Ramacast Limited and Others vs Assistant Registrar of Companies

Monoranjan Mallick, J.—This revision petition is directed against the conviction and sentence passed by the learned Magistrate against the present petitioners u/s 220(3) of the Companies Act, 1956. The facts are briefly as follows:

Opposite party, the Assistant Registrar of Companies, filed a petition of complaint u/s 220(3) read with Section 162(1) of the Companies Act, 1956, alleging that M/s. Ramacast Ltd. and the directors who are petitioners Nos. 2 to 4 herein of the company, were under a statutory obligation to file three copies of balance-sheet and profit and loss account placed in the annual general meeting within 30 days, that the annual general meeting of the company should have been held on or before June 30, 1981, and the balance-sheet, etc., were required to be produced in the office of the complainant on or before July 29, 1981, but that the petitioners-accused did not file the balance-sheet and profit and loss account even as on December 31, 1981, in spite of show-cause notice. That is how they have contravened the provisions of Section 220(1) of the Act and are liable to be prosecuted and punished under that section read with Section 162(1) 6f the Act.

The learned Magistrate, on considering the evidence produced by the complainant as well as by the present petitioners, came to the finding that the prosecution has been able to prove the charges against the accused petitioners, that the accused persons are responsible for the default regarding non-submission of the balance-sheet and profit and loss account and are liable to be punished u/s 220(3) of the Companies Act. So he convicted all the petitioners under that section and sentenced petitioner No. 1 to a fine of Rs. 200 only and the other petitioners to a fine of Rs. 200 each in default to simple imprisonment for 5 days each. He also directed 10% of the fine, if realised, to be awarded to the prosecution as costs.

Being aggrieved, this revision petition has been filed.

It is contended, firstly, that the learned Assistant Registrar of Companies has no competence to file a petition of complaint, and the complaint filed by him is illegal and the conviction and sentence are, therefore, liable to be set aside. The second contention is that the learned Magistrate considered the documentary evidence proved by P.W. 1, but that P.W, 1 did not have the competence to prove documents and that the contents of the documents cannot be read in evidence. The third contention is that there is no evidence that petitioners Nos. 2, 3 and 4 are in default and u/s 5 of the Companies Act, 1956, they can only be prosecuted if they are officers in default and, consequently, the conviction and sentence against petitioners Nos. 2 to 4 are liable to be quashed.

The revision petition is contested by the opposite party. On behalf of the opposite party, it is contended that the decision of this court in Ajit Kumar Sarkar Vs. Assistant Registrar of Companies, where it has been held that the Assistant Registrar of Companies has the competence to file the petition of complaint as against the accused persons for offence punishable u/s 220(3) of the Act answers the first point. It is also submitted that P.W. 1 has clearly proved the documentary evidence and so reliance can be placed on such evidence. It is further contended that in view of the judgment in Madan Gopal Dey and Another Vs. State and Another, , the directors have an obligation to follow the provisions of the Companies Act, 1956, and, therefore, when they failed to perform their statutory duties, they bring themselves within the mischief of the penal provisions of law and in the circumstances, the conviction of the directors was quite proper and is not liable to be set aside.

As regards the first contention raised by the learned advocate for the petitioners, I am of the view that the judgment of this court in Ajit Kumar Sarkar Vs. Assistant Registrar of Companies, answers the point. There, the learned single judge has held that an Assistant Registrar of Companies is competent to file any petition of complaint for contravention of any provisions of the Companies Act, I have carefully perused this decision and I fully rely on the said decision as it appears to lay down the correct principle. I find no reason to differ from the observation made by the learned judge in coming to the conclusion that the Assistant Registrar of Companies is competent to make a complaint against the limited company and the directors thereof under the provisions of the Companies Act, 1956. Therefore, the contention of the learned advocate for the petitioners in this regard is not tenable.

As regards the question of admissibility of the documentary evidence being proved by P. W. 1, I am of the view that it is true that P.W. 1 is an assistant in the Office of the Registrar of Companies and has no personal knowledge about the case nor about the notices sent. He has proved the signature of the complainant in the petition of complaint and some acknowledgment receipts showing that notices were sent to the accused petitioners which were duly received by all others except one and his notice had been returned unserved by the postal authorities. The documentary evidence which have been tendered in this case are formal in nature. Mr. Mukherjee, learned advocate for the Assistant Registrar of Companies, submits that the Registrar of Companies does not have any obligation to issue notice on the company and its directors asking them to submit balance-sheet, etc., but by way of abundant caution, the notices have been issued and he is not placing any importance on such notices and he is of the view that on the basis of the other evidence before the learned Magistrate, the finding of the learned Magistrate that the petitioners are guilty of offence u/s 220(3) of the Companies Act can be supported.

