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1978 Supreme(Cal) 409
High Court Of Calcutta
Jyotirmoyee Nag
AJIT KUMAR SARKAR - Appellant
Versus
ASSISTANT REGISTRAR OF COMPANIES - Respondent
Criminal Revision Case 734 Of 1977
Decided On : 06/21/1978
ALOK K.BISWAS, ANJAN MUKHERJI, BALAI CHANDRA ROY, J.N.GHOSH, L.N.DATTA, M.P.Mukherji
The offences under Sections 159 and 160 of the Companies Act are continuing offences and the Assistant Registrar is competent to file a complaint for contravention of the provisions of the Act under the Companies Act.
Headnote:
COMPANIES ACT - Sections 159, 162 - Continuing Offence - Limitation - Section 468, Cr. P. C. - Complaint - Assistant Registrar - Competence - Section 2 (40) - Necessary Party - Company - Officer in Default - Section 5 - Cognizance - Bad.
Fact of the Case:
Petitioner, a managing director of a company, was prosecuted for non-filing of annual returns under Sections 159 and 162 of the Companies Act. The petitioner challenged the maintainability of the proceedings on various grounds, including that the offences were not continuing offences, the complaints were filed by an incompetent authority, and the company was not prosecuted along with the petitioner.
Finding of the Court:
The court held that the offences under Sections 159 and 160 of the Companies Act are continuing offences and, therefore, the bar imposed under Section 468 of the Criminal Procedure Code does not operate in the present cases. The court also held that the Assistant Registrar is competent to file a complaint for contravention of the provisions of the Act under the Companies Act as he along with the others, i.e., the Additional, Deputy, Joint Registrars is empowered to register Companies under the Act. However, the court held that the cognizance taken on the basis of such petitions of complaint is bad as there was no specific averment in the complaint as to the officers who are in default apart from the company.
Issues: 1. Whether the offences under Sections 159 and 160 of the Companies Act are continuing offences? 2. Whether the Assistant Registrar is competent to file a complaint for contravention of the provisions of the Act under the Companies Act? 3. Whether the company is a necessary party in the prosecution for non-filing of annual returns under Sections 159 and 162 of the Companies Act? 4. Whether there should be a specific averment in the complaint as to the officers who are in default apart from the company?
Ratio Decidendi: 1. The court held that the offences under Sections 159 and 160 of the Companies Act are continuing offences as the liability to furnish return continues until it is complied with and each day's failure is visited with penalty. 2. The court held that the Assistant Registrar is competent to file a complaint for contravention of the provisions of the Act under the Companies Act as he along with the others, i.e., the Additional, Deputy, Joint Registrars is empowered to register Companies under the Act. 3. The court held that the company is a necessary party in the prosecution for non-filing of annual returns under Sections 159 and 162 of the Companies Act as only if the company is convicted the others may be convicted as the directors derive their liability from the company. 4. The court held that there should be a specific averment in the complaint as to the officers who are in default apart from the company as the expression "every officer who is in default" becomes redundant and meaningless if all the directors are liable for every default.
Final Decision: The court quashed the proceedings against the petitioner as the cognizance taken on the basis of the petitions of complaint was bad due to the absence of specific averment in the complaint as to the officers who are in default apart from the company.
( 1 ) CRIMINAL Revision Nos. 732-34 of 1977 are taken up together as they involve the same points of law and will accordingly be governed by this judgment. The rules in these cases are directed against criminal proceedings pending before the learned Metropolitan Magistrate for prosecution of the petitioner and others for offences under the Companies Act, viz. , under Sections 159 and 162 (1) of the said Act. The petitioner along with the other members of the family is a shareholder of the company carrying on a business in coal trade named A. Sircar Sons (Private) Ltd. of 60/20, Gouri Bari Lane, Calcutta. The petitioner is the managing director of the said company. It is the case of the petitioner that day-to-day management along with the management of the business was entrusted to his elder brother, Rajendra Nath Sarkar, one of the directors of the said company, as the petitioner had to manage another business as managing agent/contractor of a small colliery at Asansol and be was so engaged during the period 1954 to 1960. The petitioner would come to Calcutta on casual visits and then he enquired from his brothers about the functioning of the business at Calcutta and being assured by his brothers that the company was functioning smoothly and the statutory compliances were being regularly and timely made and relying upon such statements and assurances the petitioner did not make any further enquiry. After 1960, due to inundation by flood of the colliery, the business at Asansol had to be closed and the petitioner came to reside permanently in Calcutta. It is then that he began taking interest in the business of the company but his brothers refused to give him any access to the books of accounts, documents, papers and to the management of the company and declined to disclose any account and/or particulars about the affairs of the company during the period 1954 to 1960, In the meantime, serious disputes also arose amongst the members of the family and the company ceased to function from 1960 and its State Government licence for coal trade was cancelled, of which the Registrar of Companies was well aware, for notices were issued under Sections 560 (1) and 560 (2) o'f the Companies Act, dated March 21, 1960 and April 27, 1960, asking the company to show cause why the name of the company should not be struck off from the register in order to bring about its dissolution. Owing to misunderstanding and/or disputes amongst the members, i. e. , shareholders, the petitioner was kept in complete darkness about the affairs of the company by the said brothers and the petitioner in spite of his best efforts could not know as to whether annual returns by
the company had been filed under Section 159 of the Companies Act. In such a predicament, the opposite party. Assistant Registrar of Companies, filed complaints against the petitioner and others, being Cases Nos. 3798 to 3813 of 1969, 8 cases for alleged non-filing of annual returns under ss, 159 and 162 (1) and 8 cases for alleged non-filing of balance-sheets under Section 220 (3) of the Companies Act for the financial years 1960 to 1967, In these 16 cases summons could neither be served upon the company nor upon the additional director, Nishit Bhattacharjee, in the result the cases against them were marked as "filed" and the cases proceeded only against the present petitioner. The petitioner appeared in these cases and challenged the maintainability of the proceedings by appropriate applications. On June 9, 1975, the proceedings in all the cases were stopped and order of release was made in respect of the petitioner by the learned 11th Presidency Magistrate, Calcutta. This was done in pursuance of the judgment of the Division Bench of this Hon'ble court presided over by N. C. Talukdar and A. N. Banerji JJ. reported in 79 CWN 601, Brahmanand Goyal v. N. C. Chakraborty, wherein their Lordships held that the violation of the mandatory provision of Section 200 of the Code of
