Calcutta High Court (Appellete Side)
Atul Pukhraj Falgunia vs State Of West Bengal & Ors on 16 April, 2026
IN THE HIGH COURT AT CALCUTTA
CRIMINAL REVISIONAL JURISDICTION
APPELLATE SIDE
PRESENT:
THE HON'BLE JUSTICE UDAY KUMAR
CRR 4387 OF 2022
WITH
CRAN 7 OF 2025
ATUL PUKHRAJ FALGUNIA
-VS-
STATE OF WEST BENGAL & ORS.
CRR 4388 OF 2022
WITH
CRAN 7 OF 2025
RAMKRISHNA MOOGIMANE
-VS-
STATE OF WEST BENGAL & ORS.
For the Petitioner : Mr. Bodhisatta Biswas,
Mr. Ishan Bhattacharya
For the Opposite Party Nos. 2 & 3 : Mr. Swatarup Banerjee
: Mr. Sukanta Ghosh
Mr. S. Chakrabarty
Mr. R. Chamria
Hearing concluded on : 02.03.2026
Judgment on : 16.04.2026
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UDAY KUMAR, J.: -
1.
INTRODUCTION
1.1. These two revisional applications, being CRR 4387 of 2022 and
CRR 4388 of 2022, arise out of a common nexus of facts and
challenge an identical summoning order dated 10th September 2013
passed by the Learned Chief Judicial Magistrate, Alipore, South 24
Parganas, in Complaint Case No. C/7025/2013. In CRR 4387 of
2022, the Petitioner, Atul Pukhraj Falgunia, is the erstwhile Company
Secretary, while the Petitioner in CRR 4388 of 2022, Ramkrishna
Moogimane, was arraigned in his capacity as a Director of Binani
Cements Limited. Both move this Court under Section 482 of the Code
of Criminal Procedure, 1973, seeking the quashing of the proceedings
presently pending before the Learned Chief Judicial Magistrate,
Alipore, South 24 Parganas. Since both applications are directed
against the same Impugned Order and involve a shared factual matrix
concerning a technical disclosure in the Company’s financial
statements, they are being disposed of together by this common
judgment to ensure consistency and avoid conflicting findings.
1.2. The genesis of the controversy lies in the statutory filing of the
annual financial statements of Binani Cements Limited (hereinafter
“the Company”) for the Financial Year 2010-11. This period marked a
pivotal shift in corporate regulatory compliance, as the Ministry of
Corporate Affairs (MCA) introduced the Extensible Business Reporting
Language (XBRL) taxonomy for the first time. To comply with this
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maiden digital mandate, the Company utilized the services of
professional consultants to convert their audited accounts into the
prescribed XML format. During this technical conversion, a
discrepancy occurred in the digital filing. The Earnings Per Share
(EPS) for the previous year (2009-10) was reflected as Rs. 1.371,
whereas the actual audited and published EPS for that year was Rs.
13.71. The Registrar of Companies (ROC) has built its case on the
premise that this “decimal-shift” was not a clerical oversight but a
deliberate and calculated act of manipulation to create a fictitious
growth trajectory of 237%.
1.3. It is a matter of record that prior to this digital upload, the
Company had already fulfilled its disclosure obligations through
traditional and verifiable means. Approximately 20,000 physical
copies of the Annual Report, containing the correct audited EPS of Rs.
13.71, were circulated to shareholders and submitted to various Stock
Exchanges. Furthermore, the correct financial data was uploaded in
PDF format on the Company’s official website and filed with the
regulatory authorities. However, based solely on the decimal
discrepancy found in the XBRL filing, the ROC issued a show-cause
notice in 2013, nearly two years after the filing, alleging that the
Company had falsified its growth trajectory by depressing the previous
year’s figures to show a fictitious increase in earnings when, in reality,
the Company had suffered a substantial decline of approximately
66%. As per the ROC, such an act constitutes a “false statement in a
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material particular,” attracting the penal provisions of Section 628 of
the Companies Act, 1956.
1.4. Consequently, on 10th September 2013, the ROC filed a formal
complaint before the Learned Chief Judicial Magistrate, Alipore,
against the Company and its officers, including the present
Petitioners. The Learned Magistrate, on the same day, took cognizance
and issued process. Notably, the Petitioners at the material time were
residents of Mumbai and Delhi, respectively, falling outside the
territorial jurisdiction of the Learned Court below. Despite this
geographical fact, the summoning order was issued without the
Learned Magistrate conducting any prior inquiry or directing an
investigation as contemplated under the mandatory provisions of
Section 202 of the Cr.P.C.
1.5. Subsequent to the issuance of process, the Petitioners were
required to travel from their respective cities to enter appearance and
seek bail. Over the ensuing decade, the proceedings have remained
pending at the stage of appearance and procedural compliance. The
Petitioners now move this Court, asserting that the entire prosecution
is founded upon a patent “punching error” in a technical document,
which stands contradicted by the Company’s own contemporaneous
and widely circulated physical reports, and contending that the
fundamental procedural safeguards for out-of-jurisdiction residents
were bypassed, thereby rendering the continuation of the proceedings
a manifest miscarriage of justice.
