Registrar of Companies vs Bipin Behari Nayak

R.K. Patra, J.—The registrar of Companies, Orissa, being felt aggrieved by the order passed by the Second Additional Sessions, Judge, Cuttack, in Criminal Appeal No. 68 of 1983 acquitting the respondent of the offence of default in filling the balance-sheet of the Company in time punishable u/s 220(3) of the Companies Act, 1956 (hereinafter referred to as ''the Act'') has filed this appeal.

The appellant filed complaint against Kalinga Advertising and Marketing Private Limited (hereinafter referred to as ''the Company'') and five different individuals including the respondent (each of then being described as Director except one P.K. Das who was described as Managing Director) on the allegation that the balance-sheet of the company was not filed in time as required by Sub-section (1) of Section 220 of the Act for which each of them committed an offence punishable under Sub-section (3) of Section 220 of the Act. The said complaint was registered as 2(c) CC No. 48 of 1980 in the Court of the Additional Chief Judicial Magistrate-cum- � Special Court, Cuttack. After taking coginsance under Sub-section (3) of Section 220 of the Act, the learned Magistrate issued summons. As presence of other accused persons except the respondent could not be secured, the learned Magistrate passed order on 4-1-1983 spliting up the case and the trial proceeded against the respondent alone. In the trial the prosecution examined lone witness as PW. 1 who was the clerk working in the office of the appellant.

The plea of the respondent was one of denial. His defence was that he was not a Director of the Company and he did not even know about the existence of any such company. On the basis of the evidence of PW. 1, the learned Magistrate held the respondent to be a Director of the Company and he knowingly and willfully permitted the default in complying with the provisions of Sub-section (1) of Section 220 of the Act. Accordingly, he convicted the respondent under subsection (3) of Section 220 of the Act and sentenced hirn to pay a fine of Rs. 0.26 per day. Against the said conviction and sentence appeal was filed and the learned Additional Sessions Judge acquitted the respondent on the ground that there was no specific mention in the complaint that he as Director was responsible for non-filing of the balance-sheet within the time. This order of acquittal as already noted is subject-matter of challenge in this appeal.

When the case was called yesterday (17-1-1994) for hearing, there was no appearance on behalf of the appellant and I heard Shri Tripathy, learned counsel for the respondent and adjourned the matter to today. Today also there is no appearance on behalf of the appellant. I have perused the impugned judgment, the evidence on record and heard further learned counsel for the respondent.

The moot question which arises for consideration in this appeal is whether the respondent could be held to be an officer of the company in default in complying with filing of the balance-sheet in time.

The provisions of Sub-section (1) and (2) of Section 220 of the Act require copies of the balance-sheet and profit and loss account to be filed with the Registrar within 30 days from the date on which the balance-sheet and the profit and loss account were laid at the annual general meeting of the company or where no such meeting has been held within 30 days from the latest day on Or before which that meeting should have been held in accordance with the provisions of the Act. Sub-section (3) of Section 220 provides that if default is made in complying with the requirements of Sub-section (1) and (2) there of, the company, and every officer of the company who is in default, shall be liable to the like punishment as is provided by Section 162 for a default in complying with the provisions of Sections 159, 160 or 161. Clause 30 of Section 2 of the Act defines officer to include "any Director. Managing agent, Secretaries....................." According to clause 31 of Section 2, "officer who is in default" in relation to any provision referred in Section 5 has the meaning specified in that section. In Section 6, the meaning of "officer who is in default" has been mentioned. This provision (Section 5) came to be substituted by a new provision by the Companies (Amendment) Act, 1988 (Act No. 31 of 1988). The present case is governed by pre-amendment law, Section 5 as it stood at the relevant time read as follows:-

"For the purpose of any provision in this Act which enacts that any 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."

(Emphasis supplied)

The expression "officer who is in default" as it stood prior to 1968 amendment came for consideration before the Calcutta High Court in Deputy Lal Vs. State of U.P., . It was a case where validity of the order passed by the Metropolitan Magistrate taking cognizance was challenged by some directors of Company. The learned Judge in paragraphs 7 and 8 of the judgment by referring to Section 5 of the Act observed that "officer in default" means "an officer who is knowingly guilty of default" and it was incumbent on the prosecution to fix the liability with the particular "officer in default" and in absence of any such specific averment in the. complaint, the statutory obligation to file annual report cannot be imposed on any Director. The ratio in the case of Deputy Lal Vs. State of U.P., was followed by this Court in Bipin Behari Nayak v. Registrar of Companies (1987) 64 CLT 462, where the conviction recorded in Sub-section (3) of Section 220 of the Act for having failed to hold annual general meeting of the company and for non-submission of annual return within the time was assailed. The learned Judge observed that there was no averment in the complaint nor there was my evidence to the effect that the accused was the "officer in default". Accordingly the conviction was set aside. The same view was taken in Criminal Revision No. 163 of 1983 (Bipin Behari Nayak v. The Registrar of Companies) decided on 4-6-1983 which was a case of non-submission of balance-sheet and profit and loss account before the Registrar of Companies in time. The ratio of Deputy Lal Vs. State of U.P., was subsequently followed by this Court in the following cases. (1) Criminal Appeal No. 40 of 1985 (Registrar of Companies v. Bipin Behari Nayak) decided on 3-5-1990 and (ii) Criminal appeal No. 41 of 1985 (Registrar of Companies v. Bipin Behari Nayak decided on 6-7-1993.

In paragraphs 2,3 and 6 of the complaint it was alleged that balance-sheet of the company which ought to have been filed by 10-7-1977 at the latest was submitted on 9-3-1979 after delay of 22 months and 28 days and for such default in complying with the provisions of Sub-section (1) of Section 220 of the Act, the officers of the company committed the offence punishable under Sub-section (3) of Section 220 of the Act, The meaning of the expression "officer in default" as was provided in Section 5 of the Act at the relevant time was any officer of the company who was knowingly guilty of the default etc. or who knowingly or wilfully authorised or permitted such default. Neither in the complaint was there any averment that the respondent was knowingly guilty of the default in non-compliance or he knowingly and wilfully authorised or permitted such default nor was any evidence adduced by the prosecution on that score. On the contrary, the evidence of PW. 1 suggests that the respondent was in no way connected with the company. In paragraph 5 of his cross-examination, PW. 1 has admitted that the balance-sheet and profit and loss account of the company was signed by the Managing Director who was one P.K. Das. PW. 1 further admitted that except Ext. 4 (form No. 32) there is no other document to show that the respondent was Director of the company.

In view of the aforesaid, I have no hesitation to hold that the prosecution has failed to prove that the respondent was an "officer in default" in complying with the filing of the balance-sheet of the company with the Registrar of Companies within time. No valid and cogent reason is available to interfere with the impugned order of acquittal.

In the result, I do not find any merit in this appeal which is accordingly dismissed.