Subodh Kumar Goel vs State Of Bihar and Anr

IN THE HIGH COURT OF JUDICATURE AT PATNA
CRIMINAL MISCELLANEOUS No.61998 of 2017
CNR No. BRHC010512872017
Arising Out of PS. Case No.-43 Year-2014 Thana- PATNA COMPLAINT CASE District-
Patna
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Subodh Kumar Goel Son of Sri Matadeen Goel, Resident of 5th Floor,
Santosha Complex, P.S. Kotwali, Town and District- Patna.
... ... Petitioner/s
Versus
1. State Of Bihar and Anr
2. The Registrar of Companies Bihar and Jharkhand, having its Office at
Mauryalok Complex, 4th Floor,
... ... Opposite Party/s
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Appearance :
For the Petitioner/s : Mr. Mohit Agarwal, Adv.
Mr. Aman Kumar, Adv.
For the Opposite Party/s : Mr.Sri Bharat Bhushan, APP
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CORAM: HONOURABLE MR. JUSTICE ANSUL
ORAL JUDGMENT
Date : 02-11-2026
Heard learned counsel for the petitioner and learned
counsel appearing for the State.
2 . The present application has been filed for quashing of
the order dated 02.08.2016 passed by the learned Special Judge,
Economic Offences, Patna in Complaint Case No. 43(C) of 2014,
corresponding to Case No. 8496 of 2014, whereby cognizance has
been taken under Section 233 of the Companies Act, 1956 for
alleged contravention of Section 227(3)(d) of the said Act and
summons have been directed to be issued against the petitioner.
3 . The facts which are necessary for disposal of the
present application are limited. M/s. Geeta Steels Tubes Private

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Limited was a company registered under the Companies Act,
1956. The petitioner was its statutory auditor and was functioning
through M/s. Subodh Goel and Company, Chartered Accountants.
The Registrar of Companies, Bihar and Jharkhand instituted
Complaint Case No. 43(C) of 2014 alleging that the petitioner had
failed to comply with the requirement contained in Section 227(3)
(d) of the Companies Act, 1956 relating to compliance of the
accounts with the prescribed accounting standards.
4 . The complaint was filed under Section 233 of the
Companies Act, 1956. The allegations arose out of an inspection of
the books and records of the company. The inspection report raised
allegations concerning depreciation on fixed assets, accounting for
disposal of fixed assets and disclosure of managerial remuneration.
The complaint alleged that the petitioner had not qualified the
audit report in respect of the matters noticed during inspection.
5 . On 02.08.2016, the learned Special Judge, Economic
Offences, Patna, after hearing the learned Special Public
Prosecutor and perusing the complaint and the documents annexed
thereto, recorded that a prima facie case under Section 233 of the
Companies Act, 1956 was made out against the accused persons,
namely, the petitioner and M/s. Subodh Goel and Company, and
took cognizance of the offence.

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6 . The present application was thereafter filed before
this Court. By order dated 24.09.2018, further proceedings in the
complaint case were stayed. Thus, the criminal proceeding has
remained subject to the order of stay of this Court.
7 . During pendency of the present proceeding, the
petitioner approached the Regional Director, Eastern Region,
Ministry of Corporate Affairs, Kolkata, by filing an application
under Section 441 of the Companies Act, 2013 for compounding
of the offence under Section 227 of the Companies Act, 1956. The
application was forwarded by the Registrar of Companies, Bihar
along with his report. The report specifically noticed that
prosecution under Section 227(3)(d) of the Companies Act, 1956
had been filed before the Special Judge, Economic Offences, Patna
and was pending. The Registrar did not object to the application
for compounding.
8 . The Regional Director, by order dated 19.10.2022
passed in Application No. RD/ER/441/24/22/6818, recorded the
aforesaid facts and, upon consideration of the report of the
Registrar of Companies, compounded the offence with regard to
the contravention of Section 227 of the Companies Act, 1956 upon
payment of a compounding fee of Rs. 30,000. The order further
records that the said amount had been deposited by the petitioner

