Delhi District Court
Registrar Of Companies vs Shakti Bhog Foods Limited on 7 August, 2023
IN THE COURT OF ANURAG THAKUR
ADDL. CHIEF METROPOLITAN MAGISTRATE (Spl. Acts)
CENTRAL, TIS HAZARI COURTS, DELHI
ROC V. M/S. SHAKTI BHOG FOODS LIMITED & ORS.
CC No. : 3332/2017
CNR No. : DLCT02-005099-2017
Date of Institution : 28.02.2017
Name of the complainant : Registrar of Companies,
its registered office NCT of Delhi & Haryana
4th Floor, IFCI Tower, 61,
Nehru Place, New Delhi.
Through:Assistant Registrar of
Companies Sh. Arun Kumar Singh
Name of accused : (i) M/s. Shakti Bhog Limited
his parentage and address etc. 1101-1103 Pearls Business Park,
Netaji Subhash Palace, Pitampura, Delhi
(Proceedings had been stayed)
(ii) Sh. Kewal Krishan Kumar,
S/o Sh. Jugal Kishore, Managing Director,
R/o 15/61, West Punjabi Bagh, New Delhi-110026
(Proceedings were disposed of in Lok Adalat)
(iii) Sh. Siddharth Kumar,
S/o Sh. Kewal Krishan, Whole Time Director,
R/o 15/61, West Punjabi Bagh, New Delhi-110026
(Proceedings were disposed of in Lok Adalat)
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(iv) Sh. Rajeev Lochan,
S/o Om Prakash Bhatnagar, Company Secretary,
R/o D-2 Dayanand Block, Shakarpur Ext.,
Delhi-110092
Offence complained of : U/s 99 and 137(3) of The Companies Act, 2013
Date of Judgment : 07.08.2023
Plea of accused : Not guilty
Final Judgment : Acquitted
Brief facts and reasons for decision of the case:-
1.The factual matrix of the case is that M/s Shakti Bhog Foods Limited was a company incorporated under The Companies Act, 1956 and was registered with the office of the complainant. Accused No.2 was the Managing Director, accused No.3 was the Whole Time Director and accused No.4 was the Company Secretary of the accused No.1 and they were in charge of day to day affairs of accused No.1 and were responsible for compliance of the extant provisions of The Companies Act, 2013 (hereinafter referred to as 'The Act'). The gravamen of accusation against the accused persons is that the accused No.1 did not file copies of the Balance Sheet and the Profit and Loss Account in the prescribed e-form within 30 days of the date of Annual General Meeting since the year ended on 31.03.2015, moreover, it is also alleged that accused No.1 company could not hold its Annual General Meeting since year 2015. Thereafter, show cause notice u/s 20 of The Act was sent on e-mail ID of Company Secretary Sh. Rajeev Lochan i.e. [email protected] for default under Section 137/92/96 of The Act but no reply was received from the accused persons. Accused No.2 to 4 were considered as officers in default and hence the present complaint against the Ct. Case No.3332/2017 ROC v Shakti Bhog Foods Limited & Ors. Page No.2 of 10 accused persons for contravention of section 96 and 137 of The Act punishable u/s 99 and 137(3) of The Act respectively.
2. The present complaint was filed by Dr. Afsar Ali, the then Assistant Registrar of Companies on behalf of the complainant. Since the complaint was filed by a public servant while discharging his duties as a public servant and in his official capacity, so his examination under Section 200 Cr.P.C was dispensed with in terms of proviso (a) of Section 200 Cr.P.C. Cognizance of offence(s) was taken and the accused were summoned vide order dated 14.03.2017, however, summons were received back unserved. Subsequently, the accused persons appeared on 21.09.2017 when copies were supplied to them. Notice of accusation u/s 251 Cr.P.C for offence punishable under Section 99 and 137(3) for contravention of Section 96 and 137 of The Act, was served upon accused No.4 Rajeev Lochan on 17.12.2019 who pleaded not guilty and claimed trial.
