Failure to file audit: MD jailed by Economic Offences wing court

In one of the rarest instances of a conviction for a violation of the Companies Act, the Economic Offences Wing court in Hyderabad found Ameya Labs and its managing director guilty of failing to submit a cost audit report to the Registrar of Companies (ROC). Despite making 269 crore in sales or product deliveries, the company failed to file a report. A special judge for economic offences in Hyderabad issued the same ruling in two separate cases.

Both cases were brought by the ROC, Hyderabad, for failing to submit cost audit reports to the federal government by the deadline required by Section 233(b) of the Companies Act of 1956 for the 2012–13 and 2013–14 financial years.

According to the prior fiscal report submitted to the ROC, the company’s sales turnover, or the total value of the turnover from the sale or supply of items, as shown by profit and loss on March 31, 2011, was 269 crore. This qualified the business to submit a cost audit report to the federal government.

“Both cases were proved by the prosecution, and these are the fourth and fifth such successful prosecutions by gaining convictions with the incarceration of the defendants,” according to ROC officials. Nonetheless, this is an extremely uncommon instance in which a defendant was sentenced to harsh imprisonment for violating the Corporations Act.

The business was found guilty and ordered to pay a Rs. 3,000 fine. Kosaraju was given a five-month sentence of solitary confinement and ordered to pay a fine of Rs. 2,000. The court ordered that prison authorities would take custody of the accused “if he needs to serve any sentence issued by other courts.”