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in the Central Government account. It is thereafter expressly
recorded that the offence with regard to the contravention of
Section 227 of the Companies Act, 1956 had been compounded
against the petitioner and the application stood disposed of.
9 . There is nothing on the record to show that the
aforesaid order dated 19.10.2022 has been set aside, stayed or
otherwise interfered with by any competent authority or Court.
The order of compounding, therefore, remains operative.
10 . The question which now arises is a narrow one.
Once the very contravention of Section 227 of the Companies Act,
1956, which constitutes the foundation of the prosecution under
Section 233 of the said Act, has been compounded by the
competent authority and the compounding fee has been paid,
whether the prosecution founded upon that contravention can still
be permitted to continue.
11 . The answer has to be in the negative.
12 . The Hon’ble Supreme Court in V.L.S. Finance Ltd.
vs. Union of India, reported in (2013) 6 SCC 278 , was dealing
with prosecution under the Companies Act, 1956 which was
pending before the criminal Court when the offence was
compounded by the Company Law Board. The Hon’ble Supreme
Court held that the statutory power of compounding could be

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exercised even after institution of prosecution. While considering
Section 621A(4)(d) of the Companies Act, 1956, the Hon’ble
Supreme Court noticed that where composition is made after
institution of prosecution, it is to be brought to the notice of the
Court and, on such notice, the company or officer in relation to
whom the offence has been compounded is to be discharged. The
relevant discussion is contained in paragraph 15 of the judgment.
13 . The principle laid down in the aforesaid judgment
applies with greater force to the facts of the present case. The
prosecution against the petitioner is not for some independent act
apart from the alleged contravention of Section 227. The
complaint itself is expressly described as a complaint under
Section 233 for contravention of Section 227(3)(d) of the
Companies Act, 1956. The Regional Director has thereafter
expressly compounded the offence relating to the contravention of
Section 227 of the same Act. Thus, the foundation of the
prosecution has ceased to survive.
14 . The provision contained in Section 441(3)(d) of the
Companies Act, 2013 provides that where compounding takes
place after institution of prosecution, the fact of such compounding
is to be brought by the Registrar in writing to the notice of the
Court in which the prosecution is pending and, on such notice

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being given, the company or officer in relation to whom the
offence has been compounded shall be discharged.
15 . In the present case, the record does not establish that
the Registrar communicated the order of compounding to the
learned Special Judge. However, that procedural circumstance
cannot result in continuation of a prosecution in respect of an
offence which has already been compounded by the competent
statutory authority. More so, the criminal proceeding has remained
stayed by this Court since 24.09.2018. The absence of a
subsequent order by the learned Special Judge, in these
circumstances, cannot keep alive a prosecution whose underlying
offence has ceased to be available for adjudication.
16 . The Court is not required to examine at this stage the
correctness or otherwise of the allegations relating to depreciation,
disposal of fixed assets or disclosure of managerial remuneration.
After the order of compounding dated 19.10.2022, those questions
have become academic for the purpose of the present proceeding.
The Court is also not required to examine the correctness of the
order taking cognizance dated 02.08.2016 on its original merits.
17 . It is also necessary to notice that the order of the
Regional Director was passed after the Registrar of Companies
had specifically placed before the Regional Director the fact that

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the prosecution arising out of the alleged contravention of Section
227(3)(d) was pending before the Special Judge, Economic
Offences, Patna. Thus, the compounding was not made in
ignorance of the pending prosecution. The very pending
prosecution was part of the material before the authority which
compounded the offence.
18 . In view of the subsequent statutory compounding of
the offence which forms the very foundation of the prosecution,
continuation of the criminal proceeding against the petitioner
would serve no useful purpose. It would also be contrary to the
statutory consequence attached to compounding.
19 . Accordingly, this application is allowed.
20 . The order dated 02.08.2016 passed by the learned
Special Judge, Economic Offences, Patna in Complaint Case No.
43(C) of 2014, corresponding to Case No. 8496 of 2014, taking
cognizance under Section 233 of the Companies Act, 1956 against
the petitioner, namely, Subodh Kumar Goel, is hereby quashed.
21 . Consequently, the entire criminal proceeding arising
out of the aforesaid complaint, insofar as the petitioner Subodh
Kumar Goel is concerned, stands quashed.
22 . It is made clear that this Court has not examined the
merits of the original allegations concerning the accounting

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standards, as the same have become unnecessary for disposal of
the present application in view of the subsequent compounding.
23 . The application stands disposed of.
(Ansul, J)
krishna/-
AFR/NAFR NAFR
CAV DATE 28.08.2026
Uploading Date
Transmission Date