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Andhra Provincial Potteries Ltd., Tadepalli and ors. Vs. Registrar of Companies, Andhra Pradesh, Hyderbad - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtAndhra Pradesh High Court
Decided On
Case NumberCriminal Revn. Case No. 360 of 1968 and Criminal Revn. Petn. No. 313 of 1968
Judge
Reported in[1969]39CompCas1000(AP); 1970CriLJ313
ActsCompanies Act, 1956 - Sections 134(2), 159 to 162, 166, 210, 220 and 220(3)
AppellantAndhra Provincial Potteries Ltd., Tadepalli and ors.
RespondentRegistrar of Companies, Andhra Pradesh, Hyderbad
Appellant AdvocateA.V. Koteswara Rao, Adv.
Respondent AdvocatePublic Prosecutor, for the State
Excerpt:
company - laying of statement of accounts - sections 134 (2), 159 to 162, 166, 210, 220 and 220 (3) of companies act, 1956 - whether holding of annual general meeting (agm) of company and laying balance sheet and profit and loss account before it are prerequisites for prosecution under section 220 (3) - as per provisions of companies act preparation of statements of account and balance sheet is mandatory - failure to hold agm cannot be pleaded as defence for default committed in preparing statements as required under act - held, though prosecution under section 220 (3) cannot be initiated before holding of agm. - - the registrar therefore asked them to make good the default mentioned above within one month form the date of issue of the notice. (2) .(3) .(4) .(5) if a company makes.....p. jaganmohan reddy, c.j.1. the question before us is whether, under s. 220 of the companies act, 1956 (i of 1956), (hereinafter referred to as the 'act'), the holding of an annual general meeting of a company and laying before it the balance sheet and the profit and loss account are prerequisities for a prosecution under section 220 (s). 2. the high court of bombay in emperor v. pioneer clay and industrial works, air 1948 bom 357, and earlier, the madras high court in lakshmana v. emperor, air 1932 mad 341 had held under sec. 134 and the analogous provisions of the indian companies act, 1913 (hereinafter called the 'old companies act) corresponding to section 22o of the act that the omission to file with the registrar the balance-sheet and the profit and loss account of a company is not.....
Judgment:

P. Jaganmohan Reddy, C.J.

1. The question before us is whether, under S. 220 of the Companies Act, 1956 (I of 1956), (hereinafter referred to as the 'Act'), the holding of an annual general meeting of a company and laying before it the balance sheet and the profit and loss account are prerequisities for a prosecution under Section 220 (S).

2. The High Court of Bombay in Emperor v. Pioneer Clay and Industrial Works, AIR 1948 Bom 357, and earlier, the Madras High Court in Lakshmana v. Emperor, AIR 1932 Mad 341 had held under Sec. 134 and the analogous provisions of the Indian Companies Act, 1913 (hereinafter called the 'old Companies Act) corresponding to Section 22o of the Act that the omission to file with the Registrar the balance-sheet and the profit and loss account of a company is not a contravention of those provisions in as much as either no general meeting was held at which the balance-sheet was laid, or no general meeting was due to be held. After the decision of the Supreme Court in State of Bombay v. Bhandhan Ram, : 1961CriLJ319 , some of the High Courts have taken the view that the decision of the Bombay High Court in AIR 1948 Bom 357 has been overruled and that therefore the Directors cannot take shelter in the defence that no general meeting was held, when the non-holding of the general meeting was due to their own default. It may be stated that even after the Supreme Court's decision, this Court in Public Prosecutor v. H. R. Basav Raj, : AIR1963AP389 , took a similar view to that taken by the Bombay High Court, AIR 1948 Bom 357 (supra). But having regard to the decisions of several High Courts which have taken a contrary view, Sharfuddin Ahmed and A. D. V. Reddy, JJ., have referred this matter to a Full Bench.

3. The petitioners who are the Directors of the Andhra Provincial Potteries Limited, have been prosecuted for contravention of the provisions of Section 220 (1) of the Act.

