The Madras High Court has allowed a batch of six writ petitions filed by Cognizant Technology Solutions (CTS), a leading information technology consultancy service provider in the country, and directed the office of the Registrar of Companies to ensure that the petitioner was put on advance notice if any decision was taken to initiate criminal prosecution against it under the Companies Act of 2013.
Justice T. Raja ordered that the office of the Registrar should consider the replies submitted by the petitioner company on January 3 to as many as six show-cause notices issued to it on December 8 and communicate the decisions taken on the issue as expeditiously as possible. He agreed with petitioner’s counsel Srinath Sridevan that such communication was necessary before initiating prosecution.
The judge relied upon a similar decision rendered by another single judge of the High Court in Venkatesan Thyagarajan versus Registrar of Companies on February 27, 2018. In that case, it was held that the Registrar “cannot decide the issue of taking criminal action without a factual finding resulting in a final order to be communicated to the petitioner.
“After all, a show-cause notice should result in an adjudication process, for which, a person, whose rights are liable to be affected has to be informed by a decision supported by reasons, on a consideration of the reply given. Therefore, it is mandatory on the part of the first respondent (Registrar) to see to it that such an order is passed and served on the officer against whom a criminal proceedings is likely to be initiated by giving a private complaint,”
CTS had approached the court fearing possibility of criminal prosecution being launched against it for alleged violation of the provisions of the Companies Act as well as the Companies (Appointment and Disqualification of Directors) Rules of 2014 without any advance notice to it. In identical affidavits filed in support of its six writ petitions, CTS had said, “A decision to prosecute the petitioner would have serious civil consequences on the petitioner. Not only will the petitioner (and its officers) have to face a criminal prosecution with all that it entails, but also the said decision would ipso facto label the petitioner as a defaulter. The petitioner verily believes its stand is correct. It believes it is not liable to prosecution.”