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2. QUESTIONS FOR DETERMINATION
2.1. In view of the multifaceted challenges raised against the
common Impugned Order, and to ensure that the grievances of both
the Petitioners are addressed with finality, this Court finds it
imperative to frame the following questions for determination:
I. On the Jurisdictional Mandate under Section 202 of
the Cr.P.C.:
Whether the Learned Magistrate, while taking
cognizance and issuing process against Petitioners
residing outside the territorial limits of his
jurisdiction (in Mumbai and Delhi), was under a
mandatory statutory obligation to conduct an
inquiry or investigation as contemplated under
Section 202 of the Code of Criminal Procedure, and
whether the omission to do so renders the
summoning order ab initio void and unsustainable
in law?
II. On the Ingredient of “Knowledge” under Section 628
of the Companies Act, 1956:
Whether the existence of a correct EPS figure (Rs.
13.71) in thousands of physical copies of the
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& CRR 4388 OF 2022
Annual Report and other public disclosures,
contemporaneous to the digital filing, effectively
negates the prima facie allegation that the
Petitioners “knowingly” made a false statement in
the XBRL format, thereby failing to satisfy the high
threshold of mens rea required for a criminal
conviction?
III. On the Doctrine of “Officer in Default” vs. Statutory
Signatories:
Whether, in the presence of a formally designated
“Officer in Default” (the CFO) under Form 1AA for
the purposes of financial compliance, the Company
Secretary and the Director can be held criminally
liable for an error in the digital financial statements
(a technical “punching” slip) committed by an
external agency during a digital conversion process?
IV. On the Materiality of the Error and the Scope of Relief
under Section 633:
Whether the decimal shift (altering Rs. 13.71 to Rs.
1.371) constitutes such a material falsification
intended to mislead the public that it mandates a
trial, or whether it qualifies as an “honest and
reasonable mistake” made during the maiden year
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& CRR 4388 OF 2022of a complex digital transition (XBRL), thereby
entitling the Petitioners to discharge or exoneration
under the beneficial provisions of Section 633 of the
Act?
V. On the Preventive Interference under Section 482 of
the Cr.P.C.:
Whether, considering the totality of the
circumstances, including the delayed service of
summons and the fact that the correct figures were
always available to the public, the continuation of
the criminal proceedings against the Petitioners
constitutes an abuse of the process of the Court,
justifying the exercise of the inherent powers of this
Court to prevent a miscarriage of justice?
2.2. The adjudication of these points will provide a comprehensive
resolution to both CRR 4387 of 2022 and CRR 4388 of 2022, settling
the controversy surrounding the technical discrepancy and the
procedural propriety of the prosecution. Learned Counsel representing
the parties in both revisions have advanced their submissions in
support of their contentions in respect of the questions so framed
3. SUBMISSIONS ON BEHALF OF THE PETITIONERS
3.1. Following the comprehensive framing of the issues for
determination, Mr. Bodhisatta Biswas, the learned advocate for the
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Petitioners in both revisions, being CRR 4387 of 2022 and CRR 4388
of 2022, advanced their submissions in support of their contentions.
In view of the commonality of the challenges raised against the
initiation of these criminal proceedings, their arguments are recorded
in an amalgamated manner as follows:
3.2. Primarily in respect of Question No. II and IV relating to the
Absence of Mens Rea and the “Knowing” Requirement, Mr. Biswas,
Learned Advocate for the petitioner contended that the very bedrock of
a prosecution under Section 628 of the Companies Act, 1956, was the
existence of a statement made by the accused “knowing it to be
false.”He submitted that the discrepancy in the shift of a decimal point
from Rs. 13.71 to Rs. 1.371 was a classic “punching error” occurring
during the maiden year of the complex XBRL mandate conversion
process, a period notoriously marked by technical “teething issues,”
systemic digital transitions, and multiple extensions by the MCA.
3.3. He vehemently argued that it was a logical impossibility for a
person to “knowingly” attempt to deceive a regulator with a digital
error while simultaneously providing the correct, audited true figure
in 20,000 physical printed copies of the Annual Report circulated to
the public. Learned Counsel maintained that a “falsity” in law implies
a concealment of truth; whereas, in the present case, the truth was
not only disclosed but widely disseminated. Relying on the ratio in
Sunil Kumar Agarwal v. G. Mukhopadhyay [(2010) 2 CHN 431] and
Dilip Kapur v. Registrar of Companies [2011 SCC OnLine Mad 737],
counsel urged that a patent typographical slip, particularly when the
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& CRR 4388 OF 2022correct data was already in the public domain, fell squarely within the
exception of bona fide error, rendering the grounds insufficient for
prosecution.