INDIAN COMPANIES ACT

(VII OF 1913)

32. (1) 'Every company having a share capital shall within eighteen months from its incorporation and thereafter once at leaset in every year make a list of all persons who, on the day of the first or only ordinary general meeting in viz., for not filing the balance sheet and the profit and loss account with the Registrar of Companies, as contemplated in that section within the prescribed time. On 14th December 1967, a notice was issued by the Registrar of Companies, informing the petitioners that the annual general meeting of the company ought to have been held at the latest on 30-9-1967, that the balance sheet and the profit and loss account ought to have been laid before the said annual general meting and that they should have been filed before the Registrar on or before 30th October 1967 in accordance with the provisions of Section 220 (1) of the Act. Inasmuch as the said balance sheet and profit and loss account were not filed, they being the directions of the company, it would be presumed that they are the officers of the company in default within the meaning of Section 5, and as such, are liable to be prosecuted. The Registrar therefore asked them to make good the default mentioned above within one month form the date of issue of the notice. To this, a reply was sent on 17th February 1968 by one of the petitioners, stating that they were arranging to send the concerned documents immediately and requesting for condonation of delay. As no balance sheet and profit and loss account were filed, a complaint was lodged.

4. A preliminary objection was raised before the VI City M magistrate that prosecution will not lie under Section 220 (3) of the Act, inasmuch as no annual general meting as required under Section 166 of the Act was held without which the question of filing copies of the balance sheet and the profit and loss account would not arise. In a considered order, the Magistrate applying the principles laid down by the Supreme Court in : 1961CriLJ319 , and taking the view that that decisionhad overruled the Bombay High Court's decision in AIR 1948 Bom 357, dismissed the objection. It was throughout admitted by both the prosecution and the accused that no general meeting was held on the date when the complaint was filed, namely the 4th March 1968. The learned Advocate for the petitioners, however, states that the meeting was held on the 9th March 1968 and the documents lodged on 19th March 1968.

5. Inasmuch as several decisions dealing with the provisions of the old Companies Act, 1913 and the Act have been cited before us, we give below the relevant provisions of the old Companies Act and the Act has they would assist in the understanding of the question before us.

COMPANIES ACT, 1956

(I OF 1956)

159. (1) 'Every company having a share capital shall, within sixty days from the day on which each of the annual general meeting referred to in Section 166 is held, prepare and file with the Registrar a return containing the year, are members of the company, and of all persons who have ceased to be members since the date of the last return or (in the case of the first return) of the incorporation of the company.

(2) ......................................

(3) ......................................

(4) ......................................

(5) If a company makes default in complying with the requirements of this section, it shall be liable to a fine not exceeding fifty rupees for every day during which the default continues, and every officer of the company who knowingly and wilfulluy authorities or permits the default shall be liable to the like penalty'.

76. (1) 'A general meeting of every company shall be held within eighteen months form the date of its incorporation thereafter once at least in every calendar year and not more than fifteen oaths after the holding the last preceding general meeting.

COMPANIES ACT, 1956

(I OF 1956)

the particulars specified in Part I of Schedule V, as they stood on the day, regarding-

(a) .......................................

(b) .......................................

(c) .......................................

(d) .......................................

(e) .......................................

(f) ........................................

(g) ........................................

Proviso...................................

Explanation- Any reference in this section or in Section 160 or 161 or in any other section or in Schedule V to the day on which an annual general meeting is held or to the date of annual general meeting is held or to the date of annual general shall, where the annual general meeting for any year has not been held be construed as a reference to the latest day on or before which that meeting should have been held in accordance with the provisions of this Act.

(2) .............................'

160. (1) 'Every company not having a share capital shall, within sixty days from the day on which each of the annual general referred to in Section 166 is held, prepare and file with the Registrar a return stating the following particulars as they stood on that day:-

(a) .................................

(b) .................................

(2) .................................

161. (1) 'The copy of the anneal return filed with the Registrar under Section 159, 160, as the case may be shall be signed both by a director and by the managing agent, secretaries and treasurer.....................

(2) ............................'

162. (1) 'If a company fails to comply with any of the provisions contained in Section 159, 160 or 1761 the company, and every officer of the company who is in default shall be punishable with the fine which may extend to fifty rupees for every day during which the default continues.

(2) For the purposes of this section and Sections 159, 160 and 161, the expressions 'officer' and 'director' shall include any person in accordance with whose directions or instructions the Board of directors of the company is accustomed to act.

166. (I) 'Every company shall in each year hold in addition to any other meetings a general meeting as its annual general meeting and shall specify the meetings as such in the notices calling it; and not more than fifteen months shall elapse between the date of one annual general meeting of a company and that of the next:

INDIA COMPANIES ACT

(VII OF 1913)

(2) If a default is made in holding a meeting in accordance with the provisions of this section, the company and every director or manager of the company who is knowingly and wilfully a party to the default shall be liable to a fine not exceeding five hundred rupees.

