Madras High Court
V. Karthikeyan vs Registrar Of Companies on 18 January, 2001
Equivalent citations: [2001]106COMPCAS685(MAD)
Author: M. Karpagavinayagam
Bench: M. Karpagavinayagam
JUDGMENT M. Karpagavinayagam, J.
1. V. Karthikeyan and T.L. Pragasam, who are arrayed as A2 and A5 respectively in the private complaint filed by the Registrar of Companies for the offence under Section 207 of the Companies Act, 1956 ('the Act') have filed these two petitions under Section 482 of the Code of Criminal Procedure, 1973 ('the Code') seeking for quashing of the said proceedings in E.O.C.C. No. 177 of 1998.
2. Whether the offence under Section 207 has been taken cognizance of validly by the Trial Court before the expiry of the period of limitation ?.
This is the main question posed before this court in these petitions.
3. According to the learned counsel for the petitioners, through Iggi. Resorts International Ltd., the subject company, declared a dividend of 25 per cent at its annual general meeting held on 25-9-1996, it did not pay the dividend amount on or before 5-11-1996, i.e., within 42 days from the date of declaration of the dividend and the said non-payment would amount to an offence under Section 207 and, is liable to be punished with imprisonment for seven days with fine and as such, the complaint ought to have been filed and taken cognizance of within one year under Section 468(2)(b) of the Code and in this case, the complaint was filed only on 15-6-1998, after nearly two years and as such, the cognizance is not valid.
4. On the other hand, it is the contention of the learned counsel appearing for the respondent that the Registrar of Companies came to know of the abovesaid default only on 24-3-1998, when the Regional Directorate, Department of Company Affairs, gave instructions to launch prosecution and as such, from that date the complaint has been filed within one year i.e., on 15-6-1998, even before the expiry of the period of limitation. He would further contend and even assuming that the Registrar has got knowledge of receipt of the complaint from the shareholders of 30-6-1997, even then the complaint was within time, since it was filed on 15-6-1998, within one year from the date of receipt of the said complaint and, therefore, the present prosecution has been filed within the period of limitation.
5. Let us now refer to the penal section of the Act. Section 207 provides thus :
"207. Penalty for failure to distribute dividends within forty two days--Where a dividend has been declared by a company but has not been paid, or the warrant in respect thereof has not been posted, within forty-two days from the date of the declaration, to any shareholders entitled to the payment of the dividend, every director of the company shall, if he is knowingly a party to the default, be punishable with simple imprisonment for a term which may extend to seven days and shall also be liable to fine:"
Under this section, the offence would be complete after the expiry of forty-two days, if the dividend declared by a company has not been paid to the shareholder and the said offence is punishable with simple imprisonment for a term which may extend to seven days and shall also be liable to fine.
6. The counsel on either side would concede that limitation for initiation of proceedings for offences under the Act has not been prescribed under the Act itself, and, hence, the general law under the Code will stand attracted. Since the offence alleged is punishable with imprisonment and fine, it is evident that under Section 468 the period of limitation for initiation of the impugned prosecution will be one year.
7. Section 468 reads as follows :
"468. Bar to taking cognizance after lapse of the period of limitation.--(1) Except as otherwise provided elsewhere in this Code, no court shall take cognizance of an offence of the category specified in Sub-section (2), after the expiry of the period of limitation.
(2) The period of limitation shall be -
(a) six months, if the offence is punishable with fine only;
(b) one year, if the offence is punishable with imprisonment for a term not exceeding one year;...".
The reading of this section would make it clear that there is a bar to taking cognizance after the lapse of the period of limitation.
However Section 469 prescribes the commencement of the period of limitation. Section 469 reads as follows :
"469. Commencement of the period of limitation.--(1) The period of limitation, in relation to an offender, shall commence -
(a) on the date of the offence ; or
(b) where the commission of the offence was not known to the person aggrieved by the offence or to any police officer, the first day on which such offence comes to the knowledge of such person or to any police officer, whichever is earlier; or"
This section would reveal that the period of limitation shall commence either on the date of the offence or on the date known to the person aggrieved by the offence or to any police officer, whichever is earlier.
We are now concerned with the commencement of the period of limitation in the instant case.
The present complaint has been filed not on the basis of the date on which offence was committed, but on the basis of the date on which offence came to be known by the person aggrieved.
8. Let us now refer to Section 621 of the Act. Section 621 reads thus :
"621.Offences against Act to be cognizable only on complaint by Registrar, shareholder or Government.--(1) No court shall take cognizance of any offence against this Act (other than an offence with respect to which proceedings are instituted under Section 545), which is alleged to have been committed by any company or any officer thereof, except on the complaint in writing of the Registrar, or of a shareholder of the company, or of a person authorised by the Central Government in that behalf :"
9. The reading of this section would clearly show that the complaint could be lodged either by a shareholder or the Registrar of Companies or by a person authorised by the Central Government. In the instant case, the complaint has been filed by the Registrar of Companies.
10. Under Section 469 the period of limitation would commence only on the date when the offence comes to the knowledge of the person aggrieved by the offence or to any police officer, whichever is earlier. In this case, no police officer is involved. On the other hand, the shareholders on being aggrieved by the non-payment of the dividend complained to the Registrar of Companies.
11. Section 621 would make it clear that the complaint could be filed either by the shareholder or by Registrar of Companies. Even though the shareholder knew about the offence, he did not choose to file complaint. Therefore, it is not necessary to go into the question as to whether there is any bar for the court to take cognizance of his complaint and as to when the shareholder came to know of the offence for finding out the time on which the period of limitation commenced.
