Delhi District Court
Roc vs J.K. Singh Etc. on 8 June, 2012
IN THE COURT OF SH. GORAKH NATH PANDEY
ADDL CHIEF METROPOLITAN MAGISTRATE (Spl. Acts): CENTRAL
TIS HAZARI COURTS, DELHI
ROC vs J.K. Singh etc.
CC No.1291/3
JUDGEMENT
(a)Serial no. of the case : 02401R0116692004
(b)Date of commission of offence : In the year 2000
(c)Name of complainant : Registrar of Companies,
NCT of Delhi & Haryana
(d)Name, parentage, residence: 1)JK Singh (Chairman)
2)Rita Singh (M.D.)
3)Natasha Singh and
4)DK Singh
all r/o D3A, Ansal Villa Satbari,
New Delhi
(e)Offence complained of/ proved : U/s 209A(8) of Companies Act, 1956
(f)Plea of accused : Pleaded not guilty
(g)Final order : Acquitted
(h)Date of such order : 08.06.12 Date of institution : 10.12.01 Date of Reservation of Judgment : 08.06.12 Date of Pronouncement of Judgment : 08.06.12 Brief statement of the reasons for the decision:
1. The Registrar of Companies NCT of Delhi & Haryana (hereinafter called the complainant) filed the present complaint u/s 209A(8) of the Companies Act, 1956 (hereinafter called the Act) against the above mentioned accused persons alleging that accused no.1 to 4 are officers/directors in default of the company M/s Mideast Integrated Steels Limited and are responsible for ROC vs JK Singh etc. 1-16 compliance of the provisions under section 209A of the Companies Act, 1956.
As contended, in pursuance to letter dated 17.07.2000 by Department of Company Affairs, Mr. VP Singh and Mr. RK Meena Deputy Directors (Inspection), were empowered to carry out the inspection of the books of accounts of the company u/s 209A of the Act. Accordingly for the purpose of inspection, the Inspecting Officers visited the Registered Office of company i.e. Kailash Colony, New Delhi on 01.08.2000 and 17.08.2000 but it was found closed and as such inspection could not be carried out. Thereafter notices u/s 209A of the Companies Act, 1956 was issued to the directors/accused persons for producing the records/books of accounts of the company on 20.09.2000 but none appeared. As contended, letter dated 19.09.2000 was received from all directors with a request to fix some other date. A notice dated 28.09.2000 u/s 209A(5) of the Act was again issued to all the directors for production of records for inspection on 04.10.2000 but again none appeared. In such circumstances inspection could not be conducted. As alleged, the provisions of section 209A of the Companies Act has not been complied with by the accused thereby violating the provisions of section 209A of the Act which is punishable u/s 209A(8) of the Act. Section 209A(8) contains that if default is made in complying with the provisions of this section, every officer of the company who is in default shall be liable with fine which shall not be less than five thousand rupees and also with imprisonment for a term not exceeding one year. Hence, this complaint is filed against the accused praying that accused may be summoned and punished in accordance with law.
ROC vs JK Singh etc. 2-16
2. The accused were summoned for the offence u/s 209A of the Act and a notice u/s 251 Cr.P.C. was served upon the accused persons on dated 28.08.03 for the offence punishable u/s 209A(8) of the Act to which all accused pleaded not guilty and claimed trial.
3. In order to substantiate its allegations made in the complaint, the complainant examined four witnesses i.e. PW1 Sh. GI Katyal, UDC from the office of ROC, PW2 Sh. RK Meena the then Deputy Director, PW3 Sh. VP Singhal the then Joint Director and PW4 Sh. TP Shammi the then Registrar of Companies. PW1 reiterated the contentions as mentioned in complaint and deposed that Sh. VP Singhal and Sh. RK Meena, Deputy Director inspection of the Department of Co. Affairs were directed to conduct the inspection of books of account and other records of the company. PW1 proved on record the letter/notice Ex. PW1/4 and Ex. PW1/5 through which the accused were asked to produce the relevant records for inspection. PW1 further proved on record the certificate of incorporation of the Company Ex. PW1/1, photo copy of memorandum and article of association Ex. PW1/1, copy of annual return made up to 25.06.99 Ex. PW1/3, copy of inspection report and letter Ex. PW1/6 and Ex. PW1/7, letter dated 02.03.01 through which sanction was accorded Ex. PW1/8, copy of show cause notice issued to accused Ex. PW1/9 and complaint Ex. PW1/10.
PW2 also reiterated the facts of the case and deposed that on receipt of letter/direction dated 17.07.2000 Ex. PW2/1 for conducting inspection, he ROC vs JK Singh etc. 3-16 issued a letter to the accused to produce the relevant records. The witness also deposed regarding the letter dated 30.01.01 recommending prosecution against the accused vide Ex. PW2/4. PW2 further deposed that for the purpose of inspection he also visited the registered office of the company situated at Moscos Tower, H1, Zamrudpur Community Centre, Kailash Colony, New Delhi on 01.08.2000 and 17.08.2000 but same was found closed and proved the copy of summons Ex. PW2/2 issued to accused and photo copy of dossier part of the inspection report as Ex. PW2/3. PW3 Mr. VP Singhal nothing but reiterated the facts of the case and deposed as deposed by PW2.
PW4 is Sh. T.P. Shammi deposed regarding the show cause notice Ex. PW1/9 u/s 209A and 147 of the Act on the recommendation and reports of Inspecting Officers and filing the present complaint Ex.PW1/1.
