Vakil Help Desk News: the Patna High Court has quashed a prosecution of a company auditor, holding that once the underlying Companies Act contravention is compounded, the foundation of the prosecution ceases to survive.
Vakil Help Desk News, Litigation & Courts. The Patna High Court has held that once the contravention underlying a Companies Act prosecution is compounded, the very foundation of the criminal case ceases to survive. Justice Ansul ruled so in Subodh Kumar Goel v. State of Bihar (Criminal Miscellaneous No. 61998 of 2017), quashing the cognizance order against a company's statutory auditor.
The Registrar of Companies had prosecuted the auditor over alleged lapses in the audit report. The auditor later obtained compounding of the offence from the Regional Director under Section 441 of the Companies Act, 2013, on payment of a sum, and the Registrar had been aware of the pending prosecution.
Relying on settled Supreme Court authority, the Court held that compounding the underlying contravention removed the basis for the prosecution, and that continuing the case would serve no purpose. The cognizance order was quashed.
What this means for you
If a Companies Act contravention has been compounded, a criminal prosecution built on the same contravention can be quashed.