3.4. In respect the Procedural Nullity and Abuse of Process, Mr.
Biswas, submitted by placing heavy reliance on the mandates of
Section 202 of the Cr.P.C., that the summoning order was a
procedural nullity. It was highlighted as an admitted fact that both
Petitioners resided in Mumbai and Delhi, well beyond the territorial
limits of the Alipore Court. It was submitted that the amendment to
Section 202 made it mandatory for a Magistrate to postpone the
issuance of process and conduct an inquiry or investigation where the
accused resided outside his jurisdiction. Citing Vijay Dhanuka v.
Najima Mamtaj [(2014) 14 SCC 638], Pepsi Foods Ltd. v. Special
Judicial Magistrate [(1998) 5 SCC 749] and Sunil Bharti Mittal v. CBI
[(2015) 4 SCC 609], the Petitioners contended that the word “shall” in
Section 202 was mandatory and its violation was a ground for
quashing. The Learned Magistrate, by failing to conduct even a
cursory inquiry, was said to have set the judicial process in motion
mechanically.
3.5. In respect of the Proper “Officer in Default,” Mr. Biswas, the
learned advocate further submitted that the Companies Act provided a
specific mechanism for designating responsibility via Form 1AA, which
in the instant case had designated the Chief Financial Officer (CFO) as
the officer responsible for financial compliances. Following the
principle of strict construction of penal statutes as laid down in G.N.
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& CRR 4388 OF 2022Verma v. State of Jharkhand [(2014) 4 SCC 282], he argued that the
Company Secretary and the Director could not be made vicariously
liable for a data-entry error in an accounting taxonomy which was the
specialized domain of the finance department and external
consultants.
3.6. Mr. Biswas, invoked the protective jurisdiction of this Court
under Section 633 of the Act. Relying on SBI Home Finance Ltd. v.
Regional Director [2006 SCC OnLine Cal 869] and Ai Champdany
Industries Ltd. v. Registrar of Companies [2011 SCC OnLine Cal 2296],
it was contended that the High Court possessed the jurisdiction to
discharge or exonerate the accused even before a full-fledged trial if
the officer had acted “honestly and reasonably” or if the lapse was of a
“trivial nature.”Given that the correct figures were readily available on
the Company’s website and in Stock Exchange records, the digital
error was trivial in impact and caused no actual loss to any
stakeholder. He forcefully argued that to force the Petitioners through
a criminal trial after a decade for a misplaced decimal point, when no
financial loss was caused and no shareholder had complained,
constituted an oppressive use of the judicial process and a manifest
miscarriage of justice.
3.7. Finally, Mr. Biswas, contended that the decade-long delay in
prosecution for a decimal point error, where no shareholder
complained, is an oppressive use of the judicial process. Invoking the
seventh category of the Bhajan Lal [1992 Supp (1) SCC 335] guidelines,
they argue that a proceeding which is “inherently improbable” must be
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& CRR 4388 OF 2022quashed. The “no mini-trial” rule in Zandu Pharmaceutical cannot be
used as a shield to sustain a prosecution that is ex-facie vexatious.
Therefore, he prayed for quashing of these proceedings summarily.
4. SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTY NO. 2
(REGISTRAR OF COMPANIES)
4.1. Countering the contentions of the Petitioners, Mr. Swatarup
Banerjee, the learned counsel representing the Registrar of Companies
(ROC) vehemently argued that the discrepancy in the XBRL filing was
not a random “punching error” but a calculated act of financial
manipulation which could not be dismissed as a triviality. It was
submitted that the digital filing on the MCA portal served as the
primary and authoritative source of data for regulatory monitoring
and institutional investors.
4.2. He contended that by shifting the decimal point from Rs. 13.71
to Rs. 1.371 for the preceding financial year, the Petitioners effectively
converted an actual 66.23% decline in Earnings Per Share (EPS) into a
fictitious 237.71% growth. The ROC maintained that this “targeted
modification” carried deep financial implications, including the
maintenance of a bullish market sentiment and the avoidance of
regulatory “red flags.” It was argued that such a significant alteration
of a “material particular” squarely attracted the penal provisions of
Section 628 of the Companies Act, 1956, regardless of the disclosures
made in physical reports.
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4.3. Regarding the defence that the CFO was the designated “Officer
in Default,” the learned counsel for the ROC submitted that statutory
responsibility for the accuracy of financial disclosures could not be
outsourced or shifted. It was highlighted that the Petitioners, as the
authorized signatories, had authenticated and approved the XBRL
filing. Under the statutory scheme, by digitally signing and uploading
these documents, they “certified” the correctness of the contents. The
ROC maintained that the phrase “any person” in Section 628 was
sufficiently broad to encompass the Petitioners, and their plea of
reliance on external consultants was no defense in a criminal trial for
the falsification of statutory records.
4.4. Regarding the non-compliance with Section 202 of the Cr.P.C.,
it was submitted that such an omission constituted a “curable
irregularity” and not a fatal illegality. Relying on the ratio in Arvind
Khanna [(2019) 10 SCC 686], it was argued that a substantive
prosecution for financial falsification should not be quashed on a
procedural technicality, especially when the numerical discrepancy
was admitted. Furthermore, the ROC contended that “knowledge” and
“intention” were disputed questions of fact which could only be
adjudicated through a full-fledged trial. Citing Zandu Pharmaceutical
Works Ltd. v. Mohd. Sharaful Haque [(2005) 1 SCC 122], Mr. Banerjee
argued that the High Court should not exercise its inherent powers to
conduct a “mini-trial” or “short-circuit” a legitimate prosecution at this
stage.
