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2010 (1) TMI 582
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....aid-up capital of Total Care Ltd. In terms of provisions of section 212(1) of Companies Act, 1956 ('the Act'), Total Care Ltd. thereby became subsidiary of the company with effect from that date and, accordingly, balance sheet of Total Care Ltd. for the period subsequent to 8-3-2003 ought to have been attached along with the balance sheet of the company. The complaint under section 212(9) of the Act for contravention of section 212(1) thereof was, therefore, filed by the respondent-Registrar of Companies against the petitioners and one Chander Shekhar N.K. another director of the company. It was alleged in the complaint that the contravention came to the knowledge of the complainant/respondent only on 24-5-2006, the date on which the inspection report was received in the office of the complainant and, therefore, the complaint was within the prescribed period of limitation. As a matter of abundant caution, the complainant, however, also filed an application under section 473 of Code, for condonation of delay. The learned ACMM, Delhi having summoned the petitioners for the offence punishable under section 212(9) of Act, in Crl. MC No. 531/2001, the petitioners are seeking quashing of....
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....such offence comes to the knowledge of the aggrieved person or to any police officer, whichever is earlier. 6. The first question which comes up for consideration in this case is as to whether the complainant-Registrar of Companies is a person aggrieved by the offence within the meaning of section 469(1)(b) of the Code, as contended by learned counsel for the respondent or his position is akin to that of a police officer as contended by learned counsel for the petitioner. 7. In support of his contention that Registrar of Companies cannot be said to be person aggrieved by the offence, the learned counsel for the petitioner has referred to the decision of Madras High Court in Sulochana v. State of Registrar of Chits [1978] Crl. LJ 116 and the decision of this Court in Nestle India Ltd. v. State [1999] 22 SCL 33 . 8. In the case of Sulochana (supra), the question before the High Court was whether Registrar of Chits (Investigation and Prosecution), Madras was a person aggrieved by the offence as envisaged in section 469(1)(b) of the Code. After noticing that neither the word person nor the word person aggrieved is defined in the Code, the learned Single Judge of the High Court....
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....rieved person if its shares, etc., were not registered and transferred in its name within time and not the Registrar of Companies." In taking this view, the learned Single Judge of this Court took support from the decision of the Madras High Court in the case of Sulochana (supra) and agreed with the view taken in that case. 10. As far as the judgment of Madras High Court in Sulochana's case (supra) is concerned, that having been overruled by a Division Bench of the High Court in Abdul Rahim v. State [1979] Crl. LJ (NOC) 192, no reliance on that judgment can be placed. The Division Bench of Madras High Court specifically held that Registrar of Chits was a person aggrieved within the meaning of section 469(1)(b) of the Code, and, therefore, was competent to initiate prosecution for an offence punishable in Tamil Nadu Chits Funds Act, 1961. 11. As far as the judgment of this Court in the case of Nestle India Ltd. (supra) is concerned that also stands impliedly overruled by the decision of the Hon'ble Supreme Court in Registrar of Companies v. Rajshree Sugar & Chemical Ltd. [2000] 25 SCL 510 . In the case before the Hon'ble Supreme Court, prosecution of the respondent was init....
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....than an offence with respect to which proceedings are instituted under section 545), which is alleged to have been committed by any company or any officer thereof, except on the complaint in writing of the Registrar, or of a shareholder of the company, or of a person authorised by the Central Government in that behalf." 13. In view of the above-referred authoritative pronouncement of the Hon'ble Supreme Court, no reliance can be placed either upon the decision of Madras High Court in the case of Sulochana (supra) or the decision of this Court in Nestle India Ltd. (supra). If Registrar of Companies is a person aggrieved in case of default on the part of the company in delivering the share certificate/debenture certificate or transferring shares/debentures, it cannot be said that it is only the shareholders of the company, who would be persons aggrieved by offence in respect of violations of section 212(2)(a), read with section 212(7), of the Act, section 211(7) read with Schedule VI of the Act or section 217(5), read with sub-section (1) of section 217, of the Act. In fact, the person affected on account of violations of various provisions of the Act by its directors, officers, e....
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....21 of the Act, it was held that Registrar of Companies, including Assistant Registrar, was a person competent to file the complaint, he being the person aggrieved. In the case before Calcutta High Court, the allegation was that the balance sheet and the profit and loss account of the company for the year ending 31-12-1974 had not been laid before the general body in time. 16. In Ritesh Exports Ltd. v. Registrar of Companies [2005] 127 Comp.Cas. 583^2, Andhra Pradesh High Court, after referring to the decision of this Court in the case of Nestle India Ltd. (supra) and the decision of Madras High Court in the case of Sulochana (supra) and relying upon the decision of the Hon'ble Supreme Court in the case of Rajshree Sugar & Chemical Ltd. (supra), held that Registrar was person aggrieved and, therefore, was competent to file complaint under section 113 of the Act. 17. In V.M. Modi v. State of Gujarat [1997] 88 Comp. Cas. 871 , Gujarat High Court (Hon'ble Mr. Justice J.M. Panchal) held that the complaint, filed by a transferee alleging failure by company to comply with the order of Company Law Board to register transfer of shares, was not maintainable since he was not a sharehold....
