Madras High Court
M.K.Ananthanarayanan vs Union Of India on 29 July, 2026
CRL OP No. 15633 of 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 24-07-2026
PRONOUNCED ON : 29-07-2026
CORAM
THE HON’BLE MR.JUSTICE SUNDER MOHAN
CRL OP No. 15633 of 2023
AND
CRL MP Nos. 9730 & 9731 of 2023
M.K.Ananthanarayanan
Partner At Deloitte Haskins And Sells,
Chartered Accountants,
Flat No.10, Lakshmi, No.8/16,
Justice Sundaram Road, Mylapore,
Chennai 600004
..Petitioner/A8
Vs
Union Of India
Rep By Shri Mvk Reddy, Assistant Director,
Serious Fraud Investigation Office,
Ministry Of Corporate Affairs,
Government Of India,
Regional Office, Corporate Bhawan, No.29,
Rajaji Salai, Chennai 600001
..Respondent(s)
Prayer: Criminal Original Petition filed under Section 482 of the Code of
Criminal Procedure, to call for the records in Spl.C.C.No.2/2018 on the
file of the XV Additional City Civil and Sessions Court, Singaravelar
Maaligai, Chennai and quash the same as against the petitioner herein.
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For Petitioner(s): Mr. J. Sivanandaraaj, Sr. Counsel
For M/s. Aditya Vikram Bhatt
M/s.S.Sakthivel
For Respondent(s): Mr.AR.L.Sundaresan, ASG
Assisted by Mr.K.Subbu Ranga Bharathi,
Special Public Prosecutor
Order
The captioned quash petition has been filed by A8 in
Spl.C.C.No.2/2018 on the file of the XV Additional City Civil and
Sessions Court, Singaravelar Maaligai, Chennai. The complaint has been
filed by the respondent against the petitioner and other accused for the
offences under Sections 159, 166, 209(5), 210, 211(7), 211(8), 217(3),
220, 227 r/w Sections 233, 240(3) & 628 of the Companies Act, 1956
[hereinafter referred to as ‘the Act’]. The petitioner/A8 is sought to be
prosecuted for the offences under Section 628 r/w 211 and Section 227
r/w 233 of the Act.
2. The gist of the prosecution case is that that petitioner was the
statutory Auditor for the Company by the name ‘Subhiksha Trading
Services Limited [STSL]’; that the said company along with its Managing
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Director [A1] was involved in financial irregularities, mismanagement
and syphoning of funds; that the Company was engaged in the business of
organized retailing by establishing chain stores with the brand name
‘Subhiksha’ and the said company was promoted by A1; that investigation
revealed that the name of the company was changed to ‘Subhiksha
Trading Services Limited [STSL]’, arraigned as A11 in the complaint,
[hereinafter referred to as ‘the Company’]; that A1 had obtained loan
from various financial institutions; that the affairs of the Company was
conducted in a fraudulent manner with the help of 42 entities to defraud
the creditors; that for that purpose, A1 did not maintain proper books of
accounts, had made false statements in the Balance Sheet and therefore,
the Balance Sheets for the Assessment years 2004-05, 2005-06 and 2006-
07 of the Company did not reflect the true and fair view of the state of
affairs of the Company; that no books of accounts in respect of fixed
assets on which charges were created by the Company were maintained;
that the petitioner as a statutory Auditor had failed to perform his
statutory duty of verification of sales, purchase and related party
transactions and was a party to the deliberate omission of material facts
and falsification of books of accounts made by the Company; and thus,
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CRL OP No. 15633 of 2023
committed the offences under Section 227 r/w 233 and Section 628 r/w
211 of the Act.