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4.5. Finally, the ROC placed heavy emphasis on the 18-month
silence of the Petitioners. It was argued that if the error were indeed a
bona fide clerical slip, the Petitioners would have sought rectification
immediately upon discovery. Instead, they waited until the issuance of
a statutory show-cause notice in 2013 before raising the plea of an
“inadvertent error.” Mr. Banerjee concluded that such conduct was
inconsistent with that of an “honest and reasonable” officer, and since
the complaint disclosed a prima facie statutory violation involving
public interest, the revisional applications were liable to be dismissed.
5. DISCUSSION AND FINDINGS
5.1. On the Mandatory Nature of Section 202 of the Cr.P.C.
5.1.1. The primary issue for adjudication is whether the Learned
Magistrate, while taking cognizance and issuing process against the
Petitioners, who were admittedly residing in Mumbai and Delhi, was
under a mandatory statutory obligation to conduct an inquiry or
investigation as contemplated under Section 202 of the Code of
Criminal Procedure, 1973.
5.1.2. It is an uncontroverted fact that at the material time of filing
the complaint and the subsequent issuance of the summoning order
dated 10th September 2013, both Petitioners were residing beyond the
territorial jurisdiction of the Learned Court at Alipore. In this context,
it is pertinent to refer to the relevant portion of Section 202(1) of the
Cr.P.C., as amended by the Amendment Act of 2005, which stipulates:
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& CRR 4388 OF 2022“Any Magistrate, on receipt of a complaint of an offence of which
he is authorised to take cognizance… shall, in a case where the
accused is residing at a place beyond the area in which he
exercises his jurisdiction, postpone the issue of process against
the accused, and either enquire into the case himself or direct an
investigation to be made by a police officer…”5.1.3. Mr. Biswas, the learned counsel for the Petitioners, argued that
the word “shall” introduced by the 2005 Amendment is not merely
directory but reflects a mandatory legislative intent to prevent the
harassment of persons residing in far-flung areas. Conversely, Mr.
Banerjee the learned counsel for the ROC contended that such an
omission is a curable irregularity, particularly when the document
containing the alleged falsity was already before the Court, thereby
negating the need for further inquiry.
5.1.4. To resolve this conflict, this Court must look to the settled
position of law. In Vijay Dhanuka v. Najima Mamtaj [(2014) 14 SCC
638], the Hon’ble Supreme Court categorically held that:
“The use of the word ‘shall’ is ordinarily indicative of mandatory
nature of the provision… The global purpose of the amendment
was to prevent the use of the criminal process as a tool for
harassment of persons residing outside the jurisdiction. Omission
to conduct such an inquiry vitiates the order of summoning.”
This principle was further solidified in Sunil Bharti Mittal v. CBI [(2015)
4 SCC 609], wherein it was observed that summoning an accused is a
“serious matter” and judicial application of mind must be reflected
through the procedural compliance of Section 202.
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5.1.5. The ROC’s reliance on Arvind Khanna [(2019) 10 SCC 686] is
misplaced. The facts therein are clearly distinguishable, as that
challenge primarily concerned the merits of evidence at a mature
stage of trial. In the present case, we are concerned with a
jurisdictional prerequisite at the very threshold of the proceedings. A
procedural safeguard intended by the Parliament to protect citizens
from mechanical prosecution cannot be discarded as a mere
“technicality.”
5.1.6. Upon a perusal of the record and the Impugned Order, it is
evident that the Learned Magistrate took cognizance and issued
process on the very same day the complaint was filed. There is a
conspicuous absence of any inquiry, whether by way of examining
witnesses or directing an investigation, to satisfy the judicial
conscience that there existed sufficient grounds for proceeding against
residents of Mumbai and Delhi. This suggests that the judicial
machinery was set in motion in a mechanical fashion, which is a
direct departure from the mandate of the statute.
5.1.7. In view of the aforesaid discussion, this Court is of the
considered opinion that the provisions of Section 202 of the Cr.P.C.
are mandatory in nature when the accused resides outside the
jurisdiction. The failure of the Learned Magistrate to conduct the
mandated inquiry prior to issuing process against the Petitioners
constitutes a fatal procedural infirmity. Consequently, the summoning
order dated 10th September 2013, having been passed in a state of
jurisdictional vacuum, is rendered ab initio void and unsustainable in
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the eyes of law. The question is, therefore, answered in the affirmative
and in favour of the Petitioners.
5.2. On the Ingredient of “Knowledge” and the Applicability of
5.2.1. The second limb of the controversy pertains to the substantive
merits of the allegation under Section 628 of the Companies Act,
1956. The Court is called upon to determine whether the existence of
the correct Earnings Per Share (EPS) figure in the Company’s
contemporaneous physical disclosures effectively negates the prima
facie allegation that the Petitioners “knowingly” made a false
statement in the digital XBRL filing.
