Criminal Prosecution can be Initiated for wrong disclosure in Balance Sheet

SANJAY SURI V. STATE [2010] 157 COMP CAS 10 (DEL) V.K.Jain, J [Decided on 29-1-2010]
Sections 209(6) and 217(1) of the Companies Act, 1956 read with sections 468, 469(1)(b) and 482 of the Cr.P.C – 

Failure by company to give proper disclosure in balance-sheet regarding collateral security and activities relating to export.


Prosecution initiated by ROC –
 1. There was a contravention of section 212 (1) as the company had acquired in excess of 90% of shareholding .


2.No proper disclosure was made in the balance sheet regarding the collateral security thereby its bank account was attached due to a court order and no contingent liability was disclosed towards this.


3.Its director report failed to disclose activities relating to exports , action initiated to enhance the exports , expansion of new export markets .

The defendants argued that the complaint was barred by limitation.  The ROC cannot be regarded as " person of aggrieved " under section 469 (1) (b) of the Criminal Procedure , 1973.


Trial Court took cognizance of the offence-summons issued against the directors – Whether criminal proceedings can be quashed-  It was held by the Court as No as the petitioners were the persons obliged to make sure compliance of the appropriate provisions of the Act and the officers in default at the appropriate time.