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Issues: (i) Whether relief under section 633(2) could be granted in respect of proceedings already initiated and pending in criminal courts. (ii) Whether the petitioners had acted honestly and reasonably so as to merit relief from liability for defaults in filing company returns and in remitting statutory dues.
Issue (i): Whether relief under section 633(2) could be granted in respect of proceedings already initiated and pending in criminal courts.
Analysis: Section 633 draws a distinction between relief sought after proceedings have commenced and relief sought on an apprehension that proceedings may be brought. Where proceedings are already pending, the matter falls within section 633(1) and relief, if any, is to be considered by the court before which those proceedings are pending. The High Court's preventive jurisdiction under section 633(2) is confined to cases where proceedings have not yet been initiated but are reasonably apprehended.
Conclusion: Relief under section 633(2) was not available in respect of proceedings already instituted and pending; the issue was decided against the petitioners.
Issue (ii): Whether the petitioners had acted honestly and reasonably so as to merit relief from liability for defaults in filing company returns and in remitting statutory dues.
Analysis: The petitioners failed to hold the annual general meeting, to prepare and file the balance-sheet and profit and loss account in time, and to show any convincing steps taken to comply with statutory requirements. Financial stringency was held not to justify non-compliance with mandatory obligations, particularly in relation to deductions from employees' wages and other statutory contributions. Each default had to be explained separately, and no sufficient particulars or evidence were led to show bona fide conduct or due diligence. The defaults were treated as violations of statutory duty rather than excusable technical lapses.
Conclusion: The petitioners had not acted honestly and reasonably, and no ground existed to excuse them from liability; the issue was decided against the petitioners.
Final Conclusion: The petition for relief under section 633 failed because the High Court could not extend preventive relief to already pending proceedings, and the petitioners had not established the honesty and reasonableness required for discretionary exoneration.
Ratio Decidendi: Section 633(2) enables preventive relief only before proceedings are instituted, and relief from company-law defaults is unavailable unless the officer proves honest and reasonable conduct in relation to each default.
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