5.2.2. For the purpose of clarity, it is necessary to examine the
statutory language of Section 628, which reads as follows:
“If in any return, report, certificate, balance sheet,
prospectus, statement or other document required by or for
the purposes of any of the provisions of this Act, any
person makes a statement which is false in any material
particular, knowing it to be false… he shall be punishable
with imprisonment for a term which may extend to two
years…”
The phrase “knowing it to be false” is the sine qua
non for the attraction of this penal provision. It
implies a conscious, deliberate act of deception and
a guilty state of mind (mens rea) at the time of
making the statement.
5.2.3. While Mr. Banerjee for the ROC argued that the digital file
projected a fictitious growth trajectory of 237%, this Court must weigh
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this “digital discrepancy” against the “physical truth” disseminated by
the Company. It is an admitted fact that the Company circulated
20,000 physical copies of the Annual Report and made filings with
Stock Exchanges reflecting the correct EPS of Rs. 13.71.
5.2.4. Relying on Sunil Kumar Agarwal v. G. Mukhopadhyay [(2010) 2
CHN 431] and Dilip Kapur v. Registrar of Companies [2011 SCC OnLine
Mad 737], this Court finds that when correct data is already available
in the public domain, a patent typographical error in a specialized
format cannot be construed as a “knowing” attempt to mislead. The
Madras High Court observed that when correct data is already
available in the public domain, a patent error in one format cannot be
construed as a “knowing” attempt to mislead.
5.2.5. In the present case, the ROC’s contention that the Petitioners
intended to manipulate regulatory “red flags” appears to be a leap of
logic that ignores the “Doctrine of Simultaneous Disclosure.” It is
inherently improbable and logically contradictory that an officer would
“knowingly” attempt to deceive a regulator through a decimal shift in a
digital file while simultaneously handing over the correct, audited
truth in thousands of printed reports to the same investing public and
regulatory bodies. A “falsity” in criminal law necessitates concealment;
here, the truth was not only disclosed but widely disseminated.
5.2.6. The ROC placed reliance on Zandu Pharmaceutical Works Ltd.
[(2005) 1 SCC 122] to argue that the question of “knowledge” is a
matter of trial. However, the ratio of Zandu Pharmaceutical must be
read in conjunction with the guidelines laid down in State of Haryana
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v. Bhajan Lal [1992 Supp (1) SCC 335]. The seventh category of the
Bhajan Lal guidelines permits quashing where the allegations are
“absurd and inherently improbable.” To assume that a Company
Secretary or a Director would choose to commit a crime through a
misplaced decimal point, knowing fully well that the correct audited
accounts are already a matter of public record, is an assumption that
borders on the absurd.
5.2.7. Furthermore, the Court takes judicial notice of the fact that
2011 was the maiden year of the XBRL mandate. The technical
complexity of converting audited accounts into a digital taxonomy
often resulted in “punching errors” or “tagging slips.” In the absence of
any evidence showing that the Petitioners derived a personal benefit or
that any shareholder was actually defrauded by this specific digital
filing, the shift from Rs. 13.71 to Rs. 1.371 appears to be a bona fide
clerical error rather than a criminal act.
5.2.8. This Court finds that the element of “knowing it to be false” is
conspicuously missing in the present case. The simultaneous
availability of the correct EPS in the Company’s physical reports and
Stock Exchange filings effectively rebuts the presumption of mens rea.
Criminal law cannot be used to punish a decimal-point slip in a
technical document when the “totality of disclosure” proves the
absence of dishonest intent. Accordingly, Question No. II is answered
in the affirmative, in favour of the Petitioners, holding that the
allegation of “knowing falsification” is inherently unsustainable.
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5.3. On the Identification of the “Officer in Default” and the
Scope of Vicarious Liability
5.3.1. The third question involves whether, in the presence of a
specifically designated officer for financial compliances, the Company
Secretary and the Director can be held vicariously liable for a
technical data-entry slip.
5.3.2. It was the specific case of the Petitioners that the Company had
complied with the statutory mandate of designating responsibility by
filing Form 1AA with the Registrar, whereby the Chief Financial Officer
(CFO) was appointed as the officer responsible for ensuring the
correctness of financial disclosures. The learned counsel for the
Petitioners argued that since the alleged error was a technical
“punching slip” in an XBRL filing, a domain belonging to the finance
and IT departments, the Petitioners could not be made vicariously
liable for the same.
5.3.3. Per contra, Mr. Banerjee, the learned counsel for the ROC
contended that the Petitioners, being the “signatories” who approved
the digital upload, were “officers who are in default” within the
meaning of Section 5 of the Act. It was urged that the duty to verify
the correctness of a statutory return is non-delegable and that the
signatories must be held to have “certified” the contents of the filing.