(3) If default is made as aforesaid, the Court may, on the application of any member of the company, call or direct the calling of a general meeting of the company.

131. (1) 'The Directors of every company shall at some date not later than eighteen months after the incorporation of the company and subsequently once at least in every calendar year lay before the company in general meeting a balance sheet and profit and loss account or in the case of a company not trading for profit an income and expenditure account for the period in the case of the first account since the incorporation of the company and in any other case since the preceding account made up to a date not earlier than the date of the meeting by more than nine months or in the case of a company carrying on busines or having interest outside British India by more than twelve months.

Provided that the Registrar may for any special reason extend the period by a period not exceeding three months.

(2) The balance-sheet and the profit and loss account or income and expenditure account shall be audited by the auditoer of the company as hereinafter provided, and the auditor's report shall be attached thereto, or there will be inserted at the foot thereof a reference to the report, and the report shall be rend before the company in general meeting and shall be open to inspection by any member of the company.

(3) Every company other than a private company shall send a copy of such balance-shet and profit and loss account or income and expenditure account so audited together with a copy of the auditor's report to the registered address of every member of the company, at least fourteen days before the members of the company, shall deposit a copy at the rgistered office of the company for the inspection of the members of the company during a period

COMPANIES ACT, 1956

(1 OF 1956)

Provided that a company may hold its first annual general meeting within a period of not more than eighteen months from the date of its incorporation; and if such general meeting is held within that period it shall not be necessary for the company to hold any annual general meeting in the year of its incorporation or in the following year:

Provided further that the Registrar may, for any special reason, extend the time within which any annual general meeting (not being the first annual general meeting) shall be held, by a period not exceeding thre months.

210. (1) 'At every annual general meeting of a company held in pursuance of Section 166, the board of directors of the company shall lay before the company-

(a) a balance sheet as at the end of the period specified in sub-section (3); and

(b) a profit and los account for that period,

(2) ..............................

(3) ..............................

(4) ..............................

(5) If any person, being a director of a companyu fails to take all reasonable steps to comply with provisions of this section, he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.

(5) If any person,being a director of a company fails to take all reasonable steps to comply with the provisions of this section, he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.

Provided that in any proceedings against a person in respect of an offence under this section, it shall be a defence to prove that a competent and reliable person was charged with the duty of seeing that the provisionsof this section weree complied with and was in a position to discharge that duty:

Provided further that no person shall be sentenced to imprisonment for any such offence unless it was committed wilfully.

(6) If any person, not being a director of the comapny, having been charged by the Board of Directors with the duty of seeing that the provisions of this section are complied with, kakes default in doing so, he shall in respect of each offence, be punishable with imprisonment for a term which may extend to six months, or with fine which may

INDIAN COMPANIES ACT

(VII OF 1913)

of at least fourteen days before that meetings.

134. (1) 'After the balance sheet, and profit and loss account (or the income and expenditure account as the case may be) have been laid before the company at the general meeting three copies thereof signed by the manager or secretary of the company shall be filed with the registrar at the same time as the copy of the annual list of members and summary prepared in accordance with the requirements of Section 32.

(2) It the general meeting before which a balance-sheet is laid does not adopt the balance-sheet, a statement of that fact and of the reasons therefor shall be annexed to the balance-sheet and to the copies thereof required to be filed with the registrar.

(3) This section shall not apply to a private company.

(4) If a company makes default in complying with requirments of this section, the company and every officerof the company who knowingly and wilfully authorises or permits the default shall be liable to the like penalty as is privided by Section 32 for a default in complying with the provisions of that section.

COMPAPNIES ACT, 1956

(I OF 1956)

tend to one thousand rupees or with both:

Provided that no person shall be sentenced to imprisonment for any such offence unless it was committed wilfully'.

220. (1) 'After the balance-sheet and the profit and loss accouoont have been laid before a company at an annual general meeting as aforesaid, there shall be filed with the Registrar (within thirty days form the date on which the balance sheet and the profit and loss account were so laid).

(a) ....... three copies of the balance-shet and the profit and loss account, signed by the managing director, managing agent, secretaries and treasurers, manager, or secretary of the company, or if there be none of these, by a director of the company, together with three copies of all documents which are required by this Act to be annexed or attached to such balance sheet or profit and loss accouont:

Provided further that-

(i) in the case of a private company which is not a subsidiary of a public company, or

(ii) in the case of a privaate company of which the entire paid up share capital is held by one or more bodies corporate incorporated outside India, or

(iii) in the case of a company which becomes a public company by virtue of Section 48A, if the Central Government directs that it is not in the public interest that any person other than a member of the company shall be entitled to inspect or obtain copies of the profit and loss account of the company under Section 610.

