1970 (5) TMI 50 - HC - Companies Law

Court lacks jurisdiction for relief under Companies Act section 633(2) for ex-directors' non-compliance

The High Court held that it lacked jurisdiction to grant relief under section 633(2) of the Companies Act for ex-directors' non-compliance with court ... Powers of court to grant relief in certain cases Issues:Petition filed by ex-directors under section 633(2) of the Companies Act, 1956 to avoid prosecution under section 614A(2) for non-compliance with court directions.Analysis:The petitioners, ex-directors of a company, were convicted by a Magistrate for not filing balance-sheets as required by the Companies Act for the years 1965-1967. The Magistrate ordered them to file the documents within two months under section 614A(2) of the Act. The petitioners failed to comply, citing lack of access to company records seized by the police and cessation of directorship. The petition sought relief under section 633(2) of the Act, claiming honest and reasonable actions. The Registrar of Companies denied the petitioners' claims of acting reasonably and honestly.The issue raised was whether the High Court had jurisdiction to grant relief under section 633(2) of the Act. Section 633(2) allows relief in cases of negligence, default, breach of duty, misfeasance, or breach of trust by an officer of a company. The court clarified that relief could be granted by the High Court only if criminal proceedings had not been initiated in a lower court. The High Court lacks jurisdiction to grant relief under section 633(2) if criminal proceedings have already commenced, as established in previous cases such as In re Orissa Jute and Cotton Mills Ltd. and In re Gilt Edge Safety Glass Ltd.The court highlighted that relief under section 633(2) is not applicable to defaults in complying with court directions, like in the present case where the petitioners failed to adhere to the Magistrate's order under section 614A(1). The court emphasized that the High Court cannot grant relief for non-compliance with court directions as it falls outside the scope of section 633(2). Additionally, the court reasoned that even after the termination of criminal proceedings, the High Court does not have jurisdiction to grant relief for defaults that were the subject of the criminal case.Ultimately, the court held the petition to be incompetent, ruling that the High Court lacked jurisdiction to grant the relief sought under section 633(2) of the Act. The court dismissed the petition, leaving the parties to bear their respective costs. The court did not delve into the question of whether the petitioners acted reasonably or honestly in failing to comply with the Magistrate's direction within the specified timeframe.