3. Thereafter, on 11.10.2022 notice of accusation u/s 251 Cr.P.C for offence punishable under Section 99 and 137(3) for contravention of Section 96 and 137 of The Act, was served upon accused No.2 Kewal Krishan Kumar and accused No.3 Siddharth Kumar to which they pleaded not guilty and claimed trial. On 11.11.2022 Lok Adalat pre-sitting was conducted qua applications for plea bargaining moved by accused No.2 and 3 and proceedings qua them had been concluded in the Lok Adalat on 12.11.2022. Proceedings qua accused No.1 were stayed by this court vide order dated 02.01.2023, as accused No.1 had been admitted in CIRP and a moratorium in terms of Section 14 of Insolvency and Bankruptcy Code, 2016 had been declared qua accused No.1.
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4. The complainant was given opportunity to examine its witnesses to substantiate the allegations levelled against the accused persons. On 26.02.2020 an application for substitution of AR of complainant was filed by the complainant, which was allowed thereby substituting Sh. Arun Kumar Singh as AR of complainant. The complainant examined only one witness i.e. CW-1 Sh. Arun Kumar Singh in post notice evidence. The complainant evidence was closed on 10.03.2023. The examination of accused No.4 u/s 313 Cr.P.C concluded on 13.07.2023, wherein he stated that he was innocent and the company at the time of default had a Managing Director, who was responsible for filing of financial statements with ROC and for conducting AGM in time. The accused No.4 lead defence evidence wherein he examined himself as DW-1. Defence evidence was closed on 13.07.2023. Final arguments were heard on 26.07.2023.
5. Ld. Company prosecutor submitted that cogent documentary evidence has been tendered by complainant, he claimed that the oral testimony of CW-1 is credible, consistent and trustworthy as the same had withstood the rigour of cross- examination. He contended that the defence set up by the accused was a sham as the entire blame for the contraventions can not be shifted on the Managing Director of accused no. 1. He stated that the case against the accused No.4 is proved beyond a shadow of doubt, so he be convicted for offence punishable u/s 99 and 137(3) for violation of Section 96 and 137 of The Act.
6. Learned defence counsel argued that the accused no. 4 was only the Company Secretary of accused no. 1 whereas the company had a managing director, whole time director, internal auditors and CFO who were primarily responsible for conducting the AGM in time and for filing of copies of financial statements with the ROC. He submitted that extension of time for conducting the AGM was Ct. Case No.3332/2017 ROC v Shakti Bhog Foods Limited & Ors. Page No.4 of 10 sought in year 2015 but the same was declined by the ROC. He submitted that his client made efforts to comply with the extant provisions of The Act but all his efforts went in vain due to inaction of other persons in-charge of affairs of accused no. 1. He claimed that the complainant had miserably failed to prove the case against accused no. 4, so his client is entitled to be acquitted.
7. At this juncture, it is apposite to reproduce in verbatim section 96, 99 and 137 of The Act which read as follows:
96. Annual general meeting.- (1) Every company other than a One Person Company shall in each year hold in addition to any other meetings, a general meeting as its annual general meeting and shall specify the meeting as such in the notices calling it, and not more than fifteen months shall elapse between the date of one annual general meeting of a company and that of the next:
Provided that in case of the first annual general meeting, it shall be held within a period of nine months from the date of closing of the first financial year of the company and in any other case, within a period of six months, from the date of closing of the financial year:
Provided further that if a company holds its first annual general meeting as aforesaid, it shall not be necessary for the company to hold any annual general meeting in the year of its incorporation: Provided also that the Registrar may, for any special reason, extend the time within which any annual general meeting, other than the first annual general meeting, shall be held, by a period not exceeding three months.
(2) Every annual general meeting shall be called during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a National Holiday and shall be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situate:
Provided further that the Central Government may exempt any company from the provisions of this sub- section subject to such conditions as it may impose.
Explanation.-- For the purposes of this sub-section, National Holiday means and includes a day declared as National Holiday by the Central Government.
99. Punishment for default in complying with provisions of sections 96 to 98.- If any default is made in holding a meeting of the company in accordance with section 96 or section 97 or section 98 or in complying with any directions of the Tribunal, the company and every officer of the company who is in default shall be punishable with fine which may extend to one lakh rupees and in the case of a continuing default, with a further fine which may extend to five thousand rupees for every day during which such default continues.
