Smt. Bale Sundari and Others vs Registrar, Companies

G.P. Mathur, J.—The applicants by means of the present petition u/s 482, Code of Criminal Procedure seek quashing of the proceedings of complaint case No. 5084 of 1981 (Registrar of Companies, U.P. v. Jindal and Jindal Pvt. Ltd.) which is pending in the Court of C.M.M., Kanpur.

The Registrar of Companies, U.P., Kanpur filed a criminal complaint dated 2.7.1981 against Jindal and Jindal Pvt. Ltd. and its five directors for their prosecution u/s 220 of the Companies Act, 1956 (hereinafter referred to as the Act) alleging that the Company and its directors were under statutory obligation to file with the Registrar of Companies. U.P. the Balance-sheet and Profit and Loss Account, in the prescribed form, duly placed in the Annual General Meeting of the Company, within thirty days of the holding of the meeting and as in the present case, no such meeting was held within thirty days of the due date of Annual General Meeting. The accused inspite of repeated notices, knowingly and wilfully committed default in not filing the Balance-sheet and Profit and Loss Account and had thereby committed continuing default. The learned Magistrate took cognizance of the offence and summoned the accused to face trial.

Learned Counsel has submitted that no Annual General Meeting of the Company was held and, therefore, the question of filing the Balance-sheet and the Profit and Loss Account of the Company with the Registrar of Companies, U.P., Kanpur did not arise and consequently, the prosecution of the applicants for violation of Section 220 of the Act is wholly illegal.

The contention raised by the learned Counsel is no doubt supported by a Full Bench decision of Andhra Pradesh High Court in Andhra Provincial Potteries Ltd., Tadepalli and Others Vs. Registrar of Companies, Andhra Pradesh, Hyderbad, where it was held that the holding of the Annual General Meeting and laying before it of the Balance-sheet and the Profit and Loss Account is a sine qua non for filing of the copies thereof before the Registrar of Companies and if no general body meeting is held, persons concerned cannot be prosecuted u/s 220 of the Act. It was further held that without holding the Annual General Meeting, the prosecution would be premature. In appeal, the aforesaid decision was affirmed by the Supreme Court in State of Andhra Pradesh and Another Vs. Andhra Provincial Potteries Ltd. and Others, . However, it may be pointed out that the aforesaid decisions were rendered with reference to a breach which had occurred In the year 1967. Section 220 was amended by Section 5 of the Companies (Amendment) Act (46 of 1977) which came into force on 24.12.1977 and the following clause was added:

...or where the annual general meeting of a company for any year has not been held, there shall be filed with the Registrar within thirty days from the latest day on or before which that meeting should have been held in accordance with the provisions of this Act.

The amendment to Section 220 has completely changed the position. Even if Annual General Meeting is not held, the Balance Sheet and Profit and Loss Account have to be filed before the Registrar, within thirty days from the latest day on or before which the meeting should have been held in accordance with the provisions of Companies Act. In view of the amendment, the law laid down by the Andhra Pradesh High Court or by the Supreme Court in State of Andhra Pradesh v. A.P. Potteries (supra) can have no application. Therefore, even if no Annual General Meeting is held, the applicants cannot contend that they are absolved of the responsibility of filing of the Balance-sheet and the Profit and Loss Account of the Company and they cannot escape from the liability imposed by the Section 220 of the Act. Thus the contention raised by the applicants has no substance.

It may also be pointed out here that in the affidavit filed in support of the petition, it has not been stated by the applicants that no Annual General Meeting of the Company was held in the relevant year. Paras 8 and 9 of the affidavit which have been relied upon by the learned Counsel in support of his submission are absolutely vague. Para 8 refers to certain allegations made in the complaint when, in fact, it was no where stated in the complaint that no Annual General Meeting was held. Similarly, in para 9, the averment made is with regard to the fact which was brought to the notice of Registrar of Companies. If the applicants wanted to rely upon the fact that no Annual General Meeting was held, the said fact should have been stated in clear terms and should have been sworn on the basis of personal knowledge which was not done.

Learned Counsel has next submitted that the complaint does not specify as to which of the officers or directors of the Company had committed the default and, therefore, the prosecution of all the applicants is illegal. Section 162 lays down that if a Company fails to comply with any of the provisions contained in Section 159, the Company and every officer of the Company who is in default shall be liable for punishment and it further lays down that the expression "officers" and "directors" shall include any person in accordance with rules, directions, or instructions, the Board of Directors of the Company is accustomed to act. Section 5 of the Act as it stood at the relevant time laid down that 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. This section has undergone a major change by Companies (Amendment) Act (13 of 1988) with effect from 15.7.1988 and now a Managing Director or a Whole-time Director, Manager, Secretary and many others are Included In the definition. The question as to who will be covered by the expression "officer who is in default" is a mixed question of fact and law and consequently cannot be adjudicated upon in a petition u/s 482, Code of Criminal Procedure The decision of this question would also depend upon evidence and, therefore, it can only be gone into in the trial. According to the allegations made in the complaint, all the directors of the Company were responsible for the default. It cannot be held at this stage that the complaint against all the directors suffers from any legal infirmity. It will be for the trial Court to determine as to who will be covered by the expression "officer who is in default" after the evidence has been adduced by the parties. No other point was urged.

For the reasons mentioned above, the petition lacks merit and is hereby dismissed. Stay order is vacated.