(2) If the annual general meeting of a ........ before which a balance sheet is laid as aforesaid does not adopt the balance-shet, a statement of that fact and of the reasons therefor shall be annexed to the balance sheet and to the copeis thereof required to be filed with the registrar.

(3) If default is made in complying with requirements of sub-sections (1)

INDIAN COMPANIES ACT

(VII OF 1913)

6. A comparison of the conspectus of the sections under the Old Companies Act would show that Sections 32 of the Old Companies Act has been replaced by Sections 159, 160, 161 and 162 of the Act with this difference that under the Old Companies Act, there was nothing to indicate as to what was meant by 'the day of the first or only ordinary general meeting in the year', while under the Act, the Explanation to Section 159 clearly indicates that a reference to 'the day on which an anual general meeting' in that section or Sections 160 or 161 or in any other section or Schedule shall be construed as a reference to 'the latest day on or before that meeting should have been held in accordance with the provisonsof the Act'. It is apparent under Section 166 (1) of the Act that the company has to hold in each year, a general meeting as its annual general meeting not more than fifteen months from the date of the previous general meeting not more than fifteen months from the date of the previous general meeting, unless of course the Registrar, for any special reason extends the time within which any annual general meeting, not obeing the first annual general meeting , shall be held, within fifteen months or eighteen months, where it is extended, from the date of the last general meeting. At such an annual general meeting, both under the Old Companies Act and the Act, the balance sheet and the profit and loss account etc., have to be laid, in default of which punishment has been provided therefore. It is also apparent, at any rate from the specific provision of the Act, that this punishment is attracted even in cases where no meeting has been held due to wilful default of those on whom the duty was cast to call the meeting and lay the specified documents before it. That this was also the position under the Old Companies Act, has been the view taken by the highest Court.

Now the question is whether the company or its Directors, agents and servants can be held liable, on the aualogy of the same principle as applicable in the case of non-holding of the annual general meeting or the omission to lay before that general meeting the documents specified in the earlier provisions for not fulfilling the requirements of Section 220 of the Act, notwithstanding the fact that no annual general meeting was held and no balance sheet or profit and loss account laid before that annual general meeting. Both Section 134 of the Old Compnies Act and Section 220 of

COMPANIES ACT, 1956

(I OF 1956)

and (2), the company, and every officer of the company who is in default, shall be liable to the like puninshment as is provided by Section 162 for a default in complying with the provisions of Sections 159, 160 and 161.

the Act provide that, after these documents viz., the balance sheet and the profit and loss account have been laid before a general meeting three copies of the balance sheet and profit and loss account should be filed before the Registrar of Companies. It is also necessary where the balance sheet is not adopted by the general body, a statement to that effect and all the reasons therefor shall be annexed to the balance sheet and to the copeis thereof required to filed before the Registrar. In default of these two requirements viz., of filing the balance sheet and the statement of the balance sheet not being adopted where it is not so adopted, the company who is in default shall be liable to punishment as provided in Section 32 of the Old Companies Act or Section 162 of the Act, for not complying with provisions of Sections 159, 160 or 161.

7. Before the Explaination to Section 159 of the Act was added defining the day on which the annual general meeting is to be held as the latest day on or before which that meeting should have been held under the provisions of Section 166 of the Act, Courts had been called upon to interpret that expression under Section 32, 76 and 77 of the Old Companies Act. It would appear that in some cases no difference was noticed between these sections and Section 134. It may be stated that both Section 134 of the Old Companies Act and Section 220 of the Act do not use the words', which are used in Section 32 of the Old Companies Act and in Sections 159 and 160 of the Act. An examination of the language of these sections significantly demonstrates the conclusion when it is stated that after the balance-sheet and the profit and loss account have been so laid before the company at the general meeting, three copies of the very same balancesheet and profit and loss account which are in fact laid before the annual general meeting had such a meeting been called. Under Section 134 (1) of Old Companeis Act, the time within which these doucments should be filed is the same as for filing copies of the annual list of members and summary prepared in accordance with Section 32. Section 220 (1) of the Act varies the language by specifying the time viz., that after the balance-sheet and the profit and loss acccount had been laid before a company at an annual general meeting as aforesaid, that is to say, as requiredunder Section 210, they shall be filed with the Registrar within thirty days on which the balance-sheet and the profit and loss account were so laid.

