Patna High Court Rules on Compounding of Companies Act Offences

The Patna High Court has ruled that once an offence under the Companies Act is compounded by the competent authority, criminal prosecution based on the same violation cannot proceed. This decision came while quashing criminal proceedings against a statutory auditor, Subodh Kumar Goel, who was accused of contravening the Companies Act. The court noted that the compounding order's lack of communication to the criminal court does not affect the extinguishment of the prosecution's foundation. The case involved a complaint from the Registrar of Companies, Bihar and Jharkhand, against Goel for alleged violations while auditing M/s Geeta Steels Tubes Private Limited. The court emphasized that the compounding process effectively nullifies the basis for any ongoing criminal charges. This ruling may have significant implications for similar cases under the Companies Act, potentially reducing the number of prosecutions following compounding.