The Calcutta High Court has laid down that an independent professional certifying statutory e-Forms does not fall within the definition of an “officer” or “officer-in-default” under the Companies Act, 1956 or 2013, and the ROC cannot directly prosecute such a professional under Section 439(2) of the 2013 Act unless active criminal complicity is prima facie established. However, the Court qualified this by holding that the proposition that an independent professional can never be prosecuted under Section 628 merely because they are not an executive officer is legally incorrect, and active complicity with mens rea can attract the rigour.
The discharge order was upheld and affirmed on two independent grounds: first, the total absence of specific pleadings and foundational ingredients of mens rea against the certifying professional; and second, the prosecution being incurably barred by limitation under Section 468(2)(c) of the CrPC, with no application or ground made out under Section 473 to condone the delay.
On the question of whether an independent Chartered Accountant certifying statutory e-Forms falls within the definition of an “officer” or “officer-in-default” under the Companies Act, a Single Judge Bench of Justice Uday Kumar observed that the status of an “officer” under Section 2(30) of the 1956 Act and Section 2(59) of the 2013 Act is intrinsically linked to executive governance, managerial control, and internal administration of the company. Section 2(60)(v) of the 2013 Act expressly carves out a statutory protection, declaring that a person who gives advice to the Board in a professional capacity shall not be deemed an officer in default. This exclusion, read alongside Section 226 of the 1956 Act (which disqualifies company officers from acting as independent auditors), reinforces the fundamental dichotomy between internal executive management and external professional advisors. Expanding the definition of “officer” to encompass an independent professional certifier would distort the statutory architecture of company law.
Consequently, under Section 439(2) of the 2013 Act (Section 621 of the 1956 Act), the ROC lacks the direct statutory locus standi to prosecute an independent professional under provisions designed for internal corporate default, unless active criminal complicity is prima facie established, added the Court.
On the substantive scope of Section 628 of the 1956 Act, the Court observed that the section penalises “any person” who makes a false statement in any return, report, certificate, or other document required under the Act, knowing it to be false, or who intentionally conceals any material fact. The essence of the offence is not merely the submission of an inaccurate document but the conscious, deliberate introduction of falsehood coupled with the requisite mens rea. Criminal penal liability of this severity can never be fastened vicariously, on the basis of loose suspicion, or through abstract association. A rigorous scrutiny of the complaint revealed a fatal lacuna: the complaint explicitly attributed all mala fide intention, physical execution, and deliberate concealment to the company director, Shri Biswajit Biswas, while concerning the Chartered Accountant, it contained only a generic assertion that he certified the forms.
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There was a complete absence of any foundational averment or material particular demonstrating personal knowledge of the fraud or active connivance. Under Rule 10 of the Companies (Registration Offices and Fees) Rules, 2014, the primary statutory obligation to file correct particulars rests on the applicant company and its directors, and an independent professional who relies on data furnished by management cannot be hauled up under Section 628 without specific, concrete allegations of direct complicity or conscious knowledge of falsification, added the Court.
On the question of limitation, the Court held that the prosecution was incurably barred under Chapter XXXVI of the CrPC Section 628 read with Section 75 of the 1956 Act carries a maximum punishment of two years’ imprisonment, attracting the three-year limitation period prescribed under Section 468(2)(c) of the CrPC. The e-Forms were filed between March 2011 and March 2014, yet the complaint was instituted on March 17, 2020, nearly nine years later, which is three times the outer statutory limit. The Court reiterated that the limitation clock stops on the date of filing the complaint. There was an absolute absence of any application for condonation of delay under Section 473 of the CrPC, nor any plausible explanation for the lapse of nearly a decade. Initiating criminal proceedings after the statutory period without invoking Section 473 renders the entire prosecution legally untenable and dead in law.
Briefly, Registrar of Companies, West Bengal (ROC) filed a criminal revision before the Calcutta High Court under Section 482 read with Section 401 of the CrPC, challenging the discharge order dated July 13, 2021, passed by the 2nd Special Court, Calcutta. The complaint had been instituted by the ROC on March 17, 2020, against M/s Adorable Agrotech Limited and several individuals, including the surviving opposite party CA Ranjan Meghani (Accused No. 10) and the now-deceased CA Bhal Chandra Khaitan (Accused No. 12), principally under Sections 58A, 58AA, 60, 67, 69, 73, 75, 81, and 628 of the Companies Act, 1956, as well as Section 448 read with Sections 61(1)(a) and 117(1) of the Companies Act, 2013.
The company, incorporated on July 28, 2010, with an initial authorised share capital of Rs. 5 lakhs, artificially inflated its authorised capital to Rs. 70,35 crores between 2010 and 2014, almost exclusively through the issuance of Non-Convertible Redeemable Preference Shares, while its equity share capital remained static. A statutory investigation under Section 210(1) of the 2013 Act revealed that these capital expansions were carried out through ordinary resolutions disguised as special business, bypassing the protective shareholder protocols under Section 81(1A) of the 1956 Act. The company allotted preference shares to thousands of investors on single days, 1,431 individuals on September 15, 2011, and 9,120 individuals on July 1, 2013, triggering the public offer threshold under Section 67(3) of the 1956 Act, which mandated prospectus registration under Section 60 and stock exchange listing under Section 73, neither of which was complied with. The ROC treated these collections as illegal “deposits” under the Companies (Acceptance of Deposits) Rules, 1975, attracting penal consequences under Sections 58A and 58AA.
The sole nexus of CA Ranjan Meghani to this corporate web was his professional verification and certification of electronic forms (Form 5 and Form 2: Return of Allotment) uploaded by the company on the MCA portal in October and December 2011. He was neither a promoter, director, nor key managerial personnel of the company. The inspection report itself attributed all mala fide intention and physical filing of false forms to the company director, Shri Biswajit Biswas.