3 (i). Mr.Sivanandaraaj, learned senior counsel appearing for the
petitioner would submit inter alia that the complaint was barred by
limitation; that the learned Judge had not applied his mind while taking
cognizance; that the learned Judge ought not to have taken cognizance as
he had no jurisdiction to try the offence, which could be tried only by a
Magistrate; that the complaint against the co-accused against whom
serious allegations have been made has been quashed by this Court in
Crl.OP.No.6372 of 2019 etc. batch by the order dated 10.10.2023 and that
the complaint against the petitioner also has to be quashed on parity; that
additionally, the complaint against the petitioner is also liable to be
quashed as none of the offences are made out; that the offences under
Sections 211 and 628 of the Act, cannot be maintained against a statutory
Auditor, as he is not an officer specified under Section 209(6) of the Act;
that the petitioner had only rendered an opinion for which he cannot be
prosecuted; that in any case, in the complaint itself, it is stated that the
petitioner, in his report, had stated that the Company had not maintained
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CRL OP No. 15633 of 2023
books of accounts and therefore, his report, which is based on the
documents furnished to him cannot be faulted; and that any lapse in his
duty, even assuming it to be so, cannot be termed as “wilful” making him
liable for the offence under Section 233 of the Act.
(ii) The learned senior counsel pointed out to the portions in the
complaint which, according to him, do not suggest that any alleged lapse
on the part of the petitioner was wilful.
4 (i). Mr.AR.L. Sundaresan, learned Additional Solicitor General
appearing for the respondent would submit that as against the order of
this Court in the above-referred quash petitions, the respondent has filed a
Special Leave Petition before the Hon’ble Supreme Court and notice has
been issued; that the very fact that the notice has been issued by the
Hon’ble Supreme Court would show that the respondent has made out a
prima facie case in the challenge to the orders of this Court; that the
complaint cannot be said to be barred by limitation, as the delay was due
to the interim orders passed in various writ petitions challenging the
action taken by the respondent; that as soon as all the interim orders were
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vacated, the impugned complaint was lodged; that even assuming that the
complaint was filed in the Court having no jurisdiction, it is curable and
they can seek transfer of the complaint; that the general public have been
duped by A1 and the other Directors; that in view of serious fraudulent
activities committed by the Company, its Managing Director and the
Auditors including the petitioner, the question as to whether the non-
compliance with petitioner’s statutory duty is wilful or not would be a
matter for the trial and cannot be adjudicated in this quash petition.
(ii) The learned Additional Solicitor General also pointed out to the
averments in the complaint in support of his submission.
5. This Court has carefully considered the rival submissions and
perused the materials available on record.
6. It is the specific case of the respondent that the books of account
were not properly maintained and the Balance Sheet contained false
statements for the Assessment Years, 2004-05, 2005-06 and 2006-07.
The complaint against the principal accused and Directors of the
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Company, as stated above has been quashed by this Court by the order
dated 10.10.2023, in the quash petitions referred above, on various
grounds including that the complaint was barred by limitation and the
learned Judge had not applied his mind while taking cognizance of the
complaint.
7. As regards the grounds raised by the petitioner, as stated above,
a few of them are covered by the decision of this Court in
Crl.OP.Nos.6372 of 2019 etc. batch. Therefore, this Court does not deem
it necessary to advert to those grounds, as they would be subject to the
decision of the Hon’ble Supreme Court in the challenge made to the order
of this Court. Hence, this Court is inclined to only consider the ground
which is specific to the petitioner, viz., that the allegations even if
accepted to be true would not attract any of the offences alleged against
the petitioner.
8. The role and the overt act attributed to the petitioner is found in
paragraphs 41 to 46 of the complaint, which are extracted hereunder for
better understanding of the allegations against the petitioner.
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“41. That during the course of investigation into the affairs of
‘STSL’, the investigation pointed out several instances of falsification
of books of accounts, omission of materials facts by the management
of ‘STSL’ and failure of statutory auditors for non-compliance of
prescribed & mandatory standard procedures in auditing.