5.3.4. To resolve this issue, it is imperative to refer to Section 5 of the
Companies Act, 1956, which defines an “officer who is in default” as
follows:
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& CRR 4388 OF 2022“…(f) any person in accordance with whose directions or
instructions the Board of Directors of the company is accustomed
to act;
(g) where the company has any managing or whole-time director
or directors, such director or directors…
5.3.5. “However, this must be read in conjunction with the principle of
Corporate Attribution. The Hon’ble Supreme Court in G.N. Verma v.
State of Jharkhand [(2014) 4 SCC 282] dealt with a similar question of
penal liability and observed:
“There is no vicarious liability in criminal law unless the statute
takes that also within its fold… In the absence of a specific role
attributed to the accused, and where a specific officer is
designated for a task, the others cannot be dragged into a
criminal prosecution.”
5.3.6. Furthermore, the ratio in Sunil Bharti Mittal v. CBI [(2015) 4 SCC
609] provides the necessary clarity. The Apex Court held that an
individual can be prosecuted along with the company only if there is
sufficient incriminating evidence of their active role with criminal
intent. The mere fact that a person is a Director or a Company
Secretary does not make them automatically liable for every clerical
error committed during a technical digital conversion.
5.3.7. In the present case, the ROC placed reliance on Arvind Khanna
[(2019) 10 SCC 686] to argue that the signatories are always liable.
However, this Court finds that the facts of the present case are clearly
distinguishable. The discrepancy here is not a fundamental
falsification of audited accounts, but a decimal-point shift in a
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technical digital taxonomy (XBRL). When the Company has formally
designated a CFO via Form 1AA to oversee financial compliances, the
law creates a specific “channel of responsibility.” To bypass the
designated CFO and target the Company Secretary or a Director for a
“punching error” is to ignore the very mechanism the Act provides for
designating responsibility.
5.3.8. The ROC’s attempt to fasten vicarious liability on the Petitioners
without any specific allegation of their direct involvement in the
“tagging” or “punching” of the XBRL data is an impermissible
overreach of penal provisions. In a specialized digital transition, a
signatory relies on the expertise of the finance department and
external consultants; a technical slip in such a domain, in the
absence of mens rea, cannot be the basis for a criminal trial against
the upper management.
5.3.9. In view of the aforesaid discussion, this Court is of the opinion
that where a company has a designated “Officer in Default” (CFO) for
financial compliances, other signatories such as the Company
Secretary or a Director cannot be held vicariously liable for a technical
data-entry error in the digital filing process. The doctrine of strict
construction of penal statutes requires that liability be fastened only
upon the officer specifically responsible for the default. Accordingly,
Question No. III is answered in favour of the Petitioners.
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5.4. On the Materiality of the Error and the Scope of Relief
under Section 633
5.4.1. The fourth question necessitates an evaluation of whether the
“decimal shift” (altering Rs. 13.71 to Rs. 1.371) constituted a material
falsification intended to mislead the public, or whether it qualified as
an “honest and reasonable mistake” occurring during a period of
systemic digital transition, thereby attracting the beneficial
jurisdiction of Section 633 of the Companies Act, 1956.
5.4.2. Mr. Banerjee, the learned counsel for the ROC vehemently
argued that the materiality of the error is found in the “percentage of
growth” it projected, converting a decline into a fictitious 237%
increase. However, “materiality” in criminal jurisprudence cannot be
viewed in a vacuum; it must be coupled with an intent to deceive.
Section 633 of the Act provides a statutory shield for officers who,
though technically in default, have acted “honestly and reasonably”
and ought fairly to be excused.
5.4.3. It was the specific contention of the Petitioners that the year
2011 was the maiden year of the XBRL (Extensible Business
Reporting Language) mandate. This Court takes judicial notice of the
fact that the transition from traditional PDF filings to tagged XML data
was a complex exercise involving external consultants and specialized
software. Relying on SBI Home Finance Ltd. v. Regional Director [2006
SCC OnLine Cal 869], the Petitioners maintained that the High Court
possesses the power to grant relief where the default is of a “trivial
nature” and lacks the sting of dishonesty.
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CRR 4387 OF 2022
& CRR 4388 OF 20225.4.4. In distinguishing the facts of the present case from a case of
deliberate fraud, this Court finds that the “simultaneous disclosure of
truth” is the most potent factor. Had the Petitioners intended to
mislead the public, they would not have circulated 20,000 physical
copies of the Annual Report containing the correct figure of Rs. 13.71.
The theory of the ROC, that the digital filing was a “targeted
modification,” fails to explain why the Petitioners would leave a
massive trail of correct data in every other public and regulatory
forum, including the Stock Exchange portals.
5.4.5. The ROC cited Arvind Khanna [(2019) 10 SCC 686] to argue that
such defences should be tested at trial. However, the ratio in Ai
Champdany Industries Ltd. v. Registrar of Companies [2011 SCC
OnLine Cal 2296] clarifies that when the “honesty” of the officer is
apparent from the uncontroverted facts on record, the Court should
not hesitate to exercise its power under Section 633 to prevent
unnecessary litigation.
