case, got examined its Authorized Person
i.e., Junior Technical Assistant as PW-1 and got marked in all
nine documents as Ex.P-1 to Ex.P-9 and got closed its side of
evidence.
14. The PW-1 reiterated the complaint averments as to
the Companies Act mandating to furnishing the ROC by the
financial statement in accordance with Section 129(1) of the
Act, so also, the complainant having noticed the default of the
accused No.1 company having not disclosed the bank
deposits as at 31.03.2017, 31.03.2016 & 31.03.2015 with
more than 12 months maturity with SUCO Co-Operative
Bank separately under the head “Cash & Cash Equivalent” as
required under Schedule-III of the Act. It is also deposed
regarding the complainant having issued show cause notice
and as such it is deposed as to accused persons have
contravened the Section 129(1) of the Act and have committed
the offence punishable U/s.129(7) of the Companies Act.
15. In support of the said testimony, in all nine
documents have been marked as Ex.P-1 to Ex.P-9. Ex.P-1 is
the authorization letter dated 21.05.2024, issued by the
complainant, wherein the PW-1 has been authorized to
depose on behalf of the complainant U/s.439(3) of the
Companies Act. The certified true copy of letter dated
16.10.2018 by the Regional Director, Hyderabad is marked as
Ex.P-2. The certified true copy of Preliminary Finding Letter
7 C.C. No.98/2023
dated 28.01.2019 addressed to accused Nos.2 & 3 intimating
regarding the contravention of Section 129(1) r/w Schedule-III
of the Act is marked as Ex.P-3. Ex.P-4 is the certified true
copy of the reply by accused Nos.2 & 3 vide letter dated
07.02.2019. The certified true copies of the letter dated
28.02.2019 by complainant to Regional Director, Hyderabad
and Inquiry Report dated 28.02.2019 are collectively marked
as Ex.P-5. The certified true copy of the letter dated
08.02.2023 by Regional Director, Hyderabad directing the
complainant to prosecute the accused persons for the
contraventions U/s.129 of the Act is marked as Ex.P-6.
Ex.P-7 is the certified true copy of the show cause notice
dated 08.02.2023 issued by complainant addressed to
accused Nos.2 & 3. Ex.P-8 is the reply dated 28.02.2019 by
the accused Nos.2 & 3 to the show cause notice as per
Ex.P-7. Ex.P-9 is the complaint lodged by complainant before
this court, pertaining to the case on hand.
16. The PW-1 has been subjected to cross-examination
by the counsel for the accused persons, wherein, he has
sticked on to his version in examination-in-chief as to the
three financial statements submitted by the accused No.1
company being contrary to the Schedule-III of the Companies
Act. The other suggestions as to there is compliance of
Section 129(1) of the Act by disclosing the particulars of FD in
the three financial statements has been denied by the
witness.
17. The accused persons have not chosen to adduce
their evidence in support of their contentions.
8 C.C. No.98/2023
18. The learned counsel for the complainant vehemently
argued that, the accused No.1 company being managed by
accused Nos.2 & 3, who are responsible for day to day affairs
and management of the said company have very much
defaulted in complying the Section 129(1) of the Companies
Act by making necessary disclosures in the financial
statements under the head “Cash & Cash Equivalents”. The
counsel has also emphasized the evidence of PW-1. Amongst
these arguments, it has been sought to convict the accused
persons.
19. The counsel for the accused persons vehemently
argued that, the accused Nos.2 & 3 are not responsible for
the day to day management and affairs of the accused No.1
company. It is also argued that, the non-disclosure is not
amounting to misleading, fraudulent as well as unfair trade
practice as per the Act. It is also argued as to the qualified
Auditor having reported as to the fixed deposits are covered
under the Current Accounts. Amongst these arguments, it
has been sought to acquit the accused persons.
“Evaluation and analysis of the evidence”
20. The overall examination of the complainant’s case,
the evidence on record and arguments canvassed by the
either parties, the crux of the case is that, the accused No.1
company defaulted in having not disclosed the bank deposits
as at 31.03.2017, 31.03.2016 & 31.03.2015 with more than
12 months maturity with SUCO Co-Operative Bank
separately under the head “Cash & Cash Equivalent” as
9 C.C. No.98/2023
required under Section 129(1) r/w Schedule-III of the Act.
