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indra Prakash Karnani and ors. Vs. Registrar of Companies and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberCriminal Revision No. 2175 of 1979
Judge
Reported in[1985]57CompCas662(Cal)
ActsCompanies Act, 1956 - Section 209A, 209A(1), 209A(2), 209A(5) and 209A(8); ;Minimum Wages Act, 1948; ;Employees' Provident Funds Act, 1952
Appellantindra Prakash Karnani and ors.
RespondentRegistrar of Companies and ors.
Appellant AdvocateSantosh Sen and ;S.N. Some, Advs.;Sova Mukherjee, Adv.
Respondent AdvocateDipak Kumar Sengupta, Adv. for respondent No. 1
DispositionPetition dismissed
Cases ReferredMaya Chundra v. Inspector
Excerpt:
- .....of sub-section (2) read with sub-section (5) of section 209a of the companies act, 1956, the books of account and the other books of the company were required to be produced before shri j. b. bhaduri, assistant inspecting officer, an officer authorised under clause (ii) of section 209a(1) of the act on september 19, 1975, after a notice to that effect was given to the directors by a letter dated august 30, 1975. the company, by a letter dated september 8, 1975, expressed its inability to produce the books of account on september 19, 1975, and prayed for one month's time. the complainant alleged that by another notice dated october 17, 1975, the directors of the company were individually informed that default in the matter of production of records before the authorised officer was.....
Judgment:

Chaudhuri, J.

1. In this case arising out of an application under Section 401 read with Section 482 of the Cr. PC. 1973, and Article 227 of the Constitution, a prayer has been made for quashing the proceedings in Case No. G/2969 of 1975, in the fifth Court of Metropolitan Magistrate, Calcutta, and for setting aside the order dated October 11, 1979, passed in the said case.

2. The aforesaid case before the Metropolitan Magistrate arose out of a petition of complaint filed by the Registrar of Companies, West Bengal, under Section 209A(8) of the Companies Act, 1956, impleading the present petitioners as accused. It was alleged that Poobong Tea Co. Ltd. was incorporated under the Indian Companies Act, 1913, on March 27, 1923, having its registered office at 44, Strand Road, Calcutta, and the accused were directors of the company. Pursuant to the provisions of Sub-section (2) read with Sub-section (5) of Section 209A of the Companies Act, 1956, the books of account and the other books of the company were required to be produced before Shri J. B. Bhaduri, Assistant Inspecting Officer, an officer authorised under Clause (ii) of Section 209A(1) of the Act on September 19, 1975, after a notice to that effect was given to the directors by a letter dated August 30, 1975. The company, by a letter dated September 8, 1975, expressed its inability to produce the books of account on September 19, 1975, and prayed for one month's time. The complainant alleged that by another notice dated October 17, 1975, the directors of the company were individually informed that default in the matter of production of records before the authorised officer was well within their knowledge and they were required to show cause why action should not be taken against them under the appropriate section of the Companies Act. Instead of complying with the above direction, the accused remained silent and the company requested for directions on the authorised officer to carry on the inspection of the books at its premises which was contrary to the specific directions given by the complainant in its notice. The complainant, therefore, alleged that the accused committed an offence under Section 209A(2), read with Sub-section (5) and Sub-section (S) when the company, by its letter dated November 15, 1975, expressed its unwillingness to produce the books of account. In the petition of complaint it was alleged that after giving prior notice to the company, Mr. Bhaduri had visited the premises of the company on April 16, 1974, April 18, 1974, and April 25, 1974, in vain for inspection of the books of account. After receiving the complaint, the then Chief Metropolitan Magistrate by his order dated December 25, 1975, took cognizance of the case and ordered issue of summons against the accused petitioners. Simultaneously, he transferred the case to the fifth Court of Metropolitan Magistrate for. disposal. Entering appearance in the case, the accused took some preliminary objections to the proceedings and prayed that the order taking cognizance of the case be reviewed and the proceedings dropped. By order dated October 11, 1979, impugned herein, the learned Metropolitan Magistrate, fifth Court, refused the prayer of the accused. Against the above background, the present revision case has been filed.

3. Mr. Santosh Nath Sen, the learned advocate on behalf of the petitioners, challenges the legality and validity of the proceedings before the learned Metropolitan Magistrate on various grounds. He contends that offence, if any, was committed by the company between April 16, 19,74, and April 25, 1974. The case before the Metropolitan Magistrate instituted on December 23, 1975, is barred under Section 468(2)(b) of the Cr. PC. This contention does not have any substance on its face. It has been clearly stated in para. 7 of the complaint that the complainant issued another notice on October 16, 1975, reiterating specifically that the directors of the company individually were aware of the default of not producing the records before J.B. Bhaduri on August 30, 1975, and the directors were asked to show cause why action should not be taken against them, but the directors remained silent and the company prayed for direction on Mr. Bhaduri to carry on inspection at its premises contrary to the directions given in the original notice dated August 30, 1975. In para. 10 of the petition of complaint, it has been specifically pleaded that the offence occurred on November 15, 1975, when the company by its letter of the same date expressed its unwillingness to produce the books of account. If is thus evident that the complaint was not for offences committed on different dates in the month of April, 1974, to which references were incidentally made in paras. 5, 6 and 7 of the complaint. The complaint gave clear indication that the prosecution undertaken was for the offence committed on November 15, 1975. By no, stretch of imagination can it be said that the cognizance of the said offence was taken beyond the period of limitation prescribed by Section 468(2)(b) of the Cr. PC. The first, contention of Mr. Sen, therefore, fails.