42. That it is found that sales for the financial year 2006-07
were deliberately inflated by the promoters of the company in a pre-
planned & systematic manner using their controlled entities and bank
accounts for booking fictitious sales. The controlled entities were used
as ‘Cash Collection Agents’ for circular transactions which were
booked as cash sales. The promoters have utilised part of bank
borrowings from ‘HSBC’ bank to inflate sales by Rs.5 Crore during
2006-07. The statutory auditors failed in their duty to verify the
basic records, particulars as per established audit procedure. This
fact has been corroborated by the statutory auditor in his statement
under section 240 of the Companies Act, 1956 made during the
course of the investigation.
43. That further it is found that purchases of the financial year
2006-07 were deliberately inflated by the Management of ‘STSL’. The
‘STSL’ availed post-harvest loans (Agriculture produce marketing loan)
from banks intended for the use of genuine farmers by falsely
declaring the employees of ‘STSL’ as farmers and diverted the loan
amount to the controlled entities. The ‘STSL’ showed these farmers as
suppliers of agriculture produce to ‘STSL’ for direct procurement of
farm produce-Chillies and Tamarind. By this fraudulent conduct of
business/activity, ‘STSL’ inflated purchase of raw material during the
month of March 2007 and thereby for the financial year 2006-07. The
statutory auditors also failed in their duty to verify the basic records,
particulars as per established audit procedure.
44. That it is also corroborated that the ‘STSL’ availed loan
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from Bank of Baroda by deliberately concealing materials facts. The
company apparently maintained different sets of books of accounts and
documents to fraudulently obtain ‘end use certificate’ from Chartered
Accountants for the purpose of obtaining working capital (Cash Credit)
and Terms Loan. The statutory auditors failed in their duty to verify
the basic records, particulars as per established audit procedure.
45. That it is also found that the ‘STSL’ Management
deliberately did not disclose the ‘related party transactions’ fully in the
financial statements for the years 2004-05, 2005-06 & 2006-07. The
company had made high value transactions with entities controlled by
Ms.Srividya Subramanian, wife of Shri R.Subramanian the accused
No.1. The Statutory Auditor failed to make enquiries from the
management of ‘STSL’ about these high value transactions with
these entries and failed to make observations in his audit report
regarding non-compliance of prescribed Accounting Standard-18.
46. That the acts of deliberate omissions of such material facts
and falsification of books of accounts for the purpose to access the
money liable to be prosecuted under section 628 r/w Section 211 of
the Companies Act, 1956 (as the books of accounts did not reflect
true and fair affairs of the company). In addition, the statutory
auditor is liable to be prosecuted and punished under Section 233
r/w 227 of the Companies Act, 1956 (as the statutory auditors
facilitated the management by failing to impart their statutory duty of
verification of sales, purchases and related party transactions).
Therefore, Accused No.1 Mr.R.Subramanina, Managing Director,
Accused No.2 Ms.Bala Deshpande, Director, ‘STSL’, Accused No.3
M.Rathinakumar, the Company Secretary, Accused No.8
M.K.Anantha Narayanan, the statutory auditor & partner of
M/s.Deloitte Haskins and Sells are jointly and severally liable to be
punished under Section 628 r/w section 211 of Companies Act, 1956
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for not presenting the true and fair view of the state of affairs of the
company, for furnishing / making false financial statements of the
year 2004-05, 2005-06 & 2006-07 and failing to make observations
in audit report of ‘STSL’ regarding non-compliance of prescribed
accounting standard-18. That further, Accused No.8, M.K.Anantha
Narayanan, Partner of M/s.Deloitte Haskins and Sells, Accused No.9,
K.Sridhar, Chartered Accountant and Accused No.10
Sri.M.Jayaraman, Chartered Accountant are jointly and severally liable
to be punished under Section 233 r/w Section 227 of Companies Act,
1956 for the reasons as afore stated herein.”
9. The highlighted portions in the above extract would show that
the gravamen of the charge against the petitioner is that he had failed in
his duty to verify the basic records and particulars, as per the established
audit procedures, had failed to make enquiries about certain high-value
transactions and failed to make observations in the audit report with
regard to non-compliance with prescribed accounting standards.
