1972 (1) TMI 61 - HC - Companies Law

Conviction under Companies Act Section 220(3) overturned, petitioners acquitted, fines refunded. Obligation clarified.

The court held that the conviction of the petitioners under Section 220(3) of the Companies Act, 1956 was incorrect. The petitioners were acquitted, and ... Balance sheet - Default in filing copies of Issues Involved:1. Interpretation of Section 220(1) of the Companies Act, 1956.2. Validity of the defence plea regarding the statutory obligation contingent on holding the annual general meeting.3. Applicability of the Supreme Court's decision in State of Bombay v. Bandhan Ram Bhandani to the present case.4. The necessity of holding an annual general meeting for the obligation under Section 220(1) to arise.5. The correctness of the lower court's reliance on the decision in Registrar of Companies v. Haribansha Misra.Issue-wise Detailed Analysis:1. Interpretation of Section 220(1) of the Companies Act, 1956:The core issue was whether the statutory obligation to file the balance-sheet and profit and loss account with the Registrar under Section 220(1) arises only after these documents have been laid before the company at its annual general meeting. The judgment emphasized that the language of Section 220(1) explicitly makes the filing contingent upon the documents being laid before the annual general meeting. Therefore, the obligation to file does not arise if the meeting has not been held.2. Validity of the Defence Plea:The petitioners contended that their failure to file the balance-sheet and profit and loss account was due to the managing director's illness, which prevented the documents from being ready for the annual general meeting. The court examined whether this constituted a valid defence. It concluded that the statutory obligation to file the documents with the Registrar is dependent on the documents being laid before the annual general meeting, which had not occurred in this case. Thus, the defence plea was considered valid.3. Applicability of the Supreme Court's Decision:The lower courts had relied on the Supreme Court's decision in State of Bombay v. Bandhan Ram Bhandani, which dealt with analogous provisions in the old Companies Act of 1913. The judgment clarified that while the Supreme Court's decision applied to Sections 32 and 131 of the old Act, the language of Section 220(1) of the 1956 Act differed significantly. The Supreme Court's principle that a person charged with an offence cannot rely on their own default was not directly applicable to Section 220(1) due to the distinct language and requirements of the latter.4. Necessity of Holding an Annual General Meeting:The judgment underscored that holding an annual general meeting is a sine qua non for the obligation to file the balance-sheet and profit and loss account with the Registrar. It highlighted that the statutory requirement under Section 220(1) is triggered only after the documents are laid before the annual general meeting. Therefore, if no meeting is held, the obligation to file does not arise, and no offence is committed under Section 220(3).5. Correctness of the Lower Court's Reliance:The lower courts had relied on the decision in Registrar of Companies v. Haribansha Misra, which followed the Supreme Court's ruling in Bandhan Ram Bhandani. The judgment concluded that this reliance was misplaced because the language of Section 220(1) of the 1956 Act necessitated a different interpretation. The court agreed with the Andhra Pradesh High Court's decision in Andhra Provincial Potteries Ltd. v. Registrar of Companies, which correctly interpreted Section 220(1) as making the filing obligation contingent on holding the annual general meeting.Conclusion:The court held that the conviction of the petitioners under Section 220(3) of the Companies Act, 1956, was incorrect. The petitioners were acquitted, and the fines, if paid, were ordered to be refunded. The judgment clarified that the obligation to file the balance-sheet and profit and loss account with the Registrar arises only after these documents have been laid before the annual general meeting, which had not occurred in this case.