JUDGMENT Karpagavinayagam, J.
1. The Registrar of Companies, Tamil Nadu, having his office at Chennai, filed a private complaint against Viswapriya Financial Services & Securities Ltd. and its six named directors for the offences under Sections 58A(2)(b) and 58A(7)(b) of the Companies Act, 1956 ('the Act'). This, was taken on file in E.O.C.C. No. 262 of 1997 by the Additional Chief Metropolitan Magistrate (E.O. II), Egmore, Chennai. On taking cognizance of the above offences, the trial Court issued summons to the company and its directors. On receipt of the same, the petitioners have filed the present application before this Court under Section 482 of the Code of Criminal Procedure seeking for quashing of the proceedings arising out of the above complaint.
2. The short facts which led to the filing of this petition are given under :
"(a) Viswapriya Financial Services & Securities Ltd. (A1) having the managing director and chairman (A2) and the directors (A3 to A6) which was originally incorporated as a private limited company was converted as a public limited company. On 3-9-1997, the company (A1) issued an advertisement in The Hindu invitingdcposits from the public with a maturity period of five to ten years. The said advertisement did not furnish the statement showing the financial position of the company and the details about the management, profits carried for the preceding three years, dividends for the preceding three years and a statement that the company has no overdue deposits and has complied with the directions of Reserve Bank of India, etc., as required by Rule 3 of the Non-Banking Financial Companies and Miscellaneous Non-Banking Financial Companies (Advertisement) Rules, 1977. On noticing this contravention, the complainant sent a show-cause notice on 30-9-1997, to the company and its directors as to why the prosecution should not belaunched against them for the said contravention as provided under Section 58A of the Act.
(b) The company, in turn, sent a reply dated 13-10-1997, stating that the provisions of Section 58A except 2(b) would not apply to the company being a non-banking financial company as per Sub-section (7)(b) of the said section read with Notification No. S.0. 523(E), dated 18-9-1975 see  45 Comp. Cas. (St.) 273, and they being a loan company, have applied for registration as a non-banking financial company and the non-banking financial company was obliged to furnish the particulars to the Reserve Bank of India and not to the Registrar of Companies and as per Sub-clause 4 of the Companies (Acceptance of Deposits) Rules, 1975, the non-banking non-financial company alone shall deliver a copy of the advertisement to the Registrar of Companies and, therefore, there is no violation of Section 58A(2)(b) read with Rule 3 of the Non-Banking Financial Companies and Miscellaneous Non-Banking Companies (Advertisement) Rules, 1977. Having not been convinced with the said reply, the Registrar of Companies, the complainant filed a private complaint on 26-11-1997, in the trial court. The said proceedings have been challenged in this application for quashing on various grounds."
3. Mr. Prakash Goklaney, the learned counsel for the petitioners would raise the following points :
(1) The prosecution under Section 58A(6)(6) is not applicable to the first petitioner-company. As per Section 58A(7)(b) except the provisions relating to advertisement contained in Clause (b) of Sub-section (2), nothing in the section shall apply to such clauses of financial companies as the Central Government may, after consultation with the RBI, specify in this behalf. Clarifying the said provisions. Notification No. S.O. 523(E) issued by the Government would envisage that the Central Government, after consultation with the RBI, specifies all classes of financial companies as the companies to which no provisions of Section 58A [except the provisions relating to advertisement contained in Clause (b) of Sub-section (2) of that section] shall for the purpose of that clause, apply. These provisions read together would show that the prosecution under Section 58A(6)(b) would not apply to the first petitioner-company, as it is a non-banking financial company. Therefore, the prosecution is without jurisdiction.
(2) The scheme of 'Poorna Viswaas' does not contemplate any deposit within the meaning of the Non-Banking Financial Companies (Acceptance of Deposits) Rules or Section 58A. This scheme was one of asset securitisation distinguished from any acceptance of any deposit as contemplated under Section 58A.
(3) Even if such an advertisement is construed as an invitation for deposits from the public, the Registrar of Companies is not the competent authority to institute the complaint since Notification No. G.S.R. 473(E), dated 26-9-1978, would provide that under Section 621 of the Companies Act, the Chief Officer, Deputy Chief Officer and Assistant Chief Officers attached to the Department of Non-Banking Companies, Reserve Bank of India, can file the complaint in respect of an offence punishable under subsection (6) of Section 58A. Therefore, the Registrar of Companies had no power vested in him to launch a prosecution.
