TaxTMI 
TaxTMI 
2007 (6) TMI 294
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....the petitioner No. 1 is a subsidiary of the Assam Industrial Development Corporation Ltd. a Government of Assam undertaking, while the petitioner No. 2 is the managing director of the petitioner No. 1 and that the respondent No. 1, who is the Registrar of Companies for the North Eastern States, initiated Criminal Case Nos. 580-587(S)/2005 under section 220(3) read with section 162(1) of the Act against the petitioners for their failure to furnish three copies of balance sheets and profit and loss accounts for the financial years commencing from 31-3-1997 and ending on 31-3-2004, i.e., for 7 (seven) financial years. It would appear that the criminal proceedings in question was stated to have been initiated by the respondent No. 1 when the show-cause default notice did not evoke positive response from the petitioners. The learned magistrate ultimately found the petitioners guilty of the provisions of section 162(1) and sentenced the petitioner No. 2 to pay fine at the rate of Rs. 2 per each defaulting day, the total whereof came to Rs. 51,564. The petitioners have duly paid the fine so imposed. The contention of the petitioners that the balance sheets as well as the profit and loss a....
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....accounts for the financial years in question? Section 220(1) of the Act provides for the filing of these documents, which are in the following terms :- "220. Three copies of balance sheet, etc., to be filed with Registrar.-(1) After the balance sheet and the profit and loss account have been laid before a company at an annual general meeting as aforesaid, there shall be filed with the Registrar within thirty days from the date on which the balance sheet and the profit and loss account were so laid or where the annual general meeting of a company for any years has not been held, there shall be filed with the Registrar within thirty days from the latest day on or before which that meeting should have been held in accordance with the provisions of this Act." 6. Thus, simply put, a company is required to file with the Registrar of Companies three copies of the balance sheet and the profit and loss account signed by the person specified therein together with three copies of all documents which are required by the Act to be annexed or attached to such balance sheet or profit and loss account. When? After the balance sheet and profit and loss account have been laid before the company at....
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....e liable to the like punishment as is provided by section 162 for a default in complying with the provisions of section 159, 160 or 161." 7. Section 619 of the Act engrafts special provisions for Government companies, which are in the following terms : "(1) In the case of a Government company, the following provisions shall apply, notwithstanding anything contained in sections 224 to 233. (2) The auditor of a Government company shall be appointed or reappointed by the Central Government on the advice of the Comptroller and Auditor General of India : Provided that limits specified in sub-sections (1B) and (1C) of section 224 shall apply in relation to the appointment or re-appointment of an auditor under this sub-section. (3) The Comptroller and Auditor General of India shall have power- (a )to direct the manner in which the company's accounts shall be audited by the auditor appointed in pursuance of sub-section (2) and to give such auditor instructions in regard to any matter relating to the performance of his functions as such; (b )to conduct a supplementary or test audit of the company's accounts by such person or persons as he may authorise in this behalf and for the purp....
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....titioner-company or its parent concern for appointment of statutory auditor. Anyway, coming now to the contention of the learned counsel for the petitioners, I cannot but observe that it is the requirement of section 220(1) that three copies of the balance sheet and profit and loss account together with three copies of other documents indicated earlier shall have to be filed with the Registrar of Companies. The question to be determined is whether the filing of these documents with the Registrar of Companies is mandatory or not. Section 220(1) uses the word "shall", which necessarily raises the presumption that the provision is mandatory or imperative. Nonetheless, this prima facie inference may be rebutted by other consideration such as the object and scope of the enactment and the consequences flowing from such construction. There are numerous cases where the word "shall" has been construed as merely directory. "For ascertaining the real intention of the Legislature", according to the eminent jurist, Subbarao, J. in State of UP v. Babu Ram Upadhya AIR 1961 SC 751, 'the court may consider, inter alia, the nature and design of the statute, and the consequences which would follow fr....