5.4.6. This Court is of the view that a misplaced decimal point in a
maiden digital filing, which is contradicted by the Company’s own
contemporaneous printed records, falls squarely within the category of
an “honest and reasonable mistake.” The discrepancy did not result in
any wrongful gain to the Petitioners or any actual loss to the
shareholders, as the correct audited accounts were always accessible.
To categorize such a “teething issue” of digital transition as a criminal
falsification would be an overly harsh and mechanical interpretation
of the law.
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CRR 4387 OF 2022
& CRR 4388 OF 20225.4.7. In view of the aforesaid, this Court finds that the error was not a
material falsification intended to mislead, but an inadvertent technical
slip. The Petitioners, having acted honestly and reasonably in the
discharge of their duties during a period of complex regulatory
transition, are entitled to the protection of Section 633. The question
is, therefore, answered by holding that the nature of the error does not
warrant a criminal trial.
5.5. On the Abuse of Process and the Exercise of Inherent
Powers
5.5.1. Finally, this Court must determine if the continuation of these
proceedings, after a twelve-year delay, constitutes an abuse of the
process of the Court, thereby necessitating the exercise of this Court’s
inherent powers under Section 482 of the Code of Criminal Procedure,
1973.
5.5.2. Mr. Biswas, the learned counsel for the Petitioners argued with
great vehemence that the prosecution was “manifestly vexatious.” It
was submitted that the complaint was lodged in 2013 for a filing made
in 2011, and for over twelve years, the Petitioners have been forced to
travel from Mumbai and Delhi to Alipore for a case founded upon a
misplaced decimal point. On the other hand, the ROC contended,
placing reliance on Zandu Pharmaceutical Works Ltd. [(2005) 1 SCC
122], that the High Court should not “short-circuit” a prosecution if a
prima facie case is disclosed, and that the 18-month silence of the
Petitioners before raising the plea of error suggests a lack of bona
fides.
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CRR 4387 OF 2022
& CRR 4388 OF 20225.5.3. This Court, however, finds that the “no mini-trial” rule cited by
the ROC cannot be used as a shroud to cover a prosecution that is
“inherently improbable.” The landmark guidelines in State of Haryana
v. Bhajan Lal [1992 Supp (1) SCC 335] specifically empower this Court
to quash proceedings under the seventh category, where the
allegations are so absurd that no prudent person could reach a
conclusion that there is sufficient ground for proceeding.
5.5.4. The “absurdity” in the present case is found in the ROC’s own
theory of a “manipulated growth story.” For this Court to accept that
the Petitioners intended to manipulate the market via a digital file, it
must also accept that they were foolish enough to simultaneously
distribute the “un-manipulated truth” in 20,000 physical reports to
the very same shareholders and stock exchanges. Such a contention
is self-contradictory. Criminal intent does not coexist with such
transparent and widespread disclosure of the correct facts.
5.5.5. Furthermore, as observed by the Hon’ble Supreme Court in
Pepsi Foods Ltd. v. Special Judicial Magistrate [(1998) 5 SCC 749],
summoning an accused in a criminal case is a serious matter; it
cannot be done at the drop of a hat. When the “falsity” alleged is a
patent “punching error” contradicted by the Company’s own
contemporaneous records, and where the mandatory procedural
safeguards of Section 202 Cr.P.C. were bypassed, the proceedings lose
their character of a “legitimate prosecution” and turn into an
instrument of harassment.
26
CRR 4387 OF 2022
& CRR 4388 OF 20225.5.6. The decade-long delay in a case involving a technicality, where
no financial loss was caused to any stakeholder, further tilts the
scales of justice in favour of the Petitioners. To compel professional
individuals to undergo the rigors of a criminal trial at this distance of
time for a clerical slip occurring during a systemic digital transition
would be a travesty of justice.
5.5.7. In view of the findings recorded on the preceding questions, this
Court is of the firm opinion that the continuation of the proceedings in
Complaint Case No. C/7025/2013 is an abuse of the process of the
Court. The charges are inherently improbable, the procedural
foundation is a nullity, and the substantive requirement of mens rea
is missing. To prevent a manifest miscarriage of justice, this is a fit
case for the exercise of the inherent powers of this Court. The
question is answered in the affirmative, in favour of the Petitioners.
6. FINAL CONCLUSIONS
6.1. In light of the comprehensive analysis of the facts and the
statutory framework governing the dispute, this Court arrives at the
following definitive conclusions to settle the questions framed for
determination:
6.2. It is concluded that the summoning order dated 10th September
2013 is tainted by a fundamental jurisdictional error. The Petitioners,
admittedly residents of Mumbai and Delhi, were entitled to the
mandatory protection of an inquiry or investigation under Section 202
of the Cr.P.C. prior to the issuance of process. The Learned
27
CRR 4387 OF 2022
& CRR 4388 OF 2022Magistrate’s failure to comply with this “shall” mandate, a prerequisite
solidified by the Hon’ble Supreme Court in Vijay Dhanuka (supra) and
Sunil Bharti Mittal (supra), renders the initiation of these proceedings a
procedural nullity ab initio.