The reference to Section 210 by the use of the word 'aforesaid' and the emphasis indicated by the words 'were so laid' makes the filing of copies of those balance-sheets and the profit and loss accounts which are laid before the general body meeting an essential prerequisite. If no general body meeting is held, it is obvious that no copies of the balance sheet and profit and loss accounts fan be filed even though the default may be wilful. Both under Section 134 of the Old Companies Act and Section 220 of the Act, the laying of the balance sheet and the profit and loss account before an annual general meeting is a condition precedent to the requirement that copies of such documents so laid should be filed before the Registrar. The intention is made further clear by the provision under sub-section (2) of the respective sections of both the Acts that, if the balance sheet is not adopted at the general meeting before which it is laid, a statement of that fact and of the reasons therefor have to be annexed to the balance sheet and to the copeis thereof required to be file with the Registrar. If no balance sheet is laid before a general body, there can be no question of that balance sheet not being adopted nor of complying with the requirements of the Sub-section (2) of Section 134 of the Old Companies Act or Section 220 of the Act as the case may be, while wilful omission to call a general body meeting and omit to lay the balance sheet and profit and loss account before it may expose the person responsibnle to punishment under other provisions of the Act, it certainly does not make him liable under the under the aforesaid provisions. The punishment under these sections is for default is filing copies of the balance sheet or the profit and loss account which are laid before a general body and for not sending a statement of the fact that the balance sheet was not adopted. It may be that copies of the balance sheet so laid before the general body may have been forwarded under sub-section (1) of Section 134 of the Old Companies Act but nontheless if the requirements of sub-section (2) of the respective sections have not been complied with, even then, the persons concerned would be liable for punishment of that default.

In our view, these provisions unmistakably indicate, as we laid earlier, that the holding of the annual genera, meeting and the laying before it of the balance sheet and the profit and loss account is a Erin qua non for filing of the copies thereof before the Registrar. If no general body meeting is held, the persons concerned cannot be said to have committed a default in complying with those provisions.

8. An examination of the case law would, in our view, show that the difference in the language on the one hand of Section 134 of the Old Companies Act and 220 if the Act and on the other of the provisions of Sections 32, 76, and 77 of the Old Companies Act and analogous provisions of the Act has not been taken note of in most of the cases. Their Lordships of the Supreme Court in : 1961CriLJ319 pointed out this difference. Nowithstanding this, cases decided subsequently in the several High Courts, in our view, with great respect, failed to appreciate the significant difference.

9. In Part v. Lawton, (1911) 1 KB 588, a similar question arose for consideration under Section 26 of the English Companies (Consolidation) Act, 1908, which is analogous to Section 32 of the Old Companies Act. In that case, information was laid against the respondents by the appellant, who was a staff officer of the Companies Registration Department of Somerset House, alleging that the respondents knowingly and willingly permitted default to be made by the English Traders Limited in forwarding to the Registrar of Companies at Somerset House a copy of its list of members, with summary as to capital and shares etc., for the year 1909 as required under Section 26 of the Companies (Consolidation) Act, 1908 and that the said default had since continued for the space of sixty-seven days thereafter and still continued. Though the General meetings of the Company were duly held on November 15, 1907 and on December 7, 1908 and the annual list of members and summary for those years were duly forwarded to and filed by the Registrar at Somerset House, the Justices convicted the respondents of the offence charged in the first information.

It was contended that the words 'on the fourteenth day after the first or only ordinary general meeting in the year' were words directory as to time only; and that the company was in default in not forwarding the annual list of members and summary. The respondents, however, contended that no general meeting having been held in 1909, it was impossible to make up the list required by Section 26 and that the respondents could not, therefore, be convicted of a default for omitting to do that, which, in fact, was impossible for them to do- and until after the dated of the meeting mentioned in Section 26. This contention was negatived by Lord Alvestone, C. J., (with whom Hamilton and Avory, JJ. concurred) who said at page 592: 'the cases of Gibson v.Barton, (1857) 10 QB 329 'and Edmonds v. Foster, (1875) 45 LJ (MC) 41', are clear authorities 'that a person' charged with an offence under Section 26 is not entitled by wat of defence to 'plead the impossibility of complying with Section 26 by reason of no general' meeting; in other words, a person charged with an offence cannot rely of 'his own default as an answer to the charge'.

