Rajesh K.Hiranandani v. The Deputy Registrar Of

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED :25.01.2022

CORAM

THE HONOURABLE MR.JUSTICE V. BHARATHIDASAN Crl.O.P.Nos.11845 & 11846 of 2015 and M.P.Nos.1, 1, 2 & 2 of 2015 Rajesh K. Hiranandani ...

Petitioner in both Crl.O.Ps Vs The Deputy Registrar of Companies, Tamil Nadu, Having office at Shastri Bhavan, 26, Haddows Road, Chennai 600 006 .

...

Respondent in both Crl.O.Ps Both the Criminal Original Petitions are filed under Section 482 of Cr.P.C. to call for the records culminating in E.O.C.C.No.38 & 39 of 2015 respectively pending on the file of the learned Additional Chief Metropolitan Magistrate, Economic Offences -II, Egmore, Chennai- 8 and quash the same. For petitioner ... Mr. Sriram Panchu, in both O.Ps Senior Counsel for Mr. Arun Anbumani For respondent ... Dr.D.Simon in both O.Ps CGSC C O M M O N O R D E R Both the Criminal Original Petitions have been filed to quash the proceedings in EOCC Nos.38 & 39 of 2015, respectively pending on the file of the learned Additional Chief Metropolitan Magistrate, Economic Offences-II, Egmore, Chennai - 8, as against the petitioner.

2. Since the issues involved in both the cases are one and the same, both the cases are heard together and disposed of by

this common order.

3. The respondent/ Deputy Registrar of Companies has filed complaints against the petitioner, who is a Chartered Accountant, for violating the provisions of Section 227(3)(d), which is punishable under Section 233 of the Companies Act, 1956.

4. The allegation in the complaints is that the petitioner, being an Auditor of one M/s.Financial Technologies(India) Limited, filed Cash Flow Statements of the Company, which is not in accordance with the Accounting Standard Procedure (AS 3), thereby, he has violated the provisions of Section 227(3)(d) of the Companies Act. The learned Judicial Magistrate has taken cognizance of the offence in both the cases and issued process. To quash the same, both the Criminal Original Petitions have been filed.

5. Mr. Sriram Panchu, learned Senior Counsel appearing for the petitioner/accused submitted that the petitioner is a Chartered Accountant of the company and he has filed the Cash Flow Statement of the Company in accordance with the Accounting Standard Procedure(AS3), which is an acceptable procedure and he has not violated the provisions of Section 227(3)(d) of the said Act. The learned Senior Counsel further submitted that the petitioner has filed the Cash Flow Statements for the year 2011 & 2012, which is punishable under Section 233 of the Act, punishable with a fine of Rs.1,000/-. In the above circumstances, the complaints ought to have been filed within a period of six months, whereas, the complaints had been filed only in the year 2014, i.e., beyond the period of limitation and the complaints are barred by limitation and the learned Magistrate ought not to have taken cognizance of the offence.

6. The respondent filed a counter affidavit. In paragraph 7 & 8 of the counter, it is stated that, as per the provisions of Paragraph 18 of the Accounting Standard Procedure(AS 3), the Chartered accountant should report the cash flow, either by direct or indirect method ,and in the instant case, Cash Flow Statement of the Company had been filed under indirect method. The relevant portion of the counter reads as follows:- "7. It is humbly submitted that as per the provision of paragraph 18 of AS 3 :

"18. An enterprise should report cash follow from operating activities using either:

a) The direct method, whereby

major classes of gross cash receipt and gross cash payment are disclosed; or b) the indirect method, whereby the net profit or loss is adjusted for the effect of transaction of a non-cash nature, any deferrals or accruals of past or future operating cash receipt or payment, and items of income or expense associated with investing or financing cash flows."

8. It is humbly submitted that the Cash Flow Statement of the Company for the year ended March 31,2012 has presented under the Indirect method. "

7. Dr.D.Simon, learned Central Government Standing Counsel, appearing for the respondent submitted that the petitioner is expected to have filed a Cash Flow Statement as per the procedures contemplated under AS 3, but, that was not done so by the petitioner. Hence, the complaints have been filed.

8. This Court considered the rival submissions made on either side and carefully perused the materials available on record.

9. From a perusal of the counter affidavit filed by the respondent, more particularly, in paragraph 7 and 8, it is clear that as per the Accounting Standard Procedure (AS 3), the Cash Flow Statement can be filed either by direct method or indirect method. Admittedly, in this case, the petitioner has filed the Cash Flow Statement under the indirect method and he has only followed the Accounting Standard Procedure and there is no violation of any provisions of the said Act as alleged in the complaints. As rightly contended by the learned Senior Counsel appearing for the petitioner, the offence is punishable under Section 233 of the said Act, with a fine of Rs.1,000/-.

In the said circumstances, the complaints ought to have been filed within a period of six months, whereas, the complaints have been filed only after two years, which is barred by limitation and that the learned Magistrate ought not to have taken cognizance of the offences and issued process. Considering the above said circumstances, this Court is of the considered view that the present complaints are not maintainable on merits as well as on the ground of limitation and hence, the same are liable to be quashed.

10. Accordingly, both the Criminal Original Petitions are allowed and the complaints against the petitioner in E.O.C.C.Nos.38 & 39 of 2015 on the file of the learned Additional Chief Metropolitan Magistrate, Economic Offences-II, Egmore, Chennai, are quashed in respect of the petitioner. Consequently, connected miscellaneous petitions are closed. Sd/- Assistant Registrar(CS-VII) //True copy// Sub Assistant Registrar mrp To

1. The Additional Chief Metropolitan Magistrate, Economic Offences-II, Egmore, Chennai,

2. The Deputy Registrar of Companies, Tamil Nadu, Having office at Shastri Bhavan, 26, Haddows Road, Chennai 600 006 .

+1cc to Mr.Arun Anbumani, Advocate SR.No.4490 +2ccs to MDr.D.Simon, Advocate SR.No.4807 & 4808 Crl.O.P.Nos.11845 & 11846 of 2015 AK II(CO) GMY(23/03/2022)