1987 (11) TMI 325 - HC - Companies Law

Company Act Offences: Continuing Nature & Limitation Period - Legal Implications

The court held that the offences under sections 159 and 220 of the Companies Act, 1956, read with section 162, are continuing offences within the meaning ... Balance sheet - Default in filing copies of Issues Involved:1. Whether the offences under sections 159 and 220 of the Companies Act, 1956, read with section 162, are continuing offences within the meaning of section 472 of the Code of Criminal Procedure, 1973.Detailed Analysis:Issue 1: Whether the offences under sections 159 and 220 of the Companies Act, 1956, read with section 162, are continuing offences within the meaning of section 472 of the Code of Criminal Procedure, 1973.Background and Legal Provisions:The primary question in this case is whether the offences under sections 159 and 220 of the Companies Act, 1956 (hereinafter 'the Act'), read with section 162, are continuing offences as defined in section 472 of the Code of Criminal Procedure, 1973 (hereinafter 'the Code'). Section 159 of the Act mandates the filing of annual returns by a company, while section 220 requires the filing of the balance-sheet and profit and loss account. Section 162 prescribes penalties for non-compliance with these sections, imposing a fine for every day the default continues.Arguments by Petitioners:The petitioners argued that the offences under sections 159 and 220 are not continuing offences. They cited sections 168, 234, and 598 of the Act, which explicitly mention 'continuing default' and argued that the absence of such terminology in section 162 indicates that these offences are not continuing. They also referred to section 614A of the Act, which allows a court to direct compliance with sections 159 and 220, suggesting that non-compliance is not a continuing offence. The petitioners relied on the Calcutta High Court decision in National Cotton Mills v. Assistant Registrar of Companies, which held that the failure to file returns was not a continuing offence.Arguments by Respondents:The respondents emphasized the purpose behind sections 159 and 220, which is to ensure that important company information is available for inspection by shareholders, creditors, and the public. They argued that non-compliance with these sections keeps the public in the dark about the company's affairs, thus constituting a continuing offence. They referred to the Supreme Court's decisions in State of Bihar v. Deokaran Nenshi, Bhagirath Kanoria v. State of M.P., and Maya Rani Punj v. CIT, which provide guidance on determining whether an offence is continuing based on the language of the statute, the nature of the offence, and the legislative intent.Court's Analysis:The court examined the legislative intent behind sections 159 and 220, noting that these provisions aim to make company information accessible to the public. The court referred to the Supreme Court's criteria for determining a continuing offence, which include the statute's language, the offence's nature, and the legislative purpose. The court found that the offences under sections 159 and 220 are continuing because the non-compliance persists until the required documents are filed. The court distinguished the present case from the Calcutta High Court's decision in National Cotton Mills, noting that the Supreme Court's later decisions in Bhagirath Kanoria and Maya Rani Punj support the view that non-compliance with statutory filing requirements constitutes a continuing offence.Conclusion:The court concluded that the offences under sections 159 and 220 of the Act, read with section 162, are continuing offences within the meaning of section 472 of the Code. This means that a fresh period of limitation begins to run at every moment during which the offence continues, thereby removing the bar of limitation provided by section 468 of the Code. Consequently, the petitions were dismissed.Judgment:The petitions were dismissed, affirming that the offences under sections 159 and 220 of the Companies Act, 1956, read with section 162, are continuing offences, and therefore, the period of limitation prescribed by section 468 of the Code does not apply. The offences will be governed by section 472 of the Code, allowing for a fresh period of limitation to begin at every moment of the time during which the offence continues.