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Judgment
Padmini Jesudurai, J.—The petitioners, against whom the respondent has preferred a complaint for various offences under the Indian
Companies Act, 1956 (I of 1956) hereinafter referred to as the Act, now pending before the Additional Chief Metropolitan Magistrate, E.O. II,
Egmore, Madras, invoke the inherent powers of this Court under S. 482, Crl. P.C., to quash the above complaints.
Crl. M.P. No. 6032 of 1985 is to quash proceedings in C.C. No. 1067 of 1982 for an offence under S. 159, r/w S. 162 of the Act for failure
to file before the Registrar the returns.
Crl. M.P. No. 6034 of 1985 is to quash proceedings in C.C. No. 1068 of 1982 for an offence under S. 166 r/w S. 168 of the Act, for failure
to hold the annual general body meeting for the year 1981. Crl. M.P. No. 6034 of 1985 seeks quashing of the above complaint.
Crl. M.P. No. 6036 of 1985 is to quash proceedings in C.C. No. 1069/82 for an offence under S. 220 of the Act, for failure to file before the
Registrar, the copies of the balance sheet and the profit and loss account for the year 1981.
Crl. M.P. No. 6038 of 1985 is to quash proceedings in C.C. No. 1070 of 1982 for an offence under S. 210 of the Act, for failure to place the
balance sheet and the profit and loss account at the annual general meeting of the company for the year 1981.
The ground on which all the above four complaints are sought to be quashed is that they have been filed beyond the statutory period of limitation
fixed under the Act. According to the learned counsel for the petitioners, Thiru V. Sairam, these offences have been committed in the year 1982
and the prosecution has been launched only after the expiry of six months from the date of the commission of the offence and are therefore barred
by limitation.
Per contra, Thiru R. Shanmugham, learned counsel for the respondent, contended that offences under S. 159 r/w S. 162, S. 166 r/w S. 168,
220 and 210 of the Act are continuing offences. In the first three complaints they have been described as continuing offences and hence S. 472,
Crl. P.C., extending the period of limitation to the continuing offences would apply. The petitions, therefore, have to be dismissed.
The question that arises for consideration is whether the offences under Ss. 159 r/w 162, 166 r/w 168, 220 and 210 of the Act are continuing
offences.
In Crl. M.P. No. 6032 of 1985, the offence is one under S. 159 r/w. S. 162 of the Act and in Crl. M.P. No. 6036 of 1985 the offence is one
under S. 220 of the Act. The question as to whether these offences are continuing or not is no longer res Integra. In M/s. Kalaimagal Corporation
Ltd., Tuticorin v. The Assistant Registrar of Companies, Shastri Bhavan, Madras-6 Order in Crl. R.C. Nos. 390 to 394 of 1984 dt. 28th July,
1987 since reported in 1987 L.W. (Crl.) 501, I have held that the offences under Ss. 159 and 220 of the Act are continuing offences. After a
comparative analysis of the different provisions of the Act and the different punishments provided under the Act, disagreeing with the view
expressed by a Division Bench of the Calcutta High Court in National Cotton Mills v. Assistant Registrar of Companies 1984 56 Comp. Case.
222, and agreeing with the decision of a single Judge of the same Court in Ajit Kumar Sarkar v. Assistant Registrar of Companies 1979 49 Com.
Cas. 909, and also agreeing with the decision of the Orissa High Court in Registrar of Companies, Orissa v. The Uthai Distributors Pvt. Ltd., and
others 1977 Tax L.R. Nos. 45 and the decision of the Kerala High Court in Sundaram Chits (India) Ltd., and others v. Registrar of Companies,
Kerala 1986 59 Com. Cas. 261, I had held that the offences under Ss. 159 and 220 of the Act are continuing offences. I see no reason to change
my earlier view, particularly in the light of the later pronouncement of the Supreme Court in Maya Rani Punj Vs. Commissioner of Income Tax,
Delhi, , holding that the offence under S. 27(1)(a) of the income tax Act, 1961 was a continuing offence. The Supreme Court in the above decision
observed.
If a duty continues from day-to-day the nonperformance of that duty from day-to-day is a continuing wrong. We are of the view that the legislative
scheme under S. 27(1)(a) of the 1961 Act, in making provision for a penalty continuous with the default to be raised, provided for a situation of
continuing wrong.
I, therefore, hold that the offence under S. 159 of the Act made punishable under S. 162 of the Act and the offence under S. 220 of the Act are
continuing offences. Crl. M.P. Nos. 6032 and 6036 of 1985 have to fail.
Crl. M.P. No. 6034 of 1985 is for an offence under S. 166 r/w. S. 168 of the Act. Under S. 166 of the Act, every company is required to
hold in addition to any other meetings, a general meeting as its annual general meeting once in fifteen months after giving due notice of the same. In
case there is default in holding the annual general meeting, the Central Government is empowered to call or direct the calling of a general meeting of
the company and give ancillary or consequential directions for holding the meeting. Failure to hold a meeting as required under S. 166 of the Act
and failure to comply with any direction of the Central Government issued under S. 167 of the Act, are made punishable under S. 168 of the Act.
