CRL. M.C. 6249/2006 Page 1 of 4 * IN THE HIGH COURT OF DELHI AT NEW DELHI + CRL. M.C. 6249/2006 % Decided on: 23rd September, 2010 DHARMENDRA KR. LILA ..... Petitioner Through: Mr. Sidharth Luthra, Sr. Adv. with Mr. P.S. Singhal, Ms. Smriti Sinha & Mr. Arshdeep Singh, Advs. Versus REGISTRAR OF COMPANIES ..... Respondent Through: Mr. Baldev Malik, Adv. AND + CRL. M.C 6263/2006 KRISHNA KUMAR ..... Petitioner Through: Mr. Sidharth Luthra, Sr. Adv. with Mr. P.S. Singhal, Ms. Smriti Sinha & Mr. Arshdeep Singh, Advs. Versus REGISTRAR OF COMPANIES ..... Respondent Through: Mr. Baldev Malik, Adv. AND + CRL. M.C. 6278/2006 SUBHASH CHANDRA GUPTA ..... Petitioner Through: Mr. Sidharth Luthra, Sr. Adv. with Mr. P.S. Singhal, Ms. Smriti Sinha & Mr. Arshdeep Singh, Advs. Versus REGISTRAR OF COMPANIES ..... Respondent Through: Mr. Baldev Malik, Adv. CRL. M.C. 6249/2006 Page 2 of 4 CORAM: HON'BLE MR. JUSTICE A.K. PATHAK 1. Whether the Reporters of local papers may be allowed to see the judgment? No 2. To be referred to Reporter or not? Yes 3. Whether the judgment should be reported in the Digest? Yes A.K. PATHAK, J. (ORAL) By these petitions under Section 482 of the Code of Criminal Procedure, 1973, petitioners seek quashing of criminal complaint No.805/2002 under Section 62 read with Section 68 of the Indian Companies Act, 1956 (for short hereinafter referred to as “the Act”) filed by Registrar of Companies against them. This complaint is pending in the court of Additional Chief Metropolitan Magistrate (ACMM), Delhi. It was alleged in the complaint that the petitioners were signatories to the prospectus dated 28th April, 1994 containing misstatement of facts. The company had collected `210 lakhs from the public issue but had failed to accomplish the promises made in the prospectus. 2. Learned Senior counsel for the petitioners has contended that no criminal complaint can be filed under Section 62 of the Act as this provision deals with the “civil liability” for making misstatement in the prospectus. With regard to the complaint under Section 68 of the Act, it has been submitted that for filing of a complaint under this section, prior sanction of competent authority was required. Neither such sanction was obtained by the Registrar of Companies prior to filing of the complaint nor had the same been placed on CRL. M.C. 6249/2006 Page 3 of 4 record. In nutshell, it has been canvassed that the complaint under Section 62 read with Section 68 of the Act was liable to be quashed. Reliance has also been placed on Rajeev Shukla & Anr. vs. Registrar of Companies 135 (2006) Delhi Law Times 599 and Manju Yadav vs. Registrar of Companies 2007 (98) DRJ 312. 3. Section 62 of the Act reads as under:- “62. Civil liability for misstatements 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 persons who subscribes for any shares or debentures on the faith fo the prospectus for any loss or damage he may have sustained by reason of any untrue statement included therein, that is to say,………. xx xx xx xx” 4. Bare perusal of the aforesaid provision clearly indicates that violation thereof entails civil liability inasmuch as, it provides payment of compensation in case of misstatement in the prospectus. In my view, the compensation in respect of violation of Section 62 of the Act can be claimed by filing appropriate civil suit and no criminal complaint under Section 62 of the Act would be maintainable in this regard. Similar view has been expressed in Rajiv Shukla and Manju Yadav’s cases (supra). 5. As regards the complaint under Section 68 of the said Act is concerned, learned counsel for the respondent has not disputed that prior sanction of the competent authority is required before launching prosecution under the said provision. However, he CRL. M.C. 6249/2006 Page 4 of 4 contends that such sanction was granted for initiating prosecution by the Department of Company Affairs vide its letter dated 13th March, 2002. I have perused the copy of so called sanction letter and find that the same is general permission granted to the Regional Director by the Department of Law & Justice for initiating prosecution in respect of violations of Sections 62, 63 read with 628 of the said Act. This sanction nowhere includes launching of prosecution under Section 68 of the Act. In Rajiv Shukla’s case (supra) also this very sanction letter was involved and was adversely commented upon. No other sanction letter has been placed on record. In absence of any such sanction, the only presumption which can be drawn is that no sanction was obtained for launching prosecution under Section 68 of the Act against the petitioners. In absence of prior sanction, the complaint under Section 68 of the said Act would also be not maintainable. 6. For the foregoing reasons, petitions are allowed and complaint case bearing no. 805/2002 pending before the ACMM and all further proceedings arising therefrom qua the petitioners are hereby quashed. 7. All the abovementioned petitions are disposed of in the above terms. A.K. PATHAK, J. September 23, 2010 ga