1. Default in delivery of share certificates under Section 113, Companies Act — Complaint filed by Registrar — Dismissal on grounds of limitation under Section 468, CrPC. (Para 3 , 7 )
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2000 Supreme(SC) 1039
SUPREME COURT OF INDIA
D.P.Mohapatra : K.T.Thomas : Ruma Pal
Registrar Of Companies
Versus
Rajshree Sugar And Chemicals Limited
Case No. : 483 of 2000
Date of Decision : 5/11/00
Advocates Appeared: Prasad B.Krishna : Rao C.V.Subba : Singh Kunwar Ajit Mohan : Venkataraman K.V. : Vishwanathan K.V.
The Registrar of Companies is competent to file complaints under the Companies Act per Section 621 and is considered a "person aggrieved" under Section 469(1)(b) of the CrPC, allowing the limitation period to commence from the date the offence came to their knowledge.
Headnote:(A) Companies Act, 1956 - Sections 113 and 621 - Code of Criminal Procedure, 1973 - Sections 468 and 469 - Default in delivery of share certificates - Limitation for taking cognizance - Whether the regulatory authority is a "person aggrieved" for the purpose of calculating the period of limitation - Section 621 of the Companies Act provides that no Court shall take cognizance of any offence against the Act except on the complaint in writing of the Registrar, a shareholder, or a person authorized by the Central Government - The regulatory authority is therefore competent to file a complaint for offences under Section 113 (Paras 15, 16).
(B) Code of Criminal Procedure, 1973 - Section 469(1)(b) - Interpretation of "person aggrieved" - In the context of offences under the Companies Act, the phrase "person aggrieved" must be construed in light of Section 621 of the Act - If the term is restricted only to the person affected by the failure to transfer shares, Section 469(1)(b) would be rendered inapplicable to complaints filed by the Registrar - There is no justification to interpret the words restrictively when the statute provides for the initiation of prosecution by specific persons - The regulatory authority is a "person aggrieved" within the meaning of Section 469(1)(b) of the Code (Para 17).
(C) Companies Act, 1956 - Section 113 - Distinction between Sub-sections (2) and (3) - Sub-section (3) deals with civil liability and is compensatory in nature, applicable only at the instance of the transferee - Sub-section (2) deals with criminal liability and is punitive in nature (Para 18).
Facts of the case:
A complaint was filed by the regulatory authority against a company for defaulting in the transfer of shares within the specified time under the Companies Act. The Trial Court dismissed the complaint as barred by limitation under the Code of Criminal Procedure. The High Court upheld the dismissal, further holding that the regulatory authority was incompetent to file the complaint, as only an affected shareholder could do so.
Findings of Court:
The regulatory authority is competent to file a complaint under Section 621 of the Companies Act. For the purpose of calculating the limitation period under Section 469(1)(b) of the Code of Criminal Procedure, the regulatory authority qualifies as a "person aggrieved." Since the authority became aware of the offence on 20th July 1992 and filed the complaint on 20th August 1992, the action was within the six-month limitation period.
Issues: Whether the regulatory authority is competent to file a complaint under Section 113 of the Companies Act and whether such authority constitutes a "person aggrieved" under Section 469(1)(b) of the Code of Criminal Procedure for the purpose of limitation.
Ratio Decidendi: The court held that Section 621 of the Companies Act explicitly empowers the Registrar to file complaints. To give effect to this power and the provisions of Section 469(1)(b) of the Code of Criminal Procedure, the term "person aggrieved" must be interpreted to include the Registrar; otherwise, the benefit of the knowledge-based limitation period would be unavailable to statutory complainants who are not the direct victims of the default.
Result: The decision of the High Court as well as the Chief Judicial Magistrate are set aside and the matter is remanded back to the Chief Judicial Magistrate for being decided on merits.
