1986 (1) TMI 349 - HC - Companies Law

High Court Upholds Decision on Companies Act Violation Complaint

Satish Kumar Jhunjhunwalla Versus Registrar of Companies

The High Court upheld the lower court's decision in a case involving a complaint filed by the Registrar of Companies against officers/directors for ... Public deposits Issues:Violation of Companies Act, 1956 - Section 58A(6) and Rule 3(2)(ii) of Companies (Acceptance of Deposits) Rules, 1975; Non-joinder of company as a party in the complaint; Limitation period for filing the complaint.Analysis:The judgment concerns a petition of complaint filed by the Registrar of Companies against the accused-petitioner and others under section 58A(6) of the Companies Act, 1956, read with rule 3(2)(ii) of the Companies (Acceptance of Deposits) Rules, 1975. The complaint alleged that the accused, as officers/directors of a company, contravened rule 3(2)(ii) by accepting deposits exceeding the permissible limit. The accused raised objections, including non-joinder of the company in the complaint and the case being time-barred. The Magistrate rejected the accused's plea, leading to a revisional application before the High Court.The accused contended that the proceedings should be quashed due to the non-inclusion of the company as a party in the complaint. However, the court held that penal provisions in statutes generally encompass companies and individuals. Special statutes include provisions for company-specific offenses, and liability of officers/directors is contingent on their involvement in the contravention. The court cited relevant case law to support its position and clarified that the absence of the company as an accused does not warrant quashing the proceedings.Regarding the limitation period, the accused argued that the complaint should have been filed earlier based on the Rules. However, the court reasoned that the penal provisions in section 58A(6)(b) of the Act itself prescribed imprisonment and fine for violations, rendering the Rules' provisions on fines inapplicable. As the offense carried a potential imprisonment term exceeding three years, the court determined that the complaint was not time-barred under the Criminal Procedure Code. Consequently, the court rejected the accused's contentions and refused to quash the proceedings, ultimately dismissing the application for special leave to appeal to the Supreme Court.In conclusion, the judgment clarifies the applicability of penal provisions to companies and individuals, addresses the issue of non-joinder of the company in the complaint, and establishes the correct interpretation of the limitation period based on the relevant statutory provisions.