This aspect of default committed by the accused No.1
company and accused Nos.2 & 3 claimed to be the Directors
is very much forthcoming from the reply at Ex.P-4 & Ex.P-8,
wherein, the accused Nos.2 & 3 have claimed the FD account
to be treated as Current Account, but the said replies does
not satisfy the requirements of the mandate as provided in
the aforesaid provision.
21. The accused Nos.2 & 3 without showing the
bonafides of disclosing the particulars regarding the fixed
deposits and claiming the said fixed deposits to be treated as
Current Account has not at all been accepted by the
complainant. That being the case, the accused Nos.2 & 3
having not challenged the preliminary Inquiry report as well
as Inquiry report dated 28.02.2019 at Ex.P-5 before the
proper Forum cannot claim the compliance of the aforesaid
provision to be deemed compliance by treating the fixed
deposits as Current Account. This court is inclined to draw
an adverse inference against the accused Nos.2 & 3 in so far
as the Inquiry reports on record as per Section 114 of the
Indian Evidence Act.
22. It is also significant to note that, the accused Nos.2
& 3 being the Directors of the accused No.1 company at the
relevant point of time is also transpiring as per the covenants
of Ex.P-4 & Ex.P-8. The cross-examination of the PW-1 in
this aspect has also withstood the test of cross-examination.
10 C.C. No.98/2023
23. At this stage of the proceedings, it is significant to
note that, the scope of the instant proceedings is only to
examine the compliance of the Section 129(1) r/w Schedule-
III of the Act. The contentions and arguments advanced by
the counsel for the accused persons as to the legality of the
Inquiry reports so also, non-consideration of the Qualified
Auditors Report on behalf of the claim of accused No.1
company, cannot be subject matter of this court for
determination.
24. The complainant has very must established its case
as to non-compliance of Section 129(1) r/w Schedule-III of the
Act beyond all reasonable doubts. Per contra, the accused
persons have miserably failed to establish their defence more
particularly set up during the course of trail. In the light of
discussion made supra, this court without any hesitation,
proceeds to answer Point No.1 in the Affirmative.
25. Point No.2: In the light of the discussions and
findings, assigned supra while appreciating the Point No.1,
this court is of the view that the complainant is entitled to a
costs as contemplated U/s.446 of the Act, for a sum of
Rs.5,000/- out of the entire fine imposed therein.
Accordingly, this court proceeds to pass the following:
ORDER
By exercising the power conferred under
section 255(2) of Cr.P.C., the accused Nos.1 to
3 are hereby convicted of the offence
11 C.C. No.98/2023punishable under section 129(7) of the
Companies Act, 2013.
Accused Nos.2 & 3 being Directors of accused
No.1 company are sentenced to pay fine of
Rs.50,000/- each, pursuant to accused No.1
company having been held guilty. In default
accused Nos.2 & 3 shall undergo SI for the
period of three months.
Further, the complainant is entitled to total sum
of Rs.5,000/- out of the entire fine amount as a
costs of the proceedings as contemplated
U/s.446 of the Companies Act, 2013.
Office is hereby directed to furnish the free copy
of this judgment to the accused Nos.2 & 3 in
compliance of section 353(4) of Cr.P.C. forthwith.
(Dictated to the Stenographer directly on computer, typed by him,
corrected and then pronounced by me, in open court on this the
20th day of December 2024)
(VISHWANATH C GOWDAR)
Presiding Officer,
Spl. Court for Economic Offences,
Bengaluru.
