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Mau Cold Storage and Khandsari Sugar Factory P. Ltd. and ors. Vs. Registrar of Companies and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtAllahabad High Court
Decided On
Case NumberCompany Petition No. 6 of 1983
Judge
Reported in[1985]57CompCas37(All)
ActsCompanies Act, 1956 - Sections 633, 633(1) and 633(2)
AppellantMau Cold Storage and Khandsari Sugar Factory P. Ltd. and ors.
RespondentRegistrar of Companies and ors.
Appellant AdvocateR.N. Bhalla and ;G.N. Singh, Advs.
Respondent AdvocateK.K. Mishra, Adv.
DispositionPetition dismissed
Excerpt:
- - 1 for the period ending march 31, 1979, latest by october 30, 1979. as the petitioners failed to file the said balance-sheet and the profit and loss account within the stipulated time and were knowingly and wilfully continuing the said default, they were liable to be punished for contravening the provisions of section 220 of the act. they contend that as the petitioners have acted honestly and reasonably and that, in the circumstances of the case, the default complained of by the. 1, as well as its directors, petitioners nos......have had if it had been a court before which a proceeding against that officer for negligence, default,breach of duty, misfeasance or breach of trust had been brought under sub-section.(l). (3) no court shall grant any relief to any officer under sub-section (1) or sub-section (2) unless it has, by notice served in the manner specified by it, required the registrar and such, other person, if any, as it thinks necessary, to show cause why such relief should not be granted.' 5. a perusal of the various provisions of the act reveals that it imposes a number of obligations upon officers of the company. it also makes provisions for initiating, before a court of law, proceedings against the officers of the company for negligence, default, breach of duty, misfeasance or breach of trust. the.....
Judgment:

H.N. Seth, J.

1. Petitioner No. 1, Mau Cold Storage and Khandsari. Sugar Factory P. Ltd., is a private limited company incorporated under the Companies Act, 1956 (hereinafter referred to as 'the Act'), and petitioners. Nos. 2 to 7 are its directors. On October 4, 1984, respondent No. 1, Registrar of Companies, U.P., filed a complaint against the petitioners before respondent No. 2, Chief Metropolitan Magistrate, Kanpur, alleging that Section 220 of the Act places a statutory obligation on the petitioners to file with the Registrar of Companies the balance-sheet and the profit and loss account in the prescribed form duly placed in the annual general meeting of the company, within thirty days of the annual general meeting and, in case no annual general meeting is held, within thirty days of the due date of the annual general meeting. The petitioners were thus required to file, with the Registrar of Companies, the balance-sheet, and the profit and loss account of petitioner No. 1 for the period ending March 31, 1979, latest by October 30, 1979. As the petitioners failed to file the said balance-sheet and the profit and loss account within the stipulated time and were knowingly and wilfully continuing the said default, they were liable to be punished for contravening the provisions of Section 220 of the Act...

2. The Chief Metropolitan Magistrate, Kanpur, took cognizance of the complaint and issued processes for enforcing the presence of the petitioners before him. Aggrieved; the petitioners have invoked the jurisdiction of this court under Section 633(2) of the Act, and pray that the complaint filed against them by the Registrar of Companies as also their prosecution under Section 220 of the Act pending before the Chief Metropolitan Magistrate, Kanpur (Criminal Case No. 8235 of 1981), be quashed.

3. The case .of the petitioners is that due to some misunderstanding, the income-tax 'authorities raided the premises of petitioner No. 1 on February 20, 1979, and seized its account books and other documents relating to the year 1979. As the income-tax authorities did not release the account books and other documents seized by them, the company was prevented from preparing its profit and loss account as also its balance-sheet and getting the same audited within time. They contend that as the petitioners have acted honestly and reasonably and that, in the circumstances of the case, the default complained of by the. Registrar of Companies deserved to be excused and the court should relieve them of their liability in respect of non-filing of the company's balance-sheet and the profit and loss account within time. They also contend that in case the court relieves the petitioners of the above mentioned liability, the proceedings for their prosecution which are pending before the Chief Metropolitan Magistrate, Kanpur, will also fall and will have to be quashed.

4. Section 633 of the Act invoked by the petitioners runs thus :

' 633(1). If in any proceeding for negligence, default, breach of duty, misfeasance or breach of trust against an officer of a company, it appears to the court hearing the case that he is or may be liable in respect of the negligence, default, breach of duty, misfeasance or breach of trust, but that he has acted honestly and reasonably, and that having regard to all the circumstances of the case, including those connected with his appointment, he ought fairly to be excused, the court may relieve him, either wholly or partly, from his liability on such terms as it may think -fit:

Provided that in a criminal proceeding under this sub-section, the court shall have no power to grant relief from any civil liability which may attach to an officer in respect of such negligence, default, breach of duty, misfeasance or breach of trust. (2) Where any such officer has reason to apprehend that any proceeding will or might be brought against him in respect of any negligence, default, breach of duty, misfeasance or breach of trust, he may apply to the High Court for relief and the High Court on such application shall have, the same power to relieve him as it would have had if it had been a court before which a proceeding against that officer for negligence, default,breach of duty, misfeasance or breach of trust had been brought under Sub-section.(l).

