Delhi high court explains Companies Act

The Delhi high court (HC) ruled on Friday that the registrar of companies cannot initiate prosecution of any individual without prior government sanction.

Justice AK Pathak quashed the proceedings against Dharmendra Kumar Lila, Krishna Kumar and Subhash Chandra Gupta, accused of raising Rs210 lakh through a public issue, but failing to keep promises.

The petitioners alleged the registrar did not seek sanction from the company affairs department before slapping charges on them under the Companies Act. 

HC said, “This fact has not been disputed that prior sanction of a competent authority is required before launching prosecution under the said provision.”