Officers in default under the Companies Act do not include ordinary directors where a managing director exists.

Liability for contravention of sections 73(2B) and 113(2) of the Companies Act, 1956 attaches to the company and every officer in default. Ordinary directors are not automatically covered by that definition; under section 5, they become liable only where the company has no managing director, whole-time director, manager or secretary, or where specific responsibility is pleaded. Because the complaint itself showed that the company had a managing director, the ordinary directors could not be treated as officers in default merely by virtue of office. The criminal proceedings against them were therefore liable to be quashed.

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Issues: Whether the criminal proceedings for contravention of sections 73(2B) and 113(2) of the Companies Act, 1956 could be quashed against the petitioners, who were only ordinary directors, when the company had a managing director and the statutory definition of "officer in default" was attracted.

Analysis: Liability under sections 73(2B) and 113(2) fastens on the company and every officer who is "in default". Section 5 of the Companies Act, 1956 defines that expression and shows that ordinary directors become liable only where the company has no managing director, whole-time director, manager or secretary, or where they are specifically made responsible. The complaint itself showed that the company had a managing director. In that situation, the ordinary directors could not be treated as officers in default merely by reason of their directorship, and subjecting them to trial would serve no legal purpose.

Conclusion: The proceedings against the petitioners were liable to be quashed, and the petition was allowed in their favour.

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