4. In reply to the above contentions, Mr. C.R. Sundaram, the senior Central Government standing counsel, appearing for the respondent would make the following submissions :
"The company has made a categorical admission in the reply to the show-cause notice as well as in the present petition that Sub-section 2(b) of Section 58A would be applicable to the company regarding advertisement. The advertisement dated September 3, 1997, inviting deposits from the public is in violation of Rule 3 of the Non-Banking Financial Companies and Miscellaneous Non-Banking Companies (Advertisement) Rules, 1977. The mere assertion that the company is a loan company and it had just applied for registration as a non-banking financial company under the Reserve Bank of India Amendment Act, cannot be a ground to accept at this stage that the accused is a non-banking financial company which is exempted under the provisions of Section 58A. If it is the case of the defence that it is a non-banking financial company which will not come under the purview of Section 58A, this has to be proved before the trial court by placing the materials, especially when the complainant would state that Section 58A would get attracted in violation of the Rule 3 of the NBFC and Miscellaneous NBFC (Advertisement) Rules, 1977. Furthermore, it cannot be contended that the advertisement cannot be construed to be inviting deposits, since a reading of the advertisement filed along with the complaint would make it clear that public were invited to make a deposit informing them that the maturity period for the said deposit is five to ten years. Furthermore, under Section 621 of the Companies Act, the complaint can be filed by the Registrar of Companies and the officers mentioned in the notification are only supplementary in addition to the Registrar of Companies authorised to file a complaint and as such, the complaint filed by the Registrar of Companies is perfectly valid."
5. I have heard and carefully considered the submissions of the counsels for the parties and gone through the records.
6. According to the prosecution, the petitioners issued an advertisement in The Hindu inviting deposits from the public with a maturity period of five to ten years in contravention of Rule 3 of the Non-Banking Financial Companies and Miscellaneous Non-Banking Financial Companies (Advertisement) Rules, 1977, by not furnishing the statement showing the details such as financial position of the company, etc., and as such, the petitioners are liable to be punished for the offence under Section 58A(2)(4) and Section 58A(7)(b).
7. On the other hand, the case of the petitioners is that these sections would not apply to the petitioners as they are the non-banking financial company and as such, the advertisement has to be delivered to the Regional Officer of the Department of Non-Banking Companies of the RBI alone and not to the Registrar of Companies and, therefore, they arc not answerable to the Registrar of Companies, as Section 58A would not be applicable to the first petitioner-company.
The counsel for the petitioners in elaboration of this point would refer to Section 58A(7)(6) and the Notification No. S.O. 523(E), dated 18-9-1975, and contend that Section 58A(6)(a)/(b) would not be applicable to the first petitioner-company mainly on the reason that the company has been exempted as it is a non-banking financial company which is controlled by the RBI as governed by the Non-Banking Financial Companies (Reserve Bank) Directions, 1997. It is further contended that as per Rule 16(2), a copy of the advertisement is to be delivered to the RBI only. Furthermore, it is submitted that advertisement does not refer about deposit. It is only a scheme relating to the asset securitisation wherein no maturity amount was guaranteed to the depositor. In short, it is the contention of counsel for the petitioners that the company is a loan company and non-banking financial company which is controlled by the RBI alone.
8. This contention, in my view, does not merit consideration, at this stage, in view of the specific assertion made by the complainant in the private complaint that Section 58A would apply to the first petitioner-company.
9. Furthermore, the reading of the advertisement which has been filed along with the petition would make it clear that the public have been called to make a deposit of even a small amount from Rs. 5,000. The relevant portions of the advertisement are as follows :
10. An investment scheme for maturities of five to ten years, in various branches.
11. Even amounts as small as Rs. 5,000 can be invested in Viswapriya's Poorna Viswaas.
12. Total safety--Awarded the 'AAA' (SO) credit rating indicating highest safety.
13. Easy liquidity through repurchase options.
14. When such is the wording in the advertisement, it cannot be contended by the counsel for the petitioners as mentioned in his written arguments that the scheme is one of asset securitisation wherein no maturity amount has been guaranteed to the depositor and the depositor may even lose the entire amount as in the schemes of the mutual fund. This argument, in my view, is not in consonance with the assurance contained in the advertisement.
15. As pointed out by the counsel for the respondent, the question as to whether the first petitioner-company is exempted under Section 58A and the copy of the advertisement need not be delivered to the Registrar of Companies and the same shall be delivered to the RBI alone as it is a loan company, has to be decided only by the trial Court during the trial stage on the basis of the materials placed by the respective parties.
16. In regard to the competency of the complainant, it shall be stated that Section 621 of the Companies Act clearly provides that the complaint can be filed cither by the Registrar of Companies, or a shareholder of the company or any person authorised by the Central Government. So, the notification referred to by the counsel for the petitioners authorising some of the officers to launch prosecution would not disentitle the Registrar of Companies to file the complaint as he has been put in the first category among the competent officers to launch the prosecution.
17. Under those circumstances, there is no difficulty in holding that the complaint is maintainable as the same has been filed by the Registrar of Companies who is the competent officer. Therefore, the petition which is devoid of merit is liable to be dismissed and, accordingly, the same is dismissed. Consequently, Crl. M.P. No. 7290 of 1997 is closed.