10. Nearer home, Mitter, J. in Ballava Dass v. Mohan Lal Sadbu, (1935) 89 Cal WN 1152, was considering the case of the petitioner-director of the Cash Insurance Back Limited who had been convicted under clause (4) of Section 32 clause (6) of Sec. 77 and clause (4) of Section 134 of the Old Companies Act and sentenced to pay fine. The statuory meeting of the company had not been held within time mentioned in Section 77 was not forwarded to any member of the petitioner company and there could be no doubt that the petitioner knew of the said fact. Even after the prosecution was started on the 14th April, 1935, the register of share-holders was not prepared in accordance with the provisions of Section 32 and there was no doubt that the petitioner also knew of the fact. The balance sheet of the company was not prepared and placed at a general meeting nor filed with the Registrar of the Joint Stock Companies. In fact the general meeting was never held and the petitioner also knew of the fact. According to the learned Judge, the provisions of Section 134 were therefore not complied with; and in his view, in order to sustain a conviction under those sections, the only thing the prosecution had to prove was that a particular officer knowingly and wifully authorised or permitted these defaults. It was further held that the offence was also complete, if the officer of the company knew of the defaults and permitted the defaults.

11. In Bhagirath v. Emperor, AIR 1948 Cal 42, Lodge, J., was supported by the decision in Ballav Das'S CASE, (1935) 39 WN 1152, said at p. 45: 'In England it has been consistently held that a director who is prosecuted, for knowingly and wilfully permitting a company to default in respect of filing the balance sheet and profit and loss account with Registrar, cannot plead the impossibility of doing so when that impossinility is due to his own previous default. The same view has been taken in India.........'. Both these decisions, in the language of the several sections under which the petitioners were convicted, particularly the difference between the requirements of Section 134 and other sections of the Old Companies Act.

12. In AIR 1932 Mad 497, Walsh, J., took a different view, though in fact the time for holding the general meeting had not yet come, and therefore it may possibly be contended that what he said was obiter. In AIR 1937 Mad 341, Pandrang Row, J., considered the applicability of Sections 131 and and 134 and held that-

'The same persons cannot be charged in respect of the same years with offences punishable both under Sections 131 and 134, Companies Act, because Section 134 clearly contemplates the sending of a copy of the balance-sheet only after it has been placed before the Company at a general meeting under Sec. 131. Where in a case there is no such placing of the balance-sheet before the Company at a general meeting, the offence under Sec. 134 cannot be committed'.

Some of the cases cited before him dealt with the non-sending of a copy of the balance-sheet after it had been laid before a general meeting of the company. The persecution against the persons was for default made in preparing a balance-sheet or placing it before a general meeting of the company, which took place long before they ever became directors or officers of the company, and indeed even before they were share-holders.

13. As against this, Ramaswami, J. in Re. G. Appayya, : AIR1952Mad800 and Viswanathan v. Assistant Registrar of Joint Stock Companies, Madras, : AIR1953Mad558 , dealing in the former case with Section 133 (3) and in the latter with Sections 76 and 131 did not refer to the previous decisions of the Madras High Court. However, reliance was placed on 1911-1 KB 588 and AIR 1948 Cal 42. While these cases may be an authority for the proposition that under the provisions of Sections 76 and 131, the wilful non-holding of an annual general meeting or the non-laying before such a meeting of the balance-sheet and the profit and loss account amounts to a default of the provisions, there is nothing in these decisions which throws any light on the interpretation of Sec. 134.

14. A Bench of the Bombay High Court consisting of Chagla Ag. C. J. and Gajemdragadkhar, J. (as he then was) in AIR 1948 Bom 357 did consider the question which is now before us viz., whether default was committed under Section 134 (4). The facts on which the prosecution was founded alleged that the accused had failed, as required by Section 134 (4) of the Old Companies three copies of the balance-sheet and accounts of the company for the year 1944. It was common ground that no general meeting of the company had been called, at which the balance-sheet and the profit and loss account for the year 1944 had been laid. After referring to sub-sections (1) and (4) of S. 134 the learned Acting Chief Justice observed at page 357: 'it is to be noted that what is made penal is default in complying with the requirments of the section and the requirements of Section 134 (1) are that there is an obligation cast upon the company to file three copies of the balance-sheet and the profit and loss account after they have been laid before the company at the general meeting. There is no obligation cast upon the company to file any such copies if no general meeting has been called'.