There is no doubt, as held by the Division Bench of this court in Abdul Rahim v. State Represented by the Chit Registrar [1978] LW (Crl.) 195 and Registrar of Companies v. Rajshree Sugar & Chemicals Ltd. [2000] 101 Comp. Cas. 271 (SC), that the Registrar of Chits also is a 'person aggrieved' within the meaning of Section 469(1)(b) and as such, he is competent to initiate prosecution by invoking the benefit under Section 469(1)(b).
12. Therefore, the wording 'whichever is earlier' would not mean the date of knowledge as between the shareholder and the Registrar of Companies. It is a comparison only between the aggrieved person and the police officer with reference to the dates of knowledge in order to find out which date is earlier and that meaning cannot be conveyed to be the date of knowledge between the shareholder and the Registrar of Companies.
In this case, it has to be taken that the date of knowledge of the offence by the Registrar of Companies who filed the complaint, is the date of commencement of the period of limitation.
Under those circumstances, we have to find out what is the date of knowledge of the Registrar of Companies in regard to the offence and what is the date of cognizance of the offence taken by the Trial Court.
13. According to the complainant, the Registrar of Companies, as mentioned in the complaint, he was instructed to launch prosecution by the Regional Directorate on 24-5-1998, and as such, the period of limitation would commence only on that date and the complaint was presented on 15-6-1998, and therefore, the cognizance had been taken during the period of limitation i.e., within one year.
14. However, it is admitted by the learned counsel for the respondent-Registrar of Companies through the memo that the Registrar of Companies received a complaint from the shareholder B.C.L. Narayana on 30-6-1997. It is also mentioned in the complaint that B.C.L. Narayana sent a complaint regarding the non-payment of the dividend to the office of the Registrar of Companies on 25-6-1997. Thus, it is clear that the complaint sent by the shareholder B.C.L. Narayana dated 25-6-1997, was received by the complainant. Registrar of Companies on 30-6-1997.
On this basis, the learned counsel for the respondent would contend that even assuming that the Registrar has got knowledge of the offence on 30-6-1997, on receipt of the complaint from the shareholder, since the complaint was filed on 15-6-1998, the prosecution is valid, as the same has been filed within one year from the date of receipt of the first complaint.
In view of the said submission and in view of the averment made in the complaint, there is no difficulty in holding that the 'person aggrieved' as referred to in Section 469(1)(b), namely, the Registrar of Companies, the complainant came to know of the offence on 30-6-1997.
The next question would arise as to the date of cognizance.
15. According to the counsel for the respondent, the complaint was filed on 15-6-1998. This Court called for the records. It is seen from the first page of the complaint that the complaint was presented on 15-6-1998, and the seal was affixed on the date. But unfortunately, on noticing some irregularities in the complaint, it was returned for compliance on 16-6-1998, by the Trial Court to the complainant. After compliance, the complaint was resubmitted on 8-9-1998. Ultimately, the matter came up before the Trial Court on 10-9-1998.
16. A detailed order has been passed on 10-9-1998, by the Court stating that the complainant was instructed to launch prosecution by the Regional Directorate, Department of Company Affairs, on 24-3-1998, and, therefore, the complaint is within the period of limitation and as such, the cognizance of offence was taken on 10-9-1998.
This shows that the trial Court on the misconception that the complainant came to know of the offence only on 24-3-1998, passed an order taking cognizance on 10-9-1998, as if it is filed within the period of limitation, viz., one year from the date of knowledge, that is, 24-3-1998.
As indicated earlier, the date of knowledge of the person aggrieved, the Registrar of Companies, is not 24-3-1998, but 30-6-1997, if it is so, the cognizance is to be taken within one year from the said date i.e., on or before 30-6-1998. Though the complaint was presented on 15-6-1998, the said date cannot be construed to be the date of cognizance.
It is settled law that the cognizance is taken by the trial Court only when it applies its mind to the allegation in the complaint and issues process. In this case, the cognizance was taken on 10-9-1998, as seen in the order passed by the trial Court by which the case was taken on file and summons was issued to all the accused directing them to appear before the Court on 14-10-1998.
17. Section 468 would provide the caption 'bar to taking cognizance after lapse of the period of limitation'. Under this section, the Court shall not take cognizance of an offence after the expiry of the period of limitation. In the instant case, the period of limitation is one year from the date of knowledge of the person aggrieved. Admittedly, in this case, cognizance was taken only after the expiry of the period of limitation.
It is true that the period of limitation can be extended in certain cases as provided in Section 473 of the Code. But, the condition for invoking Section 473 is that the Court must be satisfied that the delay has been properly explained or that it is necessary so to do in the interests of justice.
In the present case, Section 473 has not been invoked. There is no application filed by the prosecution requesting for the extension of the period of limitation either by explaining the delay or to impress upon the Court that it is necessary that cognizance should be taken in the interests of justice.
18. As noted above, cognizance was straightaway taken by the trial Court on 10-9-1998, under the misconception that the Registrar of Companies came to know of the offence only on 24-3-1998. As noted earlier, there cannot be any dispute that the Registrar of Companies came to know of the offence on 30-6-1997, on receipt of the complaint of the shareholder B.C.L. Narayana, dated 25-6-1997. Thus, it is clear that the trial Court which is not competent to take cognizance under Section 468 has wrongly taken cognizance on 10-9-1998.
19. Under those circumstances, the entire proceedings in pursuance of the wrong cognizance taken in E.O.C.C. No. 177 of 1998 on the file of the Additional Chief Metropolitan Magistrate, E.O.I. Egmore, are liable to be quashed not only as against the petitioners but also as against all the other accused, though they are not the petitioners herein.
20. With the above observation, the petitions are allowed. Consequently, Crl. M.P. Nos. 11216 and 11217 of 1998 are closed.