12 C.C. No.98/2023
:ANNEXURE:
List of the Witnesses examined on behalf of the Complainant:
PW-1 : Kishore Narayanan
List of the Documents exhibited on behalf of the Complainant:
Ex.P-1 : Authorization Letter
Ex.P-2 : Certified True copy of Letter dated 16.10.2018
Ex.P-3 : Certified True copy of Letter dated 28.01.2019
Ex.P-4 : Certified True copy of Reply dated 07.02.2019
Ex.P-5 : Certified True copy of Letter & Inquiry Report
dated 28.02.2019
Ex.P-6 : Certified True copy of Letter dated 08.02.2023
Ex.P-7 : Certified True copy of Show Cause Notice
dated 08.02.2023
Ex.P-8 : Certified True copy of Reply dated 28.02.2023
Ex.P-9 : Complaint
List of Witnesses examined on behalf of the Accused:
– Nil –
List of Documents examined on behalf of the Accused:
– Nil –
Presiding Officer,
Spl. Court for Economic Offences,
Bengaluru.
13 C.C. No.98/2023
20.12.2024
Complt.: NCS
A-1 to 3: Sri. MSH
For Judgment
Accused No.1 company.
Accused No.2 present.
Accused No.3 absent.
IA filed U/s.392(6) of the BNSS for
exempting appearance of accused No.3 on
account of his ill-health, pursuant to advice
for bed rest by enclosing the photocopy of
the Discharge Summary dated 28.11.2024.
As the Judgment is one of imposition of
fine, considering health condition of
accused No.3, the IA stands allowed. The
absence of accused No.3 stands exempted.
Further, the counsel for accused No.3 is
permitted to deposit the fine amount on
behalf of accused No.3.
Judgment pronounced in the open court
(vide separate order)
ORDER
By exercising the power conferred under
section 255(2) of Cr.P.C., the accused Nos.1
to 3 are hereby convicted of the offence
punishable under section 129(7) of the
Companies Act, 2013.
Accused Nos.2 & 3 being Directors of
accused No.1 company are sentenced to pay
fine of Rs.50,000/- each, pursuant to
accused No.1 company having been held
14 C.C. No.98/2023
guilty. In default accused Nos.2 & 3 shall
undergo SI for the period of three months.
Further, the complainant is entitled to total
sum of Rs.5,000/- out of the entire fine
amount as a costs of the proceedings as
contemplated U/s.446 of the Companies Act,
2013.
Office is hereby directed to furnish the free
copy of this judgment to the accused Nos.2
& 3 in compliance of section 353(4) of
Cr.P.C. forthwith.
PRESIDING OFFICER.
15 C.C. No.98/2023
The learned counsel for the accused
persons has filed the application under
section 389(3) of Cr.P.C. seeking to enlarge
the accused Nos.2 and 3 on bail till the
expiry of appeal period. It is further
submitted that, the accused Nos.2 and 3 are
intending to file appeal and as they have
been convicted. Hence, has sought for
enlarging them on bail.
The learned counsel for the
complainant has orally objected to the said
application and submitted that, the accused
Nos.2 and 3 are not entitled to the said
relief as the accused Nos.2 and 3 have
totally disregarded the very provisions of the
Companies Act and has also submitted as
to the chances of accused Nos.2 and 3
absconding from the jurisdiction of this
court and failure to comply the order of this
court to appear in order to undergo the
punishment as per the Judgment, as such
sought for dismissal of application.
Considering the fact that, the accused
Nos.2 and 3 have been granted bail during
the course of trial and in view of the
sentence being imposed is only a fine,
having due consideration as to the accused
16 C.C. No.98/2023
Nos.2 and 3 intending to challenge the
Judgment by preferring an appeal, it is just
and appropriate to grant the bail to the
accused Nos.2 and 3 till the expiry of the
appeal period only. Accordingly, the bail
application is hereby allowed and the
accused Nos.2 and 3 have been granted bail
till the expiry of appeal period.
The bail application is allowed subject
to condition that, the accused Nos.2 and 3
shall execute the personal bond for
Rs.10,000/- each.
Office is hereby directed to take
personal bond of the accused Nos.2 and 3.
The accused Nos.2 and 3 shall be
present before the court to pay fine in
default to undergo the sentence on
26.07.2024.
Call on: 26.07.2024.
PRESIDING OFFICER.
17 C.C. No.98/2023
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