1956 (5) TMI 25 - Commissioner - Companies Law

Directors' re-election not a change under Indian Companies Act; wilfulness immaterial for statutory penalties

Krishna Mills Ltd. Versus The State

The court held that re-electing the same directors did not constitute a change requiring notification under section 87(2) of the Indian Companies Act. The ... Regsiter of directors, etc. Issues:Interpretation of section 87(2) of the Indian Companies Act regarding notification of change in directors.Determining whether re-election of the same directors constitutes a change.Consideration of wilfulness in default under the statute.Analysis:The judgment pertains to two connected references made by the Sessions Judge concerning the Krishna Mills Ltd., Beawar, a company under the Indian Companies Act. The issue at hand was the failure to notify a change in directors as required by section 87(2) of the Act. The prosecution alleged a contravention due to the non-notification of the retirement and re-election of two directors. The defense argued that as the same directors were re-elected, there was no actual change in the directorship. The Magistrate held there was a change, leading to the references by the Sessions Judge on grounds of no change due to re-election and the lack of wilfulness in any default.The crux of the matter lies in the interpretation of section 87(2) of the Indian Companies Act, which mandates the notification of any change among directors. The judgment delves into the definition of 'change,' emphasizing that re-electing the same directors does not constitute a change in the plain and dictionary meaning of the term. The judgment highlights that the statutory form requiring the date of appointment of a director pertains to the initial appointment, not re-election. It asserts that a prescribed form cannot override the specific language of the Act. Consequently, the court agrees with the Sessions Judge that re-electing the same directors does not necessitate notifying the Registrar under section 87(2).Furthermore, the judgment addresses the aspect of wilfulness in default under the statute. It clarifies that when a statute mandates certain actions and prescribes penalties for defaults, the default itself attracts penalties, irrespective of whether it was intentional or not. In this context, the court dismisses the argument regarding the wilfulness of any default.In conclusion, the judgment accepts the references, setting aside the conviction and sentences of the applicants based on the findings that re-electing the same directors did not constitute a change requiring notification under section 87(2) and that wilfulness in default is immaterial when statutory penalties apply.