Calcutta High Court slams ROC over ‘minor’ notices: ‘Mantra ease of doing business, not unease’

The court pointed out that the queries raised by the authorities were “minor, trivial, and technical” in nature, which consisted of “typographical errors” or “simple omissions” and were ascertainable upon examination of the accounts of the company.

The alleged violations, the court highlighted, could have been “easily” resolved on a proper scrutiny of the financial statements and records of the company.

“Any reply to a notice of the kind impugned requires deployment of manpower, time and resources. The underlying object is one of public interest and not of harassment. The mantra is one of ease of doing business and not unease of doing business,” the order read.

The high court, in its December 22 order, absolved all the petitioners of all liabilities from all alleged offences complained in the notice of the authorities and the proceedings connected with it.

‘Acted in good faith’

Noting that the directors have at all times acted in “good faith, honestly and reasonably”, the court observed that there was no substantive violation on their part.

“The only fault of the petitioners is that they failed to elaborate on certain entries. No palpable nor malafide intention can be attributed to the petitioners,” the court added.

The court further observed that there was “no question” of any “misrepresentation nor prejudice” which could have been possibly caused to any of the shareholders.

The high court cautioned that the power of ROC should be exercised in a “light, casual or cavalier” manner and emphasised the reply to any notice of such kind requires deployment of manpower, time and resources.

Arguments

Representing the ROC, advocate Shreya Choudhury submitted that the clarification and queries sought from the directors and company were in “good faith” and the petitioners always had the option of approaching the authorities concerned for filing applications for compounding of the offences complained of.

On the other hand, one of the petitioner’s counsel, senior advocate Jayanta Kumar Mitra, argued that the said notice was ex facie barred by limitation and highlighted that all the financial statements and accounts were readily available with the authorities.

He further submitted that there was no case of fraud nor negligence of the directors or any other officer of the company and said that the company and its directors had acted “bona fide and in good faith”.