The language of S. 168 relating to the nature of the punishment to be awarded is relevant to decide whether these offences are continuing offences
or not. The relevant portion of S. 168 of the Act is as follows:
shall be punishable with fine which may extend to five thousand rupees and in the case of a continuing default, with a further fine which may extend
to two hundred and fifty rupees for every day after the first during which such default continues.
It is clear from the language of the section extracted above, that so long as the annual general meeting is not held as required under S. 166 of the
Act, the default continues and the offences also continued, entailing a penalty for each day during which the default continues. The duty to hold a
general body meeting continues so long as the meeting is not held. Hence, applying the test indicated by the Supreme Court in Maya Rani Punj Vs.
Commissioner of Income Tax, Delhi, the non-performance of that duty from day-to-day is a continuing wrong and the penalty being continuous
with the default the offence is a continuing one. I see no difficulty in holding that the offence under S. 166 of the Act punishable under S. 168 of the
Act is a continuing offence. Crl. M.P. No. 6034 of 1985, therefore, has to fail.
Crl. M.P. No. 6038 of 1985 relates to an offence under S. 210 of the Act. The relevant portion of S. 210 of the Act is as follows: -
S.210(1). At every general meeting of a company held in pursuance of S. 166, the Board of directors of the company shall lay before the company
(a) a balance sheet as at the end of the period specified in sub-S. (3) and
(b) a profit and loss account for that period. (2 to 4 x x x)
(5) If any person, being a director of a company, fails to take all reasonable steps to comply with the provisions of this section, he shall, in respect
of each offence, be punishable with imprisonment for a term which may extend to six months or with fine which may extend to one thousand
rupees, or with both.
The opening words of the section make it clear, that the balance-sheet and the profit and loss account have to be placed at every annual general
meeting held in pursuance of S. 166 of the Act. This would, therefore, contemplate a situation where the annual general meeting is actually held
under S. 166 of the Act, and the balance sheet and the profit and loss account are not placed in the annual general meeting. When the meeting is so
held and when the documents are not so placed, the offence is committed. If no annual general meeting is held, as required under S. 166 of the
Act, the question of not placing the documents in the meeting would not arise. This offence, therefore, can be committed only when a meeting is
held and the documents are not placed. This clearly indicates that the offence is committed once for all. It is not a continuing offence. The mode of
punishment provided under sub-S. (5) of S. 210, viz., imposing a maximum imprisonment or fine also suggests that the offence is not a continuing
offence.
Though failure to hold the annual general meeting under S. 166 of the Act is a continuing offence, the failure to place the balance sheet and the
profit and loss account in the general meeting is not a continuing offence. This may, apparently appear to be an anomaly, yet a closer scrutiny of the
scheme of the Act would show that it is not. While failure to furnish annual returns or the balance sheet to the Registrar as required under Ss. 159
and 220 of the Act, made punishable under S. 162 of the Act are continuing offences entailing a fine for every day during which the default
continues, filing false statement to the Registrar either in the annual returns or in the balance sheet made punishable under S. 168 of the Act by a
lump sum fine. This indicates a clear distinction between the two kinds of offences with reference to the same documents. Similarly, the liability to
hold annual general meeting lasts so long as the meeting is not held. The offence, therefore, is a continuing offence. However, the liability to place
profit and loss account and the balance sheet arises only if and when an annual general meeting is held. The offence, therefore, can be committed
only once, i.e., when a meeting is so held and the documents are not placed. The offence is not a continuing offence. It, therefore, follows from the
above discussion that the offence under S. 210 of the Act is not a continuing offence.
The next question is whether, on the allegations in the complaint, S. 210 of the Act is attracted. The averment in paragraph 4 of the complaint
is as follows:
As such, the aforesaid company''s balance sheet and profit and loss account for the financial year ending with 31st March, 1981 should have been
laid at an annual general meeting on or before 30th September, 1981. Further, there is no evidence on record to show that the above said Balance
Sheet was placed in an annual General meeting till the date of filing of this complaint.
The prosecution, therefore, proceeds on the assumption that the balance sheet and profit and loss account should have been laid at the annual
general meeting which should have been held on or before 30th September, 1981. It is not the case of the prosecution that a meeting was held and
the balance sheet and profit and loss account, were not placed. Failure to hold a meeting is a offence under S. 166 of the Act. S. 210 of the Act
will apply only when a meeting is held and the documents are not placed at the meeting. That a meeting should have been held and the documents
should have been placed, cannot form the basis of a prosecution under S. 210 of the Act. The opening words of S. 210(1) of the Act makes this
position clear. In the absence of any averment in the complaint that the annual general meeting of the company was held in which the documents
had not been placed, the prosecution under S. 210 of the Act cannot stand. The averments in the complaint do not disclose an offence under S.
210 of the Act. The proceedings in C.C. No. 1070 of 1982, therefore, have to be quashed.
In the result, Crl. M.P. Nos. 6032, 6034 and 6036 of 1985 are dismissed. Crl. M.P. No. 6038 of 1985 is allowed and the proceedings in
C.C. No. 1070 of 1982 are quashed.