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2. Whether the Registrar is a person aggrieved under Section 469(1)(b), CrPC, and competent to initiate prosecution for offences under Section 113, Companies Act. (Para 11 )
3. Section 621, Companies Act authorizes the Registrar to file complaints; person aggrieved under Section 469(1)(b), CrPC must be construed in light of this statutory authority. (Para 15 , 16 , 17 )
4. A statutory authority authorized to file a complaint under the Companies Act is a person aggrieved for calculating limitation under Section 469(1)(b), CrPC. (Para 17 )
5. Orders of High Court and Trial Court set aside — Matter remanded for decision on merits — Costs awarded to respondents. (Para 20 )
6. Who is competent to file a complaint for offences under the Companies Act?
Under Section 621(1) of the Companies Act, a court can take cognizance of an offence (except those under Section 545) only on a written complaint by the Registrar, a shareholder, or a person authorized by the Central Government. (Para 15 , 16 )
7. Does the term person aggrieved under Section 469(1)(b) of the CrPC include the Registrar of Companies?
Yes. When the statute creating the offence provides for prosecution only on the complaint of specific persons, such as the Registrar under Section 621 of the Companies Act, that person is considered aggrieved for limitation purposes. (Para 17 )
8. What is the difference between Section 113(2) and Section 113(3) of the Companies Act?
Section 113(2) deals with the punitive criminal liability (fines) for defaulting in the delivery of share certificates, whereas Section 113(3) provides a compensatory civil remedy for the transferee to seek delivery. (Para 18 )
9. How is the period of limitation calculated for offences punishable by fine only under the CrPC?
Under Section 468(2)(a), the limitation is six months. Per Section 469(1), this commences on the date of the offence or the date the offence comes to the knowledge of the aggrieved person or police. (Para 9 )
Ruma Pal, J.
(1) LEAVE granted.
(2) THIS appeal has been preferred form the decision of the High Court of Madras dated 17th March, 1998. The appeal was filed on 26th July, 1999 after a delay of 406 days. The application for condonation of delay filed by the appellant shows that the Department of Legal Affairs took up the matter only on 16th December, 1998. No explanation whatsoever has been given for the appellants inaction during this period of nine months. The observation of this Court in State of U.P. vs. Bahadur Singh & Ors., AIR 1983 SC 845 regarding the latitude to be shown to the Government in deciding questions of delay, does not give a licence to the Officers of the Government to shirk their responsibility to act with reasonable expedition. However, since the matter has been permitted to be argued on merits, it would not be appropriate to dismiss the appeal on the ground of delay, but our disapproval of the conduct of the appellant in this regard will be reflected in the costs which we intend to award against the appellant in favour of the respondents irrespective of our decision on merits.
(3) THE issue to be decided in this appeal relates to an offence allegedly committed by the respondents under Sec. 113 of the Companies Act, 1956 (referred to as the Act). The complaint was filed by the appellant against the respondents on 28th August, 1992 alleging that the respondents had, in violation of Sec. 113 of the Act, defaulted in transfer of shares within the time specified in that section. The Chief Judicial Magistrate, Coimbatore by his order dated 30th March, 1993 dismissed the complaint on the ground that it was barred by limitation under Sec. 468 of the Code of Criminal Procedure (for short the Code).
(4) THE appellant filed a petition under Secs. 397 & 401 Criminal Procedure Code before the High Court of Madras praying for revision of the order dated 30th March, 1993. The High Court by the impugned judgment not only upheld the order of the Trial Court but also held that the appellant was incompetent to file a complaint in respect of an offence under Sec. 113 of the Act.
(5) SECTION 113 Sub-sec. (1) of the Act requires a company to deliver the share certificates to the allottee or transferee within three months after the allotment and within two months after the application for registration of transfer of the shares. The period is extendable in certain circumstances on an application by the company to the Company Law Board subject to a maximum period of nine months.
(6) SUB-SECTION (2) of Sec. 113 provides that if default is made in compliance with Sub-sec. (1) the company and every officer of the company who is in default shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues. In addition to this criminal liability for punishment, under Sec. 113(3) a person entitled to have the shares delivered to him, may apply to the Company Law Board for a directive on the company to deliver the certificates or the debentures to the complainant. The Company Law Board is authorised to pass an order directing the company and any officer of the company "to make good the default" within such time as may be specified and also provide for the costs of and incidental to the application to be paid to the complainant by the company or any officer of the company who may be responsible for the default.
(7) IN this case, the complaint filed by the appellant was under Sec. 113(2). It was alleged in the complaint that the company was sent share transfer certificates along with applications for transfer in two batches; - on 23.11.1990 and 18.12.1990. The first batch of applications for transfer was received by the company on 11.12.1990, approved on 29.3.1991 and dispatched on 6.4.1991. The second batch of applications was received on 26.12.1990 approved by the company on 3.4.1991 and dispatched on 16.4.1991. Apparently, Sec. 113
