Directors Absolved of Liability for Technical Violations | HC

Case Details: Shyam Emco Infrastructure Ltd. vs. Registrar of Companies West Bengal - [2025] 181 taxmann.com 869 (Calcutta)

Judiciary and Counsel Details

• Ravi Krishan Kapur, J.
• Jayanta Kumar Mitra, Sr. Adv., Rishav Dutt, Anuj Singh, Ms Patrali Ganguly and Ms Shrishti Roy Barman, Advs. for the Petitioner. 
• Ms Rashmi Bothra, Ms Shreya Choudhury and Jeet Barman, Advs. for the Respondent.

Facts of the Case

In the instant case, the respondent authorities, on the ground of alleged violations under section 129(1) read with Schedule III, found the company and its directors, namely the petitioners, to be in violation of the provisions of the Act and threatened prosecution against the petitioners by calling upon the company and its directors to file an application for compounding under the Act.

It was noted that the petitioners had throughout acted reasonably and had complied with all acceptable norms of accountancy, and this had been specifically brought to the attention of the respondent authorities. However, while issuing the impugned notice, the respondent authorities failed to consider and ignored the representations and responses submitted by the petitioners.

Further, the alleged violations could have been easily resolved through proper scrutiny of the company’s financial statements and records.

High Court Held

The High Court held that an infraction of such a technical and trivial nature did not warrant issuance of the impugned notice. Further, the respondent authorities had knowledge of the commission of the alleged offences beyond a period of one year and had remained inactive, in violation of the limitation period prescribed under section 129(1) read with Schedule III. Thus, the impugned notice was liable to be quashed.

List of Cases Referred to

• Girdhar Tracom Private Limited and Narendra Dhanuka v. Registrar of Companies 2024 SCC OnLine Cal 1671 (para 3)
• AI Champdany Industries Ltd. v. Registrar of Companies [2011] 16 taxmann.com 39/110 SCL 556 (Calcutta) (para 3)
• Bhagwati Foods P. Ltd v. Registrar of Companies [2008] 88 SCL 56 (Calcutta) (para 3)
• Deba Prasad Roy v. Regional Director, Department of Company Affairs [2008] 83 SCL 280 (CAL.) (para 8).