6.3. Regarding the substantive charge under Section 628 of the
Companies Act, 1956, this Court concludes that the essential
ingredient of mens rea, specifically the requirement that the accused
made a statement “knowing it to be false,” is conspicuously absent.
The simultaneous and widespread dissemination of the correct EPS in
20,000 physical annual reports and Stock Exchange filings effectively
destroys any theory of a “knowing” or “dishonest” falsification. A
patent decimal-point slip, occurring amidst a complex systemic
transition to the XBRL taxonomy and contradicted by the Company’s
own audited truth in the public domain, cannot be elevated to the
status of a criminal offense.
6.4. This Court concludes that the prosecution committed a
significant error in identifying the “Officer in Default.” In the presence
of a formally designated officer (the CFO) under Form 1AA for financial
compliances, the Company Secretary and the Director cannot be held
vicariously liable for a technical data-entry slip within a specialized
accounting taxonomy. Following the ratio in G.N. Verma (supra), penal
liability must be strictly construed and restricted to those specifically
tasked with the duty in question.
6.5. It is further concluded that the Petitioners acted “honestly and
reasonably” within the meaning of Section 633 of the Act. The error
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CRR 4387 OF 2022
& CRR 4388 OF 2022
was a bona fide “teething problem” of a digital mandate that resulted
in no wrongful gain to the Petitioners nor any actual loss to the
stakeholders. To permit a criminal prosecution to persist for over a
decade for a triviality lacking any “motive to mislead” would be a gross
departure from the principles of equity and judicial conscience.
6.6. Finally, this Court holds that the cumulative effect of the
procedural illegality, the inherent improbability of the charges, and
the excessive delay of twelve years renders the continuation of this
case a manifest abuse of the process of the Court. In accordance with
the Bhajan Lal (supra) guidelines, this is a fit case for the exercise of
this Court’s inherent powers to prevent the judicial machinery from
being utilized as an instrument of professional harassment
7. CONSEQUENTIAL ORDERS AND DIRECTIONS
7.1. Having reached the aforementioned conclusions, this Court is of
the firm opinion that any further continuation of the criminal
proceedings against the Petitioners would be an exercise in futility and
a subversion of the ends of justice. Accordingly, the following orders
and directions are issued for the final disposal of these revisional
applications:
7.2. The common summoning order dated 10th September 2013,
passed by the Learned Chief Judicial Magistrate, Alipore, South 24
Parganas, in Complaint Case No. C/7025/2013, is hereby quashed
and set aside in its entirety insofar as it pertains to the Petitioners,
namely Mr. Atul Pukhraj Falgunia, the Petitioner in CRR 4387 of
29
CRR 4387 OF 2022
& CRR 4388 OF 20222022, and Mr. Ramkrishna Moogimane, the Petitioner in CRR 4388 of
2022.
7.3. The Petitioners are hereby discharged from the said criminal
case.
7.4. All consequential proceedings, including any warrants,
proclamations, or interim orders issued against them in connection
with this complaint, are hereby declared null and void and stand
permanently stayed.
7.5. The Petitioners are hereby discharged from these criminal
proceedings. Any bail bonds, surety bonds, or personal bonds
executed by the Petitioners shall stand cancelled and discharged with
immediate effect.
7.6. Under the powers vested in this Court by Section 633 of the
Companies Act, 1956, the Petitioners are formally exonerated of any
liability arising from the digital filing for the Financial Year 2010-11,
recognizing the discrepancy as an honest technical error occurring
during a maiden regulatory transition.
8. Directions to the Learned Trial Court
8.1. The Learned Chief Judicial Magistrate, Alipore, is directed to
make the necessary entries in the Case Diary and the relevant Court
Records to reflect the quashing of the proceedings against the present
Petitioners.
8.2. The Learned Trial Court shall proceed with the remainder of the
case, if any, against any other accused persons who have not moved
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CRR 4387 OF 2022
& CRR 4388 OF 2022
this Court, strictly in accordance with the law and without being
influenced by any observations made in this judgment regarding the
merits of the case against such other persons.
9. General Directions
9.1. The Registrar of Companies (Opposite Party No. 2) is directed to
ensure that no further coercive action is initiated against these
Petitioners in respect of the specific decimal-point discrepancy in the
Earnings Per Share (EPS) filing for the Financial Year 2010-11, which
has been the subject matter of this adjudication.
9.2. There shall be no order as to costs.
9.3. With the aforementioned directions, both CRR 4387 of 2022 and
CRR 4388 of 2022 stand allowed and disposed of.
9.4. CRAN 7 of 2025 in both the appeals are also disposed of
accordingly.
9.5. Let the records of the Learned Trial Court, if summoned, be
returned forthwith along with a copy of this judgment.
9.6. All parties are to act on a server copy of this order downloaded
from the official website of the High Court.
9.7. Case diary, if any, be returned forthwith.
9.8. Urgent certified photostat copy of this judgment, if applied for,
be given to the parties as per law, as expeditiously as possible.
(Uday Kumar, J.)