10. In fact, to charge the petitioner for the offence under Section
628 r/w 211 of the Act, in paragraph 46, the respondent had stated that
the Company and its Directors are liable, as the books of accounts do not
reflect the true and fair view of the state of affairs of the Company and
the petitioner is jointly and severally liable along with the other accused
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for not presenting the true and fair view of the state of affairs of the
Company.
11. Firstly, this Court is unable to comprehend as to what the
respondent means by stating that the petitioner is liable for the offences
under Section 628 r/w 211 of the Act. They are both distinct offences
and one offence is not dependent on the other. In fact, the maximum
punishment prescribed for the offence under Section 211 of the Act is six
months imprisonment, whereas the maximum sentence for the offence
under Section 628 of the Act is two years imprisonment.
12. (i) Be that as it may. We have to examine whether any of the
offences alleged against the petitioner are made out in the complaint.
Section 211 of the Act reads as follows:
“211. FORM AND CONTENTS OF BALANCE SHEET AND
PROFIT AND LOSS ACCOUNT
(1) Every balance sheet of a company shall give a true and fair
view of the state of affairs of the company as at the end of the financial
year and shall, subject to the provisions of this section, be in the form
set out in Part I of Schedule VI, or as near thereto as circumstances
admit or in such other form as may be approved by the Central
Government either generally or in any particular case ; and in__________
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CRL OP No. 15633 of 2023preparing the balance sheet due regard shall be had, as far as may be,
to the general instructions for preparation of balance sheet under the
heading “Notes” at the end of that Part :
Provided that nothing contained in this sub-section shall apply
to any insurance or a banking company or any company engaged in the
generation or supply of electricity, or to any other class of company for
which a form of balance sheet has been specified in or under the Act
governing such class of company.
(2) Every profit and loss account of a company shall give a true
and fair view of the profit or loss of the company for the financial year
and shall, subject as aforesaid, comply with the requirements of Part II
of Schedule VI, so far as they are applicable thereto :
Provided that nothing contained in this sub-section shall apply
to any insurance or banking company or any company engaged in the
generation or supply of electricity, or to any other class of company for
which a form of profit and loss account has been specified in or under
the Act governing such class of company.
(3) The Central Government may, by notification in the Official
Gazette, exempt any class of companies from compliance with any of
the requirements in Schedule VI if, in its opinion, it is necessary to
grant the exemption in the public interest. Any such exemption may be
granted either unconditionally or subject to such conditions as may be
specified in the notification.
(3A) Every profit and loss account and balance sheet of the
company shall comply with the accounting standards.
(3B) Where the profit and loss account and the balance sheet of
the company do not comply with the accounting standards, such
companies shall disclose in its profit and loss account and balance
sheet, the following, namely:-
(a) the deviation from the accounting standards ;
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(b) the reasons for such deviation ; and
(c) the financial effect, if any, arising due to such deviation.
(3C) For the purposes of this section, the expression
“accounting standards” means the standards of accounting
recommended by the Institute of Chartered Accountants of India
constituted under the Chartered Accountants Act, 1949 (38 of 1949), as
may be prescribed by the Central Government in consultation with the
National Advisory Committee on Accounting Standards established
under sub-section (1) of section 210A :
Provided that the standards of accounting specified by the
Institute of Chartered Accountants of India shall be deemed to be the
Accounting Standards until the accounting standards are prescribed by
the Central Government under this sub-section.
(4) The Central Government may, on the application, or with
the consent of the Board of directors of the company, by order, modify
in relation to that company any of the requirements of this Act as to the
matters to be stated in the company’s balance sheet or profit and loss
account for the purpose of adapting them to the circumstances of the
company.
