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India Nutriments Ltd. Represented by A-2 and anr. Vs. the Registrar of Companies - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtChennai High Court
Decided On
Reported in(1964)1MLJ158
AppellantIndia Nutriments Ltd. Represented by A-2 and anr.
RespondentThe Registrar of Companies
Cases ReferredState of Bombay v. Bhandan Ram
Excerpt:
.....act, every company having a share capital, shall within 42 days from the day on which the annual general meeting is held, prepare and file with the registrar a return containing the particulars specified in part (1) of schedule (v), and failure to do so, is punishable under section 162 of the act. 357 that there is no obligation cast upon a company to file the balance-sheet and profit and loss account if no general meeting had been called and, therefore, where no general meeting of the company was called and no balance-sheet and profit and loss accounts laid before it, the company and its directors have made no default in complying with section 134(corresponding to section 220) by their failure to file the copies of the balance-sheet and the profit and loss accounts with the registrar..........south indian traders, is its managing agent. he did not file with the registrar of companies the balance-sheet and profit and loss account of the first petitioner company for the financial year ending with 30th june, 1958, or the annual return as required under the act in spite of several reminders by the registrar of companies. the petitioners and the other two directors of the company (accused 3 and 4) were, therefore, prosecuted for the default. the learned second presidency magistrate found a-3 and a-4 not culpable. but he found the petitioners guilty of the omission, convicted them and sentenced each of them in both the cases to a fine of rs. 25 with a default sentence of 16 days' imprisonment. the second petitioner was also directed to submit the balance-sheet within two.....
Judgment:

P. Kunhamed Kutti, J.

1. These two Revision Cases arise out of orders passed by the Second Presidency Magistrate under Sections 220(1) and 159 of the Indian Companies Act (1 of 1956). The first petitioner is the Indian Nutriments Ltd., a Company incorporated under the Indian Companies Act and the second petitioner, as the sole proprietor of South Indian Traders, is its Managing Agent. He did not file with the Registrar of Companies the balance-sheet and profit and loss account of the first petitioner Company for the financial year ending with 30th June, 1958, or the annual return as required under the Act in spite of several reminders by the Registrar of Companies. The petitioners and the other two Directors of the Company (accused 3 and 4) were, therefore, prosecuted for the default. The learned Second Presidency Magistrate found A-3 and A-4 not culpable. But he found the petitioners guilty of the omission, convicted them and sentenced each of them in both the cases to a fine of Rs. 25 with a default sentence of 16 days' imprisonment. The second petitioner was also directed to submit the balance-sheet within two months.

2. The plea of the petitioners was that the annual general meeting of the Company could not be held as A-3 and A-4 had resigned and, therefore, for want of quorum the balance-sheet and profit and loss account and the annual return could not be laid either at the general meeting, or filed with the Registrar as required under Section 220(1) of the Act. The plea was found by the learned Magistrate to be untenable in the circumstances of this case. The Articles of Association of the Company empowered the Managing Agent to nominate one-third of the total number of Directors, so that, even if A-3 and A-4 had non-cooperated and resigned as alleged by the petitioners, there was nothing preventing the second petitioner from conforming to the statutory requirements by exercising the power vested in him under the Articles of Association. An attempt appears to have been made by the second petitioner before the learned Magistrate to make out that he had issued notice of the meeting. The steps taken by him were sought to be proved not by the production of the notice alleged to have been sent by him ; but through certain entries made by him in the Company's minutes book. Rightly was the learned Magistrate not inclined to place any reliance on this self-serving piece of evidence. The position, therefore, was that as found by the learned Magistrate the second petitioner had defaulted to take the necessary steps to call the meeting and get the annual balance-sheet and profit and loss accounts to be placed before it.

3. Under Section 159 of the Act, every Company having a share capital, shall within 42 days from the day on which the Annual General Meeting is held, prepare and file with the Registrar a return containing the particulars specified in Part (1) of Schedule (v), and failure to do so, is punishable under Section 162 of the Act. The expression 'officer' and ' Director' in these sections include any person in accordance with whose directions and instructions, the Board of Directors of the Company is accustomed to act. It is not seriously contended that the second petitioner as the Managing Agent was not bound to summon the meeting or submit the returns contemplated by Section 159. In the circumstances of the case, therefore, I have no hesitation to agree with the learned Magistrate's conclusion that despite the Registrar giving him time to make the balance-sheet, he did not take any action to convene the meeting to submit the balance-sheet, and that the resignation of A-3 and A-4 did not afford a valid excuse for him for not convening the annual General Meeting or submitting the annual return to the Registrar.

4. The learned Counsel for the petitioners nevertheless urges relying on Emperor v. Pioneer Clay and Industrial Works A.I.R. 1948 Bom. 357 that there is no obligation cast upon a Company to file the balance-sheet and profit and loss account if no general meeting had been called and, therefore, where no general meeting of the Company was called and no balance-sheet and profit and loss accounts laid before it, the Company and its Directors have made no default in complying with Section 134(corresponding to Section 220) by their failure to file the copies of the balance-sheet and the profit and loss accounts with the Registrar and they are not guilty under Section 134(4) of the Companies Act, 1913 (corresponding to Section 220(3) of the present Act). Almost an identical question came for consideration before the Supreme Court in the State of Bombay v. Bhandan Ram : 1961CriLJ319 . There, the Directors of a Company were charged with offences under Sections 32(5) and 133 of the Companies Act of 1913, as amended by Act XXII of 1936, in that, they were knowingly and wilfully parties to the failure to file the summary of share capital for a certain year and to the failure to lay before the company in General Meeting the balance sheet and profit and loss account as required under Section 131. It was found that no general meeting of the Company had been held during the year in question and the Directors had been knowingly parties to the default of the Company in that respect. Their Lordships of the Supreme Court held 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 the requirements of Section 32(corresponding to Section 159 of Act 1 of 1956) and that a person charged with an offence could not rely on his own default as an answer to the charge. Their Lordships further observed that the result could not be different because of the presence of a provision like Section 76(old Act) which imposed an obligation to hold a General Meeting and attached a penalty to a failure to perform that obligation. Their Lordships distinguished the ruling in Emperor v. Pioneer Clay and Industrial Works, Ltd. A.I.R. 1948 Bom. 357 already referred to above and relied on for the petitioners herein, by stating that the decision therein turned on Section 134 of the Companies Act, 1913, and that the language of that section is to a certain extent different from the language used in Sections 32 and 131 observing at the same time that, to quote their Lordships language,'' if, however, no such difference can be made, then we think that it was not correctly decided.'

5. So far as these cases are concerned, the decision of their Lordships in State of Bombay v. Bhandan Ram : 1961CriLJ319 referred to above more appropriately applies and I am satisfied that the convictions of the petitioners both under Section 220(1) and 159 of the Act 1 of 1956 is unassailable. In imposing a fine of Rs. 25 on each of the petitioners in these cases, the learned Magistrate has taken into consideration the extenuating circumstances. The amounts of fine, therefore, do not call for any interference.

6. The convictions and sentences in these cases are accordingly confirmed and these cases are dismissed.


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