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Issues: (i) Whether non-filing of the balance-sheet and profit and loss account after the 1977 amendment to section 220(3) of the Companies Act, 1956 constituted a punishable default even where no annual general meeting was held; (ii) Whether the directors were liable as officers in default and whether the omission was wilful; (iii) Whether the prosecution was barred by limitation or whether the offence was a continuing offence.
Issue (i): Whether non-filing of the balance-sheet and profit and loss account after the 1977 amendment to section 220(3) of the Companies Act, 1956 constituted a punishable default even where no annual general meeting was held.
Analysis: After the amendment, the statutory obligation to file the balance-sheet and profit and loss account arose within thirty days from the latest date on which the annual general meeting should have been held, even if the meeting was not actually held. The earlier position, under which no offence was made out until the annual general meeting was held, no longer governed the amended provision. On the plain language of the amended section, failure to file after the prescribed time amounted to default.
Conclusion: The non-filing constituted a punishable default under section 220(3) of the Companies Act, 1956.
Issue (ii): Whether the directors were liable as officers in default and whether the omission was wilful.
Analysis: A director falls within the inclusive meaning of an officer under the Companies Act, 1956. Liability under section 220(3) attaches to every officer who is in default, and the default must be wilful. The directors received notice from the Registrar but took no effective steps to file the statutory documents, and no lawful excuse was established. A letter addressed to third parties could not validly absolve them of liability as directors.
Conclusion: The directors were liable as officers in default, and the omission was wilful.
Issue (iii): Whether the prosecution was barred by limitation or whether the offence was a continuing offence.
Analysis: Section 220(3) prescribes punishment by reference to section 162, which provides for a fine for every day during which the default continues. The nature of the penalty showed that the offence was continuing. Consequently, although cognizance was taken long after the initial default, the prosecution could proceed in respect of the period falling within six months before cognizance under the limitation provisions of the Code of Criminal Procedure, 1973.
Conclusion: The offence was a continuing offence and the prosecution was not wholly barred by limitation.
Final Conclusion: The conviction was sustained, the acquittal was set aside, and the appeal succeeded, though the punishment was reduced to a fine of Rs. 50 each with default imprisonment.
Ratio Decidendi: After the 1977 amendment, section 220(3) of the Companies Act, 1956 makes non-filing of financial statements within the prescribed time a continuing offence, and directors knowingly failing to comply after notice are liable as officers in default.
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