In view of the above submissions, I am not going to take into consideration the evidence regarding the service of notices, because P.W. 1 did not have any personal knowledge. The petition of complaint was also a formal document to be tendered in evidence. I am to see whether the prosecution has been able to bring home the charge against the petitioners on the basis of other evidence produced.

So far as petitioner No. 1 is concerned, there can be no doubt that the company has the obligation to hold the annual general meeting and to submit the balance-sheet and profit and loss account to the Registrar of Companies within the specified period. It is not the case of the present petitioners that the balance-sheet and the profit and loss account were submitted within the above specified period. Therefore, so far as the company is concerned, the evidence adduced by P.W. 1 that no balance-sheet and profit and loss account were submitted within the specified time is sufficient to convict the company. So the conviction of and sentence on the company cannot be set aside.

Learned advocate for the petitioners vehemently urges that even if the company can be convicted u/s 220(2) of the Act, its directors cannot be convicted as there was no evidence that they were in default. My attention has been drawn to the provisions of Section 5 of the Companies Act in which it is stated as follows :

" For the purpose of any provision in this Act which enacts that an officer of the company who is in default shall be liable to any punishment, or penalty, whether by way of imprisonment, fine or otherwise, the expression '' officer who is in default'' means any officer of the company who is knowingly guilty of the default, non-compliance, failure, refusal or contravention mentioned in that provision, or who knowingly and wilfully authorises or permits such default, non-compliance, failure, refusal or contravention. "

Mr. Bhattacharjee, learned advocate for the petitioners, has drawn my attention to the evidence of P.W. 1 and has submitted that P.W. 1 has not stated in his evidence that petitioners Nos. 2 to 4 were knowingly guilty of the default and permitted to continue such default. This fact has not been proved by evidence and in the absence of such evidence by P.W. 1, the only witness for the prosecution, it is fit and proper that the conviction as against petitioners Nos. 2 to 4 cannot be upheld.

Mr. Mukherjee, learned advocate for the complainant opposite party, submits that necessary averments to the above effect were made in the petition of complaint and if the evidence along with the petition of complaint is also admitted as an exhibit in the case, then there cannot be any doubt that there is evidence that petitioners Nos. 2 to 4 were also in default. Mr. Mukherjee, learned advocate has also referred me to the decision of Madan Gopal Dey and Another Vs. State and Another, to argue that the directors can be prosecuted because of their statutory obligation to file the balance-sheet and the profit and loss account in accordance with the provisions of the Companies Act. There the learned Judge held as follows (at pp. 82 and 83 of AIR and at p. 125 of Comp Cas):

" When the directors fail to perform their statutory duty, they bring themselves within the mischief of the penal provisions of the law. In order that a conviction, under the sections involved in the present cases, of ''an officer of the company'' may be sustained, the only thing to prove is that that particular officer knowingly and wilfully authorised or permitted these defaults. The offence is complete if the officer of the company knew of the defaults and permitted the same. "

So, from the above observation of the learned judge, there can be no doubt that there must be evidence to show that the particular officer knowingly or wilfully permitted the default or authorised the default. But the question remains whether there is such evidence in this case or not. P. W. 1 has not made any such averments in this evidence. Mr. Mukherjee, learned advocate for the complainant, submits that such averment, was made in the petition of complaint and if this averment in the petition of complaint be read as evidence, then there is evidence to direct prosecution.

I am unable to accept the above submissions of Mr. Mukherjee. The petition of complaint though tendered in evidence cannot be held to be substantive evidence. The prosecution case has to be proved by evidence at the trial and the petition of complaint cannot be a substitute for legal evidence to be produced to prove the case. I am of the view that petitioners Nos. 2 to 4 cannot be held guilty of default when the decision of the learned single judge referred to above makes it clear that there must be clear evidence before the directors can be convicted. In the circumstances, I am unable to sustain the conviction passed against petitioners Nos. 2 to 4 in this case.

In the result, the conviction and sentence against petitioner No. 1 stands but against petitioners Nos. 2 to 4 is set aside. The revision petition is thus allowed in part. Fine, if realised, from petitioners Nos. 2 to 4 may be refunded.