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....trar of Companies, he is deemed to have knowledge about the contents of the balance sheets and, consequently, of the offence, delimitation will start running from that day onwards." 19. As against this, the learned counsel for the respondent has referred to decision of Kerala High Court in Thomas Philip v. Assistant Registrar of Companies [2006] 133 Comp. Cas. 842^1. In the case before Kerala High Court, a complaint was filed on 24-10-2001 under section 628 of the Act alleging fictitious entries in the books of account and balance sheet of a company for the period 1995-96. The petitioners, directors of the com- pany, filed a petition under section 482 of the Code, contending that the complaint was barred by limitation since the balance sheet was filed on 24-12-1996. The High Court considered the decision of Madras High Court in the case of H.C. Kothari (supra), but did not agree with the view taken in that case and preferred to go by the view taken by Andhra Pradesh High Court in Mishra Dhathu Nigam Ltd. v. State [1998] 92 Comp. Cas. 730 . During the course of judgment, the High Court observed that there may be patent as well as latent offences revealed from the balance sheet an....
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....late that in a case where the person aggrieved did not have knowledge of the commission of offence, not the date of offence but the date of knowledge of the offence alone must be reckoned as the date of commencement of limitation." 20. In the case of Mishra Dhathu Nigam Ltd. (supra), Andhra Pradesh High Court, while rejecting the contention that mere filing of balance sheet is sufficient to impute knowledge of the offence to the Registrar of Companies, inter alia, observed as under : "8. . . . Mere filing of the balance sheets with voluminous annexures does not necessarily mean that the offence can be detected by the Registrar immediately. As there are a number of limited companies, it is humanly impossible for the Registrar to closely scrutinise each and every balance sheet the moment it is filed and to find out whether any offence has been committed by a particular company. It is only after close scrutiny, which is done as in the case of inspection, that any offence committed by the company can be detected. Moreover, whether the particular deployment of funds is in the nature of investment or deposit cannot be detected by a mere look at the balance sheets with its annexures....
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....ments of Total Care Ltd. Therefore, the offence alleged to have been committed by the petitioners, cannot be said to be a patent one, which could be detected merely by examination of the balance sheet. 23. The allegation in the complaint subject-matter of Crl. MC No. 532/2009 is that the company had not made proper disclosure in terms of Schedule VI of the Act since it had not disclosed that it had not made any provision in its balance sheet for the contingent liability on account of the company having given collateral security pursuant to order of this Court attaching its bank account to the extent of Rs. 6.24 crore. Without a detailed examination of the account books, etc., of the company, the Registrar or his official could not have known that there was an order of this Court attaching its bank account and that the company had given collateral security pursuant to that order. Hence, it cannot be said that the offence committed in this case could have come to the knowledge of the Registrar merely from scrutiny of the balance sheet filed by the company. 24. In the criminal complaint subject-matter of Crl. MC No. 533/2009, the allegation is that the company had failed to give....
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....ompanies from the date the balance sheet or other documents, as the case may be, is filed in his office, they would be encouraged to violate the provisions of the Act with impunity, since they would be knowing that it is neither possible nor practical for the Registrar or his office to come to know the offence committed by them, within a short period of filing of the documents in his office. Such a view, if taken, would only frustrate the legislative intent behind enactment of various penal provisions in the Act and, therefore, should not be taken. 26. The learned counsel for the petitioners has referred to the decision of the Hon'ble Supreme Court in P.K. Choudhury v. Commander, 48 BRTF [2008] 2 JCC 934 where the Hon'ble Supreme Court reiterated the settled proposition of law that an accused is entitled to be heard before the delay in instituting the criminal proceeding is condoned by the Magistrate. There is no quarrel with the proposition of law reiterated in this case. However, there is no delay in instituting the complaints subject-matter of these petitions since the complaints were filed within one year not only of the inspection report having been received in the office o....
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.... been filed within one year from the date the commission of offences, subject-matter of the complaints, came to the knowledge of the complainant. 29. Relying upon the provisions contained in section 209(6) of the Act, it was lastly contended by the learned counsel for the petitioners that since the company admittedly has a managing director, other directors of the company are not liable to be prosecuted for the violations subject-matter of the complaints. 30. In the complaint subject-matter of Crl. MC No. 531/2009, the petitioners are accused of violating of section 212(1) of the Act. Sub-section (9) of section 212 provides that if any person referred to in sub-section (6) of section 209 fails to take all reasonable steps to comply with the provisions of this section, he shall be liable to punishment. A perusal of section 209(6) of the Act would show that the following are the persons liable in this regard : "(a )where the company has a managing director or manager, such managing director or manager and all officers and other employees of the company; and (d )where the company has neither a managing director nor manager, every director of the company;" 31. In the com....
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....f the company would be liable to be prosecuted who were responsible for ensuring compliance with the relevant provisions of the Act and who commit default in discharging the function assigned to them in this regard. A perusal of the complaints subject-matter of Crl. MC Nos. 531 and 532 of 2009 would show that the complainant has specifically alleged that the petitioners were the officers in default at the relevant point of time and were, accordingly, responsible for compliance of the provisions of the Act. At this stage, in exercise of jurisdiction under section 482 of the Code, this Court cannot go into the question as to whether the petitioners were actually responsible for compliance of the provisions of sections 212(1) and 211(7) of the Act or not. At this stage, all the allegations made in the complaint have to be taken as correct and on their face value and, therefore, it has to be presumed that petitioners before this Court were the persons responsible to ensure compliance of the relevant provisions of the Act and, therefore, were the officers in default relevant point of time. 33. In the complaint subject-matter of Crl. MC No. 533/2009, the petitioners are alleged to hav....