It was contended by the Government Pleader in that case that the directors are themselves in default in not calling a general meeting and it is not open to them to plead in their own defence their own fault. Dealing with this contention, the Bench pointed out that under Section 76 (1), there is an obligation to hold a general meeting within eighteen months form the date of the company's incorporation, in default of which a penalty was prescribed under sub-section (2) of Section 76. Again Section 131 provides that the directors of every company must lay before the company in general meeting a balance-sheet and profit and loss account at the time stated in that section, and the failure to do so is made penal by Section 133 (3). 'Therefore', it was observed at page 358, 'on the facts which are not dispute it is clear that the directors have failed to comply with the requirements both of Section 76 (1) and also of Section 131 (1). The Government, instead of prosecuting them for what they have failed to do as required by the law and in respect of which they seem to have no defence whatever have thought fit to launch a prosectuion under Section 134 (4) when the obvious defence which is put forward by the accused is that the stage has not arrived when they can be called upon to send copies of the balance-sheet and the profit and loss accounts, because that stage can only be reached after a general meeting has been called and balance-sheet and profit and loss account have been placed before that meeting'.

15. This decision is on all fours with the one we are considering. But as we noted earlier, an impression has gained ground that their Lordships of the Supreme Court in AIR the Bombay High Court in : 1961CriLJ319 , have overruled the decision of the Bombay High Court in AIR 1948 Bom 357. We do not think this is a valid assumption. Their Lordships, after referring to the Bombay decision, pointed out at page 189, 'the language of that section is to a certain extent different from the language used in Section 31 and 131. After examining the language of Section 134 (1), Sarkar, J. (as be then was) speaking for the Court observed: 'if the language of Sec. 134 (1) makes any difference as to the principle to be applied in ascertaining whether a breach of it has occurred or not-as to which we sat nothing in this case-then that case can be of no assistance to the respondents. If however no such difference can be made, then we think that it was not correctly decided'. Perhaps, the last sentence has given rise to the impression that their Lordships have overruled the decision in AIR 1948 Bom 357. But that is not so, because the subsequent observations clearly indicate that while Chagla, C. J., did not question the correctness of the decision in (1911) 1 KB 588, which he was asked to follow all that he said with regard to that case was that the scheme and the terms of the section on which it turned were different from Sec. 134 of the Companies Act, 1913. While saying 'that may or may not be so', Sarkar, J., observed at page 159 'there is however no difference between Sec. 26 of the English Companies Act, 1908, on which Parker's case, 1911-1 KB 588, turned, and which apparently' through some mistake Chagla C> J., cited as S. 36 and S> 32 of the Indian Companies Act of 1913, except that the English Section required the summary to include a statement in the form of a balance-sheet containing certain particulars mentioned, whereas our section does not require that Section 131 of our Act contains some provision about the laying of the balance-sheet before the genereal meeting. This provision was inserted in the Act by Amending Act of 1936.

The fact, that one of the requirements of the English Sec. 26 is not present in Sec.32 of our Act cannot create any material difference between Section 32 of our Act and Sec. 26 of the English Act. If the principle that a person charged with an offence cannot rely on his default as an answer to the charge is correct, as we think it is, and which we do not find Chagla C. J., saying it is not,then that principle would clearly apply when a person is charged with a breach of Sec. 32 of our Act. The decision of the Supreme Court is only an authority in respect of Ss. 131 and 132 of the Old Companies Act and not for Section 134. In so far as Sectioin 32 is concerned the Supreme Court decided (i) that the fact that no general meeting of the company was held was, in the circumstances, no defence to the charge of not complying with requirements of Section 32. A person charged with an offence could not rely on his own default, as an answer to the charge and (ii) as in the case of Section 32 and of the same reasons, it was no defence to the charge under Sec. 131 to say that a general meeting was not called.