137. Copy of financial statement to be filed with Registrar.- (1) A copy of the financial statements, including consolidated financial statement, if any, along with all the documents which are required to be or attached to such financial statements under this Act, duly adopted at the annual general meeting of the company, shall be filed with the Registrar within thirty days of the date of annual general meeting in such manner, with such fees or additional fees as may be prescribed within the time specified under section 403:
Provided that where the financial statements under sub-section (1) are not adopted at annual general meeting or adjourned annual general meeting, such unadopted financial statements along with the required documents under sub-section (1) shall be filed with the Registrar within thirty days of the date of annual general meeting and the Registrar shall take them in his records as provisional till the Ct. Case No.3332/2017 ROC v Shakti Bhog Foods Limited & Ors. Page No.5 of 10 financial statements are filed with him after their adoption in the adjourned annual general meeting for that purpose:
Provided further that financial statements adopted in the adjourned annual general meeting shall be filed with the Registrar within thirty days of the date of such adjourned annual general meeting with such fees or such additional fees as may be prescribed within the time specified under section 403: Provided also that a One Person Company shall file a copy of the financial statements duly adopted by its member, along with all the documents which are required to be attached to such financial statements, within one hundred eighty days from the closure of the financial year:
Provided also that a company shall, along with its financial statements to be filed with the Registrar, attach the accounts of its subsidiary or subsidiaries which have been incorporated outside India and which have not established their place of business in India.
(2) Where the annual general meeting of a company for any year has not been held, the financial statements along with the documents required to be attached under sub-section (1), duly signed along with the statement of facts and reasons for not holding the annual general meeting shall be filed with the Registrar within thirty days of the last date before which the annual general meeting should have been held and in such manner, with such fees or additional fees as may be prescribed within the time specified, under section 403.
(3) If a company fails to file the copy of the financial statements under sub-section (1) or sub-section (2), as the case may be, before the expiry of the period specified in section 403, the company shall be punishable with fine of one thousand rupees for every day during which the failure continues but which shall not be more than ten lakh rupees, and the managing director and the Chief Financial Officer of the company, if any, and, in the absence of the managing director and the Chief Financial Officer, any other director who is charged by the Board with the responsibility of complying with the provisions of this section, and, in the absence of any such director, all the directors of the company, shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both.
Ordinarily, the AGM of members of a company shall be held within 6 months from the end of the financial year and the financial statements adopted at such meeting shall be filed with the ROC within 30 days thereafter. The arguments advanced by the ld. counsels for the respective parties have been cogitated over and the entire material available on record including the evidence adduced has been perused. My observation on the facts in issue are delineated hereinafter.
8. The sum and substance of allegations against accused No.4 Rajeev Lochan is that he was the Company Secretary of accused No.1 company during the period of default as the accused company did not file its financial statements with the ROC within the statutory time as mandated by Section 137 read with Section 403 of The Act. Moreover, it was also alleged that the Annual General Meeting of members of accused No.1 was not conducted within the timeline as prescribed in Ct. Case No.3332/2017 ROC v Shakti Bhog Foods Limited & Ors. Page No.6 of 10 Section 96 of The Act. The complaint mentioned that the same is filed for the aforementioned two violations for Financial Year ended on 31.03.2015 onwards, however, CW-1 Sh. A.K. Singh in his cross examination clarified that the complaint pertains to the violation for Financial Year ended on 31.03.2015. As per e-form AOC-4 for FY ended on 31.03.2015, the same was filed with the ROC on 06.05.2017 thus making it clear that the financial statements were not filed with the ROC within time prescribed in The Act. The contravention of Section 137 (for non-filing of financial statements in time) is punishable under Section 137(3) of The Act. It is pertinent to observe that as per section 137(3) of The Act, in addition to the company, the Managing Director and the Chief Financial Officer would be liable for default by company and in their absence any other Director who is charged by Board with responsibility of complying with section 137 would be liable and in his absence all the Directors of the company shall be liable for default by the company. It is worthwhile to observe that the name of the Company Secretary as one of the officers in default is conspicuously absent from sub- Section 3 of Section 137 of The Act. Therefore, a Company Secretary can not be held liable for contravention of Section 137 by the company, accordingly, accused No.4 Rajeev Lochan is acquitted of the offence punishable under Section 137(3) of The Act.