(5) The balance sheet and the profit and loss account of a
company shall not be treated as not disclosing a true and fair view of
the state of affairs of the company, merely by reason of the fact that
they do not disclose –
(i) in the case of an insurance company, any matters which are
not required to be disclosed by the Insurance Act, 1938 (4 of 1938) ;
(ii) in the case of a banking company, any matters which are
not required to be disclosed by the Banking Companies Act, 1949 (10
of 1949) ;
(iii) in the case of a company engaged in the generation or
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CRL OP No. 15633 of 2023by both the Indian Electricity Act, 1910 (9 of 1910), and the Electricity
(Supply) Act, 1948 (54 of 1948) ;
(iv) in the case of a company governed by any other special Act
for the time being in force, any matters which are not required to be
disclosed by that special Act ; or
(v) in the case of any company, any matters which are not
required to be disclosed by virtue of the provisions contained in
Schedule VI or by virtue of a notification issued under sub-section (3)
or an order issued under subsection (4).
(6) For the purposes of this section, except where the context
otherwise requires, any reference to a balance sheet or profit and loss
account shall include any notes thereon or documents annexed thereto,
giving information required by this Act, and allowed by this Act to be
given in the form of such notes or documents.
(7) If any such person as is referred to in sub-section (6) of
section 209 fails to take all reasonable steps to secure compliance by
the company, as respects any accounts laid before the company in
general meeting, with the provisions of this section and with the other
requirements of this Act as to the matters to be stated in the accounts,
he shall, in respect of each offence, be punishable with imprisonment
for a term which may extend to six months, or with fine which may
extend to 2 [ten] thousand rupees, or with both :
Provided that in any proceedings against a person in respect of
an offence under this section, it shall be a defence to prove that a
competent and reliable person was charged with the duty of seeing that
the provisions of this section and the other requirements aforesaid were
complied with and was in a position to discharge that duty :
Provided further that no person shall be sentenced to
imprisonment for any such offence unless it was committed wilfully.
(8) If any person, not being a person referred to in sub-section
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CRL OP No. 15633 of 2023(6) of section 209, having been charged by the managing director or
manager, or Board of directors, as the case may be, with the duty of
seeing that the provisions of this section and the other requirements
aforesaid are complied with, makes default in doing so, he shall, in
respect of each offence, be punishable with imprisonment for a term
which may extend of six months or with fine which ma extend to ten
thousand rupees, or with both:
Provided that no person shall be sentenced to imprisonment for
any such offence unless it was committed willfully.”
(ii) This provision deals with the Form and Contents of Balance
Sheet and Profit and Loss Account. It specifies inter alia that a Balance
Sheet and the Profit and Loss Account shall give a true and fair view of
the state of affairs of the company and every Profit and Loss Account and
Balance Sheet shall comply with the prescribed accounting standards. It
also makes any person who fails to take reasonable steps to secure
compliance by the Company, as regards any accounts laid before the
Company in general meeting, with the provisions of this Section and with
the other requirements of this Act, liable to punishment. The persons
who can be prosecuted for this offence under Section 211 of the Act are
persons who are referred to in Section 209(6) of the Act as per Section
211(7) of the Act.
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13. Section 209(6) of the Act reads as follows:
“209 (6) The persons referred to in sub-section (5) are the
following, namely : –
(a) where the company has a managing director or manager,
such managing director or manager and all officers and other
employees of company ; and
(b) &(c) …omitted
(d) where the company has neither a managing director nor
manager, every director of the company.
(e) ….omitted”
14. Therefore, unless the person is either the Managing Director or
Manager, or Director or officer or employee of the company, he cannot
be prosecuted for the offence under Section 211 of the Act. Section
211(8) also makes any person who is not the Managing Director or
Manager, or Director, liable, if he has been charged by the Managing
Director or Manager with the duty of complying with the provisions of
Section 211 of the Act. It is not the case of the respondent that the
petitioner has been charged with such a duty by the Company. Therefore,
the petitioner, who is not the Director or employee or any person
specified under Section 209(6) or 211(8), cannot be prosecuted for the
offence under Section 211 of the Act.
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15. Section 628 of the Act, reads as follows:
“628. PENALTY FOR FALSE STATEMENTS 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 –
(a) which is false in any material particular, knowing it to be
false ; or
(b) which omits any material fact, knowing it to be material ; he
shall, save as otherwise expressly provided in this Act, be punishable
with imprisonment for a term which may extend to two years, and shall
also be liable to fine.”
