1. Appellants are accused 2 and 3 in C. C. Nos. 5050 and 5051 of 1961 on the file of the Sixth Presidency Magistrate, Saidapet, Madras. They were Directors of the first accused firm Sarathi Films Private Ltd. They have been convicted along with the first accused firm Under Section 159 read with Section 162 of the Companies Act in C. C. 5050 of 1961 for failure to submit annual return and Under Section 220 (t) read with Section 220 (3) of the Companies Act in C. C. No. 5051 of 1961, for failure to submit balance-sheet and sentenced to a fine of Rs. 500/-, in default to simple imprisonment for three months each on each count. The appeals have been preferred by accused 2 and 3 alone and not by the firm.
2. The only point for determination in these appeals is whether the appellants ceased to be Directors and were not liable to submit annual return or balance-sheet. Sarathi Films Private Ltd., was incorporated as a private company limited by share capital under the provisions of the Indian Companies Act, 1913. Article 83 of the Articles of Association of the Company, provides for the whole of the Directors retiring from office at the Fourth Ordinary meeting of the company and a third of the directors retiring in every subsequent year by rotation. This corresponds to Section 256 (1) of the Companies Act. Article 87 of. the Articles- of Association provides that if at any meeting at which an election of Directors ought to take place, the places of the vacating Directors are not filled up, the meeting shall stand adjourned till the same day in the next week at the same time and place, and, if at the adjourned meeting the places of the vacating directors are not filled up, the vacating directors or such of them as have not had their places filled up shall be deemed to have been re-elected at the adjourned meeting. This corresponds to Section .256 (4) of the Companies Act. It is clear from the evidence of P. W, 1, that the last Annual General Body meeting of the company was held on 25-6-1955. Hence the appellants contend that they could not have continued as directors at any rate after 1958.
3. Section 355 (1) of the Companies Act provides for the appointment of directors and proportion of those who are to retire by rotation, but it is applicable only to a public company or a private company, which is subsidiary to a public company and it has therefore no application to the present case. Under Section 255 (2) of the Companies Act, the directors generally in the case of a private company which is not a subsidiary of a public company, shall, in default of and subject to any regulations in the articles of the company, also be appointed by the Company in general meeting. But I have already referred to the Articles of Association which provide for the appointment of directors and proportion of those who are to retire by rotation analogous to the provisions contained in Section 256 of the Companies Act relating to public companies.
4. Though Clause 1 of Section 256 of the Companies Act does not apply to a private company which is not subsidiary of a public company, any such company may by its articles, adopt its provisions, 'the decisions interpreting the clause are relevant in this case as the terms of Article 83 of the Articles of Association of the company providing for directors retiring by rotation are similar to the said clause. In Ananthalakshmi v. Indian Trades arid Investments Ltd. : AIR1953Mad467 a Bench of this High, Court following the decisions in In re, Consolidated Nickel Mihes Ltd. 1914 1 Ch 883 and Morris v. Kaneseen 1946 AC 459 has held that if in any calendar year an annual meeting is not held under an articlej of the company those directors who would have retired at the meeting had the same been held will vacate office on the last day of the year. This decision has been followed in Krishnaprasad v. Colabai Land and Mills Co., Ltd. : AIR1960Bom312 .; The appellants should be held to have retired front their office as directors by the end of the financial year of 1958, ending with 30th September} 1958, if not earlier. They cannot therefore be held liable for not submitting the annual return or the balance-sheet for the subsequent financial year ending with 30th September, 1959-
5. It has been pointed out in the decision in : AIR1960Bom312 , that in a case where despite the mandatory provisions of Section 166 and in breach of j their duty as directors, the directors' do not call for annual general meeting of the company for I any length of time, they cannot claim to continue in their office of director after the expiry of the period mentioned in the section for calling the statutory meeting. In the decision in ' 1946 AC 459, it was held that the purported acts of the pet-sons who cease to be directors in holding a meeting of directors and allotting shares were invalid, that it was not a case where there was a .defective appointment in the case of the said directors but one where after 1941 there was no appointment of them as directors at all so that their acts could not be validated. Hence the appellants cannot by any action or representation on their part continue to be directors of the company after 1958.
6. The lower Court has relied on the principle enunciated in the decision of the Supreme Court in State of Bombay v. Bhandan Ram Bandera : 1961CriLJ319 , that a person charged with an Offence cannot rely on his own default as an answer to the charge. It was also held in that decision (hat if a person charged with the failure to carry ; out the requirements of Section 32 of the Companies Act, could have called the meeting, he cannot defeat the provisions of the section simply by not calling the meeting wilfully. This principle can have no application to the facts of the present case. The appellants ceased to be directors at any rate by the end of the financial year of 1958, by virtue of Article 83 of the Articles of Association of the Company. There is no evidence in this case that there was any duty on the part: of the appellants to have called for a meeting for the appointment of directors in their place. It was stated during arguments that there were also other directors of the company, besides the appellants.
7. For the foregoing reasons, I uphold the contention of the appellants that they were not directors of Sarathi Films Private Ltd., for the financial year 1958-59, and that they cannot be prosecuted for not submitting the annual return and the balance-sheet. The convictions of the appellants are therefore set aside and the fine amounts, if collected, are ordered to be refunded to them.