( 1 ) THIS is a sequel to an earlier an application of similar effect having been made by the petitioner. That earlier petition being C. P. No. 275 of 2003, under Section 633 (2) of the Companies Act, 1956 was dismissed on the ground that it was premature and liberty was reserved thereunder for the petitioner to take appropriate steps upon receipt of a further show cause notice. ( 2 ) THE second show cause notice has prompted the petitioner to seek to be excused for any offence that he may have committed or for being exonerated if there was no offence. Section 633 (2) of the Act empowers the High Court to entertain an application by an officer of a company who has reason to apprehend that any proceeding may be brought against him in respect of negligence, default, breach of duty, misfeasance or breach of truest. The apprehension in this case was based on notices dated December, 31, 2004 that charged the petitioner with the violation of the provisions of Section 628 read with Section 211 on one count, and with the violation of Section 628 on the second count. ( 3 ) IT is undisputed position, as would appear from the affidavit filed on behalf of the Registrar of Companies in the earlier petition, that the petitioner herein came to be a Director of S. B. I. Home Finance Limited (the company) on July 27, 2002. The date is important as on that date depends the fate of the charge on the first count. ( 4 ) THE first notice issued on behalf of the Registrar related to alleged mis-declaration and non compliance with the provisions relating to the form and contents of the balance sheets of the Company for the years ended march 31, 2000 and March 31, 2001. Ordinarily, annual accounts including balance sheets are required to be prepared within six months from the date of closure of a financial year. There is no complaint that such was not the case in respect of the balance sheets and other accounts of the Company for the aforesaid two financial years. If the balance sheets and other accounts and the accompanying Directors' Reports were prepared and presented within time, the petitioner could have had no hand in the same as he assumed office nearly a year after such matters ought to have been completed. If the balance sheets and other accounts and the accompanying Directors' Reports were prepared and presented within time, the petitioner could have had no hand in the same as he assumed office nearly a year after such matters ought to have been completed. ( 5 ) IN all fairness, learned Counsel for the Registrar has not disputed such position. ( 6 ) IT is the second count that needs to be looked into. In the notice issued the Registrar has complained of the following statement appearing in the Directors' Report : "due to non-infusion of capital, the networth of the company continues to remain fully eroded". ( 7 ) THE notice mentions that such statement was 'false/misleading', though it has also been urged before me that such statement amounted to a mis-representation that would come within the mischief of Clause (b) of section 628 of the said Act. ( 8 ) THE explanation given by the Company and adopted by this director/petitioner was that all material facts had been disclosed in the balance sheet and in the composite papers of which the Directors' Report was only a part. Reliance was placed, in the reply to the relevant original notice to show cause, on the schedule appended to the balance sheet and the notes on accounts to indicate that the basis of the charge of falsity was unfounded. ( 9 ) IN claiming that a false or misleading statement had been made by inserting the quoted sentence in the Directors' Report, the Registrar had suggested that the purport of the sentence was that the erosion of the networth was due to the non-infusion of capital whereas the erosion of networth could only be upon losses being incurred by our Company. It is thus that the sentence calls for examination. There appears, in my mind, three statements of fact contained in the sentence. The first statement of fact, notwithstanding the syntax, is that the networth of the Company has been fully eroded. The second statement of fact is that such full erosion continues. The third statement of fact is that due to non-infusion of capital such erosion has not been arrested. What was sought to be suggested by the sentence was that the continuation of the erosion could have been arrested, but due to non-infusion of capital, the same could not be achieved. The third statement of fact is that due to non-infusion of capital such erosion has not been arrested. What was sought to be suggested by the sentence was that the continuation of the erosion could have been arrested, but due to non-infusion of capital, the same could not be achieved. I do not see any misstatement of fact in the sentence. ( 10 ) AGAIN, that sentence appearing in the Directors' Report has to be seen in the context of the material in the report preceding it. As has become the accepted format for such reports, the summary of the financial results of the company for the relevant