16. The above provision deals with Penalty for False Statements
in any Balance Sheet, report or other documents required for the purposes
of any of the provisions of the Act. As could be seen from paragraph 46
of the complaint, which is extracted above, it is the case of the respondent
that the petitioner and some of the other accused are liable to be
prosecuted under Section 628 of the Act as the books of accounts did not
reflect a true and fair view of the state of affairs of the company since
false financial statements were made for the accounting years mentioned
above. It is the case of the respondent that the petitioner is also liable for
the offence under Section 628 of the Act for failure to make observations
in Audit Report of the Company regarding non-compliance with
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prescribed accounting standards. It is not the case of the respondent that
the petitioner had made any false statement in his Audit Report. The
alleged failure of the petitioner to refer to the non-compliance by the
Company of the prescribed accounting standards would not amount to an
omission of any material fact within the meaning of Section 628(b) of the
Act, as there is an express provision in Section 233 of the Act for the
prosecution of an Auditor for such non-compliance or omission to state
certain facts, provided it is ‘wilful’. In any case, it is not the case of the
respondent in the complaint that the petitioner had omitted any material
fact knowing it to be material. Therefore, any alleged failure or
dereliction of duty of the statutory Auditor, would not amount to an
offence under Section 628 of the Act and therefore, prosecution for the
said offence cannot be sustained against the petitioner.
17. The next offence alleged against the petitioner is Section 233 of
the Act, which reads as follows:
“233. PENALTY FOR NON-COMPLIANCE BY AUDITOR
WITH SECTIONS 227AND 229.
If any auditor’s report is made, or any document of the
company is signed or authenticated, otherwise than in conformity with
the requirements of sections 227 and 229, the auditor concerned, and__________
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CRL OP No. 15633 of 2023the person, if any, other than the auditor who signs the report or signs
or authenticates the document, shall, if the default is wilful, be
punishable with fine which may extend to ten thousand rupees .”
18. The above provision deals with Penalty for Non-Compliance
by Auditor with Sections 227 and 229 of the Act. It is not the case that
the petitioner had not complied with Section 229 of the Act. It is the
specific case of the respondent that he had not complied with the
provisions of Section 227 of the Act and more specifically sub-sections
(2) and (3), which read as follows:
“227(2) The auditor shall make a report to the members of the
company on the accounts examined by him, and on every balance sheet
and profit and loss account and on every other document declared by
this Act to be part of or annexed to the balance sheet or profit and loss
account, which are laid before the company in general meeting during
his tenure of office, and the report shall state whether, in his opinion
and to the best of his information and according to the explanations
given to him, the said accounts give the information required by this
Act in the manner so required and give a true and fair view –
(i) in the case of the balance sheet, of the state of the company’s
affairs as at the end of its financial year ; and
(ii) in the case of the profit and loss account, of the profit or
loss for its financial year.
227 (3) The auditors’ report shall also state –
(a) whether he has obtained all the information and
explanations which to the best of his knowledge and belief were
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necessary for the purposes of his audit ;
(b) whether, in his opinion, proper books of account as required
by law have been kept by the company so far as appears from his
examination of those books, and proper returns adequate for the
purposes of his audit have been received from branches not visited by
him ;
(bb) whether the report on the accounts of any branch office
audited under section 228 by a person other than the company’s auditor
has been forwarded to him as required by clause (c) of sub-section (3)
of that section and how he has dealt with the same in preparing the
auditor’s report ;
(c) whether the company’s balance sheet and profit and loss
account dealt with by the report are in agreement with the books of
account and returns.
(d) whether, in his opinion, the profit and loss account and
balance sheet comply with the accounting standards referred to in sub-
section (3C) of section 211.