(3) No court shall grant any relief to any officer under Sub-section (1) or Sub-section (2) unless it has, by notice served in the manner specified by it, required the Registrar and such, other person, if any, as it thinks necessary, to show cause why such relief should not be granted.'

5. A perusal of the various provisions of the Act reveals that it imposes a number of obligations upon officers of the company. It also makes provisions for initiating, before a court of law, proceedings against the officers of the company for negligence, default, breach of duty, misfeasance or breach of trust. The object underlying Section 633 of the Act obviously is to avoid hardship to officers of the company in deserving cases and to relieve them of their liability in cases where they have been technically guilty if they are able to convince the court that they had been acting honestly and reasonably and that having regard to the circumstances of the case, they, in all fairness, ought to be excused from the charge or charges made against them. The section enables the concerned officer to apply to the court for making an order relieving him of the liability incurred by him either after the proceedings have commenced against him or by way of preventive action before commencement of the proceedings. Whereas, according to Sub-Section (l) of Section 633, in case where the proceedings have commenced, the application for relief in this regard has to be made to, and is to be considered by, the court before which the proceedings are pending, Sub-section (2) enables the High Court to exercise such jurisdiction in cases where the proceedings are going to be, or, are likely to be initiated. This section does not empower the the High Court to grant any relief to any officer of the company in cases where the proceedings against an officer have already been initiated and are pending.

6. It is also significant to note that Sub-sections (1) and (2) of Section 633 enable the concerned court and the High Court to grant relief only to officers of the company. The section does not contemplate any order relieving the company of any of the liabilities incurred by it.

7. In the instant case, the company, petitioner No. 1, as well as its directors, petitioners Nos. 2 to 7, have moved this court for relief under Section 633(2) of the Act after the proceedings in respect of the alleged default made by them have been initiated and are pending before the Chief Metropolitan Magistrate, Kanpur. As already explained, the company, that is, petitioner No. 1, is not entitled to claim any relief under Section 633 of the Act. So far as petitioners Nos. 2 to 7 are concerned, they can pray for relief under Section 633(1) before the court before which the criminal proceedings are pending. Inasmuch as the criminal proceedings have already been initiated against petitioners Nos. 2 to 7 and are pending before the Chief Metropolitan Magistrate, Kanpur, it is not open to this court to grant them any relief under Section 633(2) of the Act. '

8. During the course of his arguments, learned counsel appearing for the petitioners cited the case, Tolaram Jalan, In re [1959] 29 Comp Cas 34; AIR 1959 Bom 245, wherein it has been observed as follows (headnote of AIR);

'Whereas Sub-section (1) of Section 633 refers to proceedings already commenced, Sub-section (2) contemplates a claim which is anticipated as one which might be made in future. Under Sub-section (1), the important words are ' the court hearing the case', which obviously mean the court before which a proceeding is pending. These words, therefore, mean that it would not be the High Court which can grant relief under Sub-section (1) but the court before whom the proceeding has commenced and is pending; Subsection (2), on the other hand, creates a fiction and provides that in respect of an apprehended claim, the High Court shall have the same power to grant relief as it would have had under this section if it had been the court before which proceedings for negligence, default, breach of duty, misfeasance or breach of trust had been brought. '

9. This decision instead of supporting the petitioner's case that, in thecircumstances of this case, they are entitled to claim relief under Section 633(2) goes against them and supports the view taken by me, that in such cases,where the proceedings have already commenced and are pending before acourt of law it is only that court before which the proceedings are pendingwhich alone can grant the requisite relief under Section 633(1) of the Act and that, in such cases, the jurisdiction of the High Court cannot be invokedunder Sub-section (2) of Section 633. .

10. Learned counsel for the petitioners also cited before me a Full Bench decision of the Andhra Pradesh High Court in the case of Andhra Provincial Potteries Ltd. v. Registrar of Companies [1969] 39 Comp Cas 1000. In this case, the court considered the provisions of Section 220 of the Indian Companies Act, as they stood prior to the amendment made in the year 1977, and ruled that as per unamended section there was no obligation on the company or its officers to file with the Registrar, the balance-sheet and the profit and loss account of the company till an annual general meeting was held. Since, in that case, the annual general meeting had not been held, no prosecution for not filing the profit and loss account was maintainable. There is nothing in that decision which runs counter to the view which is being taken by me in the present case.

11. In the view which I am taking, it is not necessary for me to decide as to whether petitioners Nos. 2 to 7 have made out any case for being relieved against the default for which they are being prosecuted. It will be open to them to raise their claim in this regard before the criminal court which will deal with it in accordance with law.

12. Daring the course of the hearing, my attention was also invited to section 637B-of the Act, which empowers the Central Govt. to condone the delay in filing any document with the Registrar of Companies. Suffice it to say, the power under Section 637B is that of the Central Govt. and not of the High Court. The order passed by me will not preclude any of the seven petitioners from moving the Central Govt. for condonation of delay in filing the requisite documents under Section 637B of the Act. If and when any such application is moved, the Central Govt. will be free to dispose of it in accordance with law.

13. In view of the aforesaid discussion, I am of the opinion that the petitioners are neither entitled to the relief claimed by them nor to invoke the jurisdiction of this court under Section 633(2) of the Act.

14. In the result, this petition fails and is dismissed with costs.


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