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Sevaram Pasari and ors. Vs. Registrar of Companies - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtOrissa High Court
Decided On
Case NumberCriminal Revn. Nos. 525 to 528 of 1962
Judge
Reported inAIR1964Ori14; 29(1963)CLT470; 1964CriLJ64
ActsCompanies Act, 1956 - Sections 166, 168, 210 and 210(5); General Clauses Act, 1897 - Sections 26
AppellantSevaram Pasari and ors.
RespondentRegistrar of Companies
Appellant AdvocateRanjit Mohanty and ;B.B. Roy, Advs.
Respondent AdvocateGovt. Adv.
DispositionPetition dismissed
Cases ReferredViswananathan v. Asst. Registrar of Joint Stock Companies
Excerpt:
.....to call for such meeting section 168 says that the company and every officer of the company who is in default, shall be liable to fine. 8. moreover, it is well known principle that a person should not be permitted to take advantage of his own wrong. the managing director was primarily responsible for calling a general meeting of the company, and having failed to call such a meeting and thereby contravened section 166, he cannot be permitted to take advantage of this omission, and then plead that he could not lay the balance-sheet or profit and loss account be-cause no meeting was called. this well known principle was emphasised in park v......it has been held as a fact that for the two financial years ending on 31-10-58 and 31-10-59 no general meeting of the company was held (either during that year or within 9 months thereafter). this amounts to contravention of section 166 of the companies act 1956 which is punishable under section 168 of that act. similarly it has been found as a fact that the balancesheet and the profit and loss accounts of the company for the said two years were not laid before the annual general meeting as required by sub-section (1) of section 210 of that act. this amounts to an offence punishable under sub-section (5) of that section.3. for the offence under section 168 of the companies act, the aforesaid firm and its directors (including the managing director) were prosecuted and fined rs. 100/-.....
Judgment:

Narasimham, C.J.

1. These four petitions were heard together and are disposed of in one judgment.

2. There is a private company named Sambalpur Transport and Trading Company (Private) Ltd. at Bargarh of which one Sevaram Pansari (Petitioner in Criminal Revisions 325 and 326 of 1962) is the Managing Director and Ganpatram Pansari and Khemchand Agarwalla are the Directors. It has been held as a fact that for the two financial years ending on 31-10-58 and 31-10-59 no General meeting of the Company was held (either during that year or within 9 months thereafter). This amounts to contravention of Section 166 of the Companies Act 1956 which is punishable under Section 168 of that Act. Similarly it has been found as a fact that the balancesheet and the Profit and Loss Accounts of the Company for the said two years were not laid before the annual general meeting as required by Sub-section (1) of Section 210 of that Act. This amounts to an offence punishable under Sub-section (5) of that Section.

3. For the offence under Section 168 of the Companies Act, the aforesaid firm and its Directors (including the Managing Director) were prosecuted and fined Rs. 100/- each, and their appeal was dismissed. Criminal Revisions 527 and 528 of 1962 arise out of this conviction and sentence. So far as these two revisions are concerned Mr. Mohanty pressed them only on the question of sentence, but in my opinion the fine of Rs. 100/- is not excessive and does not call interference.

4. As regards the prosecution under Sub-section (5) of Section 210 of the Companies Act,the trial Court convicted 'the 'Managing Director and the other 2 Directors, but the appellate Court set aside the conviction of the other two Directors and held that the Managing Director alone was responsible for the failure to lay the balance-sheet and the Profit and Loss Account of the. Company within the period fixed, and therefore upheld his conviction and sentence. Criminal Revisions 525 and 526 were filed by the Managing Director against his conviction and sentence passed for the offence Under Section 210(5) of the Act.

5. Mr. R. Mohanty for the Managing Director namely Sevaram Pansari urged that the offence; under Sub-section (5) of Section 210 of the Companies Act is practically included in the offence under Section 168 and consequently as the Managing Director had already been convicted and sentenced, for the latter offence he could not be convicted and! sentenced for the former offence.

6. Section 166 of the Companies Act says that every Company shall each year hold the annual general meeting within a specified date and the Board of Directors have the power to call for such meeting. For failure to call for such meeting Section 168 says that the Company and every officer of the Company who is in default, shall be liable to fine. Sub-section (1) of Section 210 says that 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) the balance sheet at the ends of the period specified in Sub-section (3) and (b) the Profit and Loss Account for that period. The penal provision, viz., Sub-section (5) of that Sections says;

'If any person being a Director of the Company fails to take all reasonable steps to comply with the provisions of this Section he shall in respect of each offence be punished with imprisonment for a term which may extend to 6 months, or fine which may extend to Rs. 1000/- or with both.'

According to Mr. Mohanty once it has been found; that no annual general meeting of the Company was held, in pursuance of the requirements of Section 166, the question of laying the balance sheet or the profit and loss account does not arise, and consequently there can be no separate conviction under Sub-section (5) of Section 210 apart from the conviction under Section 168 of the Companies. Act.

7. In my opinion this argument cannot prevail. Firstly, an offence under Section 168 of the Companies Act is distinct from the offence under Section 210(5) of the Act. The former deals with omission to call an annual General meeting of the Company within the statutory period. The latter deals with omission of the director of a company to take all reasonable steps to lay the balance-sheet and profit and loss account at the annual General meeting. Reasonable steps for laying the profit and loss account and balance-sheet could be taken even before the actual date on which such meeting is held and where there is omission to take such steps the offence under Sub-section (5) of Section 210 is complete.

The principle of Section 26 of the General Clauses Act would apply if the same act or omission amounts to an offence under two enactments, in which case though there may be separate trials there may not be two separate sentences. But where it is held that the act or omission which constitutes the offence under Section 168 of the Companies Act is distinct from the act or omission which constitutes the offence under Section 210(5),the aforesaid provision in the General Clauses Act cannot apply, and it is immaterial as to whether the contravention of section 210 was brought about on account of the commission of the offence under Section 168 by the same persons.

8. Moreover, it is well known principle that a person should not be permitted to take advantage of his own wrong. The Managing Director was primarily responsible for calling a general meeting of the Company, and having failed to call such a meeting and thereby contravened Section 166, he cannot be permitted to take advantage of this omission, and then plead that he could not lay the balance-sheet or profit and loss account be-cause no meeting was called. This well known principle was emphasised in Park v. Lawton, (1911) 1 K3 588, and has been followed in India in a Calcutta decision reported in Debendra Nath v. Registrar of Joint Stock Companies, 45 Cal 486 : (AIR 1917 Cal 1) followed in In re G. Appayya, AIR 1952 Mad 800 and in Viswananathan v. Asst. Registrar of Joint Stock Companies, AIR 1953 Mad 558 while construing the corresponding provision of the old Companies Act of 1913 (Sections 76 and 133).

Mr. Mohanty then relied on some observation in AIR 1937 Mad 341 but that case is fundamentally distinguishable on facts, and hence it is unnecessary to discuss this point further. I must accordingly hold that the conviction of the managing director for the offence under Section 210(5) was justified in law. The sentence is also not severe.

9. All the revision petitions are dismissed.


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