16. Subsequent to Supreme Court's decision Kailasam, J. in Neptune Studios Ltd. v. State, (1964) Mad WN 103, Anantanarayan, J. (as he then was) in Ambalavana Chettiar P. S. N. S. and Co. (P) Ltd. v. Registrar of Companies, : AIR1966Mad415 and a Bench of the Rajasthan High Court consisting of J.S. Ranawat, C. J. and P. N. Shinghal, J. in State v. T. C. Printers (P) Ltd., 0043/1963 and Amaresh Roy, J in Dulal Chandra Bhar v. State of West Bengal, (1962) 32 Com Cas 1143 = (1963) (1) Cri LJ 521) (Cal), apart from other sections, have dealt with prosecutions under Sec. 220 of the Act. In all these cases it was assumed that the Supreme Court in : 1961CriLJ319 , applied the principle in (1911) 1 KB 588, to cases under S. 134 of the Act which, as we have pointed out with great respect is not the case, Kailasam, J. in (1964) Mad WN 103, however did nor say that the Supreme Court has in terms overruled the decision in AIR 1948 Bom 357, but nonetheless thought that the Bombay decision cannot be of ouch guidance. According to him, the effect of the Supreme Court's decision is that a person charged with failure to carry out the requirements of the section cannot take advantage of his own default. Applying the principles laid down therin, it was held that the appellants cannot be heard to plead their own default in not convening the general meeting for the submission that they are not guilty of an offence under Section 220 (3) of the Act. Anantanarnyanan, J. (as he then was) in (1964) Mad WN 103 and Ranawat, C. J. and Singhal, J. in 0043/1963 , held that the principles enunciated by the Supreme Court in : 1961CriLJ319 , apply to cases under Section 220.

D. P. Uniyal, J. in Ramachandra and Sons (P.) Ltd. v. State, (1967) 2 Com LJ 92 (All), did consider the contention that Section 220 was differently worded. In his view that section was not very happily worded, in that, the opening words of the section indicate that the balance-sheet and the profit and loss account required to be filled with the Registrar must be such as have been laid before the annual general meeting. But in his view that does not and cannot absolve the company or its directors from performing their stutter duty in filing the balance-sheet and the profit and loss account before the Registrar within the stated time. With great respect, we are unable to agree with his conclusion particularly when the learned Judge had held that the effect of the opening words would indicate that the balance-sheet and the profit and loss account required to be filed before the Registrar, must be such as have been laid before the annual general meeting. Where there are clear words which justify a certain conclusion, in our view, that conclusion must be reached.

Amresh Roy, J. in (1962) 32 Com Cas 1143 = (1963) (1) Cri LJ 521 (Cal), expressed the view at page 1149, that in : 1961CriLJ319 , their Lordships of the Supreme Court stated that the principle enunciated in (1911) 1 KB 588, would apply, when apply when a person is charged with breach of the Indian Companies Act. While applying the principle to the case before him which was under Section 220, the learned Judge Sarkar, J. in the Supreme Court decision in which the learned Judge distinguished the Bombay case. These de decisions in terms do not notice the difference in the language and the requirements of S. 220 on the one hand and Sections 159 to 162, 166 and 210 of the Act on the other.

17. It apppears to us on a consideration of the relevant provisions of the Act, that the wilful failure to hold a general meeting cannot be pleaded as a defence for default committed in preparing the statements of members of the company as required under Section 32, or for failure to lay before the general meeting, the balance-sheet and profit and loss account, or in the case of a company not trading for profit an income and expenditure account. One cannot plead one's own default in defence. The principle of (1911) 1 KB 588, however cannot be held to be applicable to the requirements of S. 134, because the actual holding of annual general meting is a condition precedent or a sine qua non for the filing of the copies of the balance-sheet and profit and loss account, which are so laid before an annual general meeting with Registrar within thirty days form the day when they are so laid. We have already noticed that the language of Section 134 (1) and (2) requires only copies of that balance-sheet and profit and loss account or a statement that the balance-sheet has not been adopted with full reasons therefor should be filed before the Registrar, which have been laid at an annual general meeting, which would have been filed, had such a meeting been held, if the persons concerned had not wilfully defaulted in calling the meeting. As (the Act) is somewhat different, and if anything, lends further weight to this conclusion. It is clear that the default in not holding an annual general meeting and preparing statements or retruns and filing them before the Registrar or in not laying of the balance-sheet and the profit and loss account before that meeting as required under Section 166, 159 to 161 and 210 cannot be pleaded in defence of prosecution.

The contrary view taken in : AIR1963AP389 , that the holding of an annual general meeting would be necessary for the prosecution under Sections 166 and 210 of the Act is, in our view, with respect no longer good law, having regard to the decision of the Supreme Court on the analogous provisions of the Old Companies Act. While this is so, the defence that no general meeting was in fact held for the non-filing of the copies of the balance-sheet has not been adopted with the explanation therefor before the Registrar within the time specified, will however be open to the persons who have committed default under Sections 166, 159 to 162 and 210 by wilfully not holding a meeting and not fulfilling the requirements of these provisions for which no period of limitation is prescribed under the Act, any prosecution under Section 220 would be premature without such a meeting being in fact held.

18. In the view we have taken the criminal revision case is allowed and the prosecution is quashed.

19. Revision allowed.


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