4. Mr. Sen draws my attention to annexure 'A' of the revision application and contends that by way of notice under Section 209(1) of the Companies Act, dated April 17, 1974, the Registrar of Companies, West Bengal, was informed that the board of directors had decided to keep the books of account of the company at Poobong Tea Garden, Ghoom, District Darjeeling. Mr. Sen, accordingly, concludes that non-production of the books of account at the registered office of the company at 44, Strand Road, Calcutta, did not constitute an offence. This contention does not prevail with me. Clause (ii) of Section 209A(1) makes books of account and other books open to inspection by an authorised officer, and Sub-section (2) requires that the company and its directors and employees will be liable to produce the books and papers at such time and place as may be specified by the person making the inspection. So if Mr. Bhaduri, the authorised officer, demanded inspection of the books of accounts at 44, Strand Road, Calcutta, it cannot in answer to the said requisition be said that the books of account may be inspected at Ghoom, Darjeeling.

5. Mr. Sen next contends relying on the Division Bench ruling of this court in the case of Mahalderam Tea Estate Pvt. Ltd. v. D.N. Prodhan [1978] 52 FJR 392 ; [1978] Cal HN 336 ; [1978] Lab IC 898, that a company is primarily liable for an offence and a conspicious feature of the present case is that the company has not been prosecuted. In short, his contention is that when the company, the primary offender, has not been prosecuted, its directors cannot be prosecuted. This contention has no force. The prosecution in the case reported was under Section 14A of the Employees' Provident Funds Act, 1952. A perusal of the provisions of the said section indicates that the company is primarily responsible for commission of offences and every person who, at the time the offence was committed, was in charge of and was responsible to the company for the conduct of the business of the company was made further liable. The provisions of the Companies Act are not comparable in their text and terms with the provisions of Section 14A of the Employees' Provident Funds Act. In this connection, reference is made to Section 209A(2) of the Companies Act which casts a duty on every director and other officers and employees of the company to produce to the person making inspection, of books of account and other books. Sub-section (8) of the said section makes it clear that if default is made in complying with the provisions of this section, every officer of the company who is in default shall be punishable. The provisions of the Companies Act, referred to above, do not indicate that the company itself will have to be prosecuted. The liability or responsibility of the directors is unqualified. Mr. Sen draws my attention to the provisions of Section 2(30) of the Companies Act, 1956, defining 'officer'. The definition does not help Mr. Sen because the definition of ' officer ' includes primarily any director. So a defaulting director is obviously liable to be prosecuted under Section 209A(8) of the Act. Mr, Sen's last contention is that in the absence of specific averment in the petition of complaint as to the responsibility of the petitioner accused vis-a-vis the company with regard to day-to-day affairs of the company and maintenance of books of account, the prosecution started was untenable. To fortify his contention, Mr. Sen refers to the case of Maya Chundra v. Inspector, Minimum Wages Office [1978] Cal HN 993 ; [1979] Cri LJ 534. Mr. Dipak Sen Gupta, on behalf of the Registrar of Companies, points out that the case relied upon by Mr. Sen was based on the express provisions of Section 22(c) of the Minimum Wages Act, 1948, and the provisions, of the said section are entirely different from the provisions of Section 209A of the Companies Act 1956. Having heard the learned advocates of both the sides, I am satisfied that the decisions relied upon by Mr. Sen have no applicability to the instant case. The provisions of Section 209A of the Companies Act are significantly different from the provisions of the Minimum Wages Act or the Employees' Provident Funds Act and the provisions of Section 209A cast an unqualified duty on any director of the company to permit inspection of books of account by an authorised officer at the appointed place and time and default in compliance with such requisition is to be visited with penalty. (Section 209A does not ?) require the company to be prosecuted nor does it require that directors or persons actually responsible for maintenance of books of account can only be prosecuted. In the aforesaid premises, the contention of Mr. Sen fails.

6. In the result, the petition under consideration fails and is liable to be dismissed. So it is ordered that the petition under consideration be dismissed on contest and rule discharged. The interim order of stay already issued is withdrawn and vacated. The records of the court below be sent back forthwith with directions to dispose of the case as expeditiously as possible.


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