(e) in thick type or in italics the observations or comments of
the auditors which have any adverse effect on the functioning of the
company;
(f) whether any director is disqualified from being appointed as
director under clause (g) of sub-section (1) of section 274.”
19. In the impugned complaint at paragraph 28, the respondent has
made the following averments.
“28… The statutory auditor has qualified his report for the
period 2006-07 that the company did not maintain proper records of
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its fixed assets, their quantitative details, situation, etc. The Directors
failed to give information regarding maintenance of books of accounts,
and specifically the company failed to maintain records of fixed
assets.”
20. Similarly, paragraph 33 of the complaint reads as follows:
“33. The statutory auditor i.e., Accused No.8, while
expressing opinion on the financial statements for the period 2004-
05, has qualified that the company has not maintained proper
records showing full particulars of fixed assets. It is further
qualified that inventory has been physically verified during the year
by the management at the shops and warehouse at reasonable
intervals. However, the physical verification carried out was not
adequately documented. The statutory auditor while expressing
opinion on the financial statements for the period 2006-07 qualified
that the company has not maintained proper records to show
particulars, including quantitative details and situation of fixed
assets acquired prior to 31st March 2006. …”
21. The above averments in the complaint would make it clear that
the statutory Auditor has stated in his opinion that the Company did not
maintain records showing full particulars of the fixed assets, including
quantitative details and situation of fixed assets acquired prior to
31.03.2006. In fact, the statement of the petitioner before the Serious
Fraud Investigation Office [SFIO] and his observations in the Audit
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CRL OP No. 15633 of 2023
Report were used against the principal accused by SFIO in their report
and by the respondent in the impugned complaint.
22. Therefore, the allegations against the petitioner that he had
failed to make the necessary enquiries and that he did not state in his
report that the company did not comply with the prescribed accounting
standards, in the facts of this case, at the most, suggest only lack of due
care and caution and dereliction of duty, even if the allegations are
accepted to be true and do not suggest that the lapse or non-compliance or
the default was wilful. It may be pointed out here that it was not even the
case of the respondent in the complaint that the lapse on the part of the
petitioner was wilful. Hence, unless there is an allegation that the lapse
on the part of the petitioner was wilful, it cannot be inferred that the
violation was wilful, especially in the light of the observations/adverse
remarks made by the petitioner about the company’s accounts in his
Audit Report. Therefore, in the facts and circumstances of this case, this
Court is unable to accept the submission of the learned Additional
Solicitor General that the question as to whether default was wilful has to
be adjudicated only during the trial.
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CRL OP No. 15633 of 2023
23. Since none of the penal provisions alleged against the petitioner
can be invoked to prosecute the petitioner, this Court is of the view that
the impugned prosecution is liable to be quashed against the petitioner. It
is needless to say that, the other grounds on which the complaint against
the other accused was quashed by this Court, would enure in favour of the
petitioner, subject to the result of the Special Leave Petition before the
Hon’ble Supreme Court.
24. Hence, this Criminal Original Petition is allowed and the
complaint in Spl.C.C.No.2/2018 on the file of the XV Additional City
Civil and Sessions Court, Singaravelar Maaligai, Chennai, is quashed
insofar as the petitioner herein/A8 is concerned. Consequently, the
connected Criminal Miscellaneous Petitions are closed.
29-07-2026
Index: Yes/No
Speaking/Non-speaking order
Neutral Citation: Yes/No
ars
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CRL OP No. 15633 of 2023
SUNDER MOHAN J.
ars
To
1. The XV Additional City Civil and Sessions Court,
Singaravelar Maaligai, Chennai.
2. Shri MVK Reddy,
Assistant Director,
Serious Fraud Investigation Office,
Ministry Of Corporate Affairs,
Government Of India,
Regional Office, Corporate Bhawan,
No.29, Rajaji Salai, Chennai 600001.
3. The Public Prosecutor,
High Court, Madras.
Pre-delivery order in
CRL OP No. 15633 of 2023
AND
CRL MP Nos.9730 & 9731 of 2023
29-07-2026
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