9. The other offence pertains to not conducting the AGM within time. Ordinarily an AGM of members of a company should be held within six months of the end of the corresponding financial year. In the present case the AGM for F.Y. ended on 31.03.2015 should have been held latest by 30.09.2015. In his testimony DW-1 disclosed that the AGM was held on 30.10.2015 i.e. after 30 days from the last day when the AGM could have been held in terms of 96 of The Act. However, he also disclosed that extension application for holding the AGM was made to the Ct. Case No.3332/2017 ROC v Shakti Bhog Foods Limited & Ors. Page No.7 of 10 ROC but the extension was not granted by the office of the complainant. No documentary proof is placed on record by the accused No.4 in support of this statement. It is trite that an extension of period of time under Section 96 of The Act can be applied for and on cogent reasons shown to it, the ROC can permit the AGM to be called till after three months from the last day of holding the AGM as per Section 96 of The Act. But in the present case the extension was not granted. Since the order declining the extension is not placed on record in this case, therefore, no comment can be made on the decision taken by the ROC on the extension application. It is suffice to observe that once the extension was declined, then the AGM ought to have been held within the time permitted by the statute i.e. till 30.09.2015. Even the Annual Return e-Form MGT-7 filed belatedly for F.Y. ended on 31.03.2015 shows that the AGM was held on 30.10.2015, whereas the due date for holding the same was 30.09.2015. Hence, even as per the filings made by company, there was violation of Section 96 of The Act.
10.As far as culpability of the Company Secretary for this violation of Section 96 of The Act is concerned, the accused No.4 testified that the CFO of the company had resigned on 07.09.2015 and an application to recast / rectify financial statements for F.Y. 2012-13, 2013-14 and 2014-15 was filed with NCLT which allowed the same vide order dated 07.11.2017. He sought to put the entire blame for not conducting the AGM in time upon the Managing Director, the Whole Time Director and the Internal Auditors of accused No.1. At this juncture, it is profitable to advert to Section 2(60) of The Act which defines 'Officer who is in default'. This expression finds mention in Section 96 of The Act and Section 99 of The Act. The officer who is in default firstly mentions the Whole Time Director and importantly at the second position mentions Key Managerial Personnel. The liability of Whole Time Director and Key Managerial Personnel is co-extensive Ct. Case No.3332/2017 ROC v Shakti Bhog Foods Limited & Ors. Page No.8 of 10 and individual. The expression "Key Managerial Personnel" is defined in Section 2(51) of The Act. Clause (ii) of Section 2(51) of The Act mentions the Company Secretary to be a Key Managerial Personnel of the company. Thus, a Company Secretary being the KMP is also individually responsible as officer who is in default for holding the AGM of a company in time. He cannot put the blame entirely upon the Directors of the company and on the Internal Auditors or CFO of the company. However, as observed earlier, the case against the company secretary is only for commission of offence punishable u/s 99 of The Act and therefore, the issue of limitation for filing the complaint against the company secretary. The punishment prescribed u/s 99 of The Act is fine only and the limitation for filing the complaint is six months. The limitation for filing the complaint in the present case is to be reckoned from the day the commission of offence could have come to knowledge of ROC. The offence punishable u/s 99 of The Act is a patent offence and the limitation for filing the complaint could have commenced latest by 30.11.2015 i.e. the first day after the last day on which the accused no. 1 could have validly filed its annual return with the ROC. It is possible that the ROC could have gained the knowledge about the commission of offence punishable u/s 99 of The Act even earlier as an application seeking extension of time for holding the AGM moved by the accused no. 1 was rejected by the complainant. For deciding the issue of limitation, the knowledge of ROC about offence u/s 99 is reckoned from 30.11.2015 and excluding the first day of limitation, the limitation to file complaint against the company secretary commenced on 01.12.2015 and ended on 31.05.2016. The complaint was made only on 28.02.2017 i.e. after about nine months of expiry of period of limitation. In Partha Ghosh v. Registrar of Companies & Anr., Neutral Citation Number 2022/DHC/005499; the High Court of Delhi quashed the complaint where the same was filed after about seven months of expiry of limitation period.
Ct. Case No.3332/2017 ROC v Shakti Bhog Foods Limited & Ors. Page No.9 of 10 Accordingly, the present complaint qua the accused no. 4 being time barred is hereby dismissed. Consequently, accused no. 4 is also acquitted of the offence punishable u/s 99 of The Act.
Announced in the open court on 07th August, 2023.
(ANURAG THAKUR) ACMM (Special Acts) : CENTRAL DISTRICT:
TIS HAZARI COURTS: DELHI This judgment consists of 10 pages and each and every page of this judgment is signed by me.
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