financial year with a comparison with the corresponding figures of the previous financial year have been set out. There is this mandatory declaration as to dividend following the summary of the results. Such declaration provides that in the absence of profits no dividend could be issued. Thereafter, the operations of the Company have been detailed and in such details the financial position of the Company has been mentioned. ( 11 ) FROM the matters referred to under the heading 'operations' and from the summary of the financial results of the two years, it is evident that the Company has been suffering losses. ( 12 ) IT is in this context that the directors found it prudent to mention that the networth of the Company could have been improved by infusion of funds but in view of the statutory restrictions on the promoter Company, s. B. I. Capital Markets Limited, fresh capital could not be infused. The sentence does not make out that the erosion is due to non-infusion of capital. What it conveys is that the erosion continues because the eroded capital has not been replaced by fresh capital. It is not a sentence appearing in a report where the financial position of the Company is attempted to be concealed. The financial position of the Company is for everyone to see in the column preceding the one containing that sentence. ( 13 ) THERE is, in my view, non mis-declaration that would attract the penalty under Section 628 of the Act. I do not see any false or misleading statement having been made. Notwithstanding the show cause notice not having relied on the second limb of Section 628 inasmuch as the same has been urged, I take that into consideration. ( 13 ) THERE is, in my view, non mis-declaration that would attract the penalty under Section 628 of the Act. I do not see any false or misleading statement having been made. Notwithstanding the show cause notice not having relied on the second limb of Section 628 inasmuch as the same has been urged, I take that into consideration. In the context of the report, there is no material concealment of information by such statement. In any event, the Directors' Report is contained in papers which detailed the financial position of the Company and any one interested could have skipped over the pages to come to the schedule to the balance sheet in order to ascertain the financial status of the Company. ( 14 ) SECTION 633 (2) permits a person to apply to the High Court on his apprehension that a proceeding might be brought against him. The first consideration of the Court is as to whether there was any material to substantiate such apprehension and whether the apprehension was real. Upon undertaking such exercise in the first case, this Court had held that there was no occasion for the petitioner to apprehend that proceedings were being brought against him and the petition was not entertained. In this case, the petition has been founded on the subsequent show cause notice which clearly puts the petitioner on notice that upon his explanation not being found satisfactory, he would be proceeded against in accordance with law. ( 15 ) THE apprehension, therefore, in this case is not unreal. ( 16 ) UPON an application being filed under Section 633 (2) of the Act, the High Court assumes the power and jurisdiction as the Court before which the proceedings threatened to be instituted may have been brought. In such a case, the criminal Court would have the jurisdiction to acquit the accused, to exonerate the accused or to find him guilty and to sentence him. Section 633 (2) does not merely give the discretion to the High Court to pardon a person upon his admission of negligence or breach of trust or misfeasance or default or breach of duty. Upon the High Court coming to the conclusion that the apprehension referred to in the opening words of sub-section (2) was genuine, the High Court, willy-nilly becomes the criminal court in which the complaint against the petitioner may have been brought. Upon the High Court coming to the conclusion that the apprehension referred to in the opening words of sub-section (2) was genuine, the High Court, willy-nilly becomes the criminal court in which the complaint against the petitioner may have been brought. The jurisdiction of the High Court in such a case is not limited to pardon the defaulter upon default being admitted or being found. The High Court in such a case may acquit or exonerate the petitioner upon arriving at a conclusion that there was no offence committed. In this case, I find that there was no false or misleading statement contained in the sentence, which has been made the subject matter of the notice relating to violation under section 628 of the Act. ( 17 ) THE petition is allowed. It is held that the petitioner is not guilty of any violation of the provisions of Section 628 read with Section 211 of the Act in the first notice of December 31, 2004. It is also held that the petitioner is not guilty of any offence under Section 628 of the Act in respect of second notice of December, 31, 2004. There will be no order as to costs.