4. The statement of all accused was recorded u/s 313 Cr.P.C.
In her statement accused Rita Singh denied the allegations and submitted that in the relevant year she was not in a position to look after the day to day affairs of the company as documents and account books of the company had been seized by the Income Tax Department. Accused further stated that she was not aware regarding the inspection to be conducted as she was in custody from 01st July 2000 to December, 2000 on account of various allegations/charges. Accused further denied the receipt of notice stating that she was in JC from 01.07.2000 to 14.09.2000 and further from 29.09.2000 till December, 2000.
Accused Dushyant Kumar Singh also denied the allegations and stated ROC vs JK Singh etc. 4-16 that he was a sleeping director and was not responsible for the day to day affairs of the company and books of accounts and other documents were not under his control. He also denied regarding receipt of any notice and stated that he was not liable to produce documents before the inspecting officers.
Accused JK Singh also stated that he had no knowledge regarding inspection to be carried out as he was in judicial custody in the month of August, 2000. He further stated that as he was in JC during the relevant time in a different cases he could not appear before the concerned officer. He also denied regarding receipt of any such show cause notice.
Accused Natasha Singh stated that she was in JC at the relevant time. She was taken into custody on 19.09.2000 and remained in jail till or after 04.10.2000 therefore, she was not in a position to produce the relevant records. She also denied regarding receipt of any show cause notice along with other allegations of the complaint.
5. Six witnesses were examined in defence evidence on behalf of the accused persons.
DW1 Sh. SK Srivastav the then Assistant Manager of the company, deposed that the books of accounts and other documents were with the accounts department and on 01.08.2000 and 17.08.2000 the registered office at Zamrudpur was closed pursuant to the Income Tax Raid. The witness further deposed that the directors of the company were in custody at the time the show cause notice dated 20.09.2000 was issued and therefore, the company or its officers could not produce the relevant record for inspections.
ROC vs JK Singh etc. 5-16 DW2 Sh. Parmeshwaram deposed that during the relevant time when the relevant documents were sought for inspection, accused JK Singh, Natasa Singh and Rita Singh were in custody in some cases. The witness further deposed that accused DK Singh was merely a nonexecutive director of the company and he was not involved in conducting the affairs or day to day business of the company.
Devender Kumar Khazanchi working with Mesco Airlines, one of the companies in group examined as DW3 deposed that in between year 2000 and 2001 the registered office of the company was at H1 Zamrudpur Community Centre, New Delhi. The witness further deposed that in February, 1997, a raid was conducted by the ITO on the group of companies in his presence and all books of accounts and records were seized by the ITO.
DW4 Sh. Vimlesh Kumar Singh the then Warden from Central Jail, Jail No.1, Tihar, proved the relevant entry Ex. PW4/A and deposed that as per records accused JK Singh was previously brought in jail no.1 on 06.06.2000 and subsequently he was released on 10.08.2000.
DW5 Sh. Rajender Kumar, Head Warden, proved the relevant entry of jail register Ex.DW5/A to Ex. DW5/C and deposed that accused Natasha Singh was brought to jail on 19.09.2000 and she was taken on police remand on 27.09.2000. The witness deposed that accused Natasha Singh was again brought to jail on 29.09.2000 and she was released on 15.10.2000. The witness further deposed that accused Rita Singh was brought to jail on 07.07.2000 and thereafter she was transferred to Gurgaon Jail on 14.09.2000.
ROC vs JK Singh etc. 6-16
DW6 Sh. Pradeep Kumar Singh, the Internal Warden, proved the
relevant entry of jail register Ex. DW6/A, Ex. DW6/B and Ex. DW6/C and deposed that accused Rita Singh and JK Singh were in District Jail, Lucknow during the period of October to November, 2000. The witness further deposed that as per record the accused Rita Singh was released on 24.11.2000 and accused JK Singh was released on 30.11.2000.
6. I have heard the arguments addressed on behalf of complainant by learned company prosecutor and learned counsel for accused and gone through the relevant records. I have also gone through the written arguments filed by the accused and considered the relevant provisions of law and considered the judgments reported as "Criminal Revision No.2175 of 1979, Indra Prakash Karnani and Ors vs Registrar of Companies and Ors. And Crl. M.C. 531, 532 and 533/2009, Sanjay Suri and Ors. vs. State and Anr". relied upon by learned company prosecutor as well as judgments reported as "Criminal Revision Case No.88 of 1988, P.Venkatakrishna Reddy vs Registrar of Companies, JT 2001 (4) SC 92, 2007 (1) Crimes 181 (SC), Criminal Appeal No. 1484 of 2009 Ebay India Pvt. Ltd. vs State and Anr. And Appeal (Crl.) 223 of 2007, Manjunath Chennabasapa Madali vs State of Karnataka".
7. The present complaint is filed by complainant against the accused/officer incharge as they failed to produce the books of accounts/records for inspection by the registrar or by such competent officer in terms of section 209A of the Companies Act. Section 209A of the Companies Act is reproduced as below: ROC vs JK Singh etc. 7-16 [Section 209A. Inspection of books of accounts, etc. of companies. (1) The books of account and other books and papers of every company shall be open to inspection during business hours i. by the Registrar, or ii. by such officer of the Government as may be authorized by the Central Government in this behalf;
iii. by such officers of the Securities of Exchange Board of India as may be authorized by it:
Provided that such inspection may be made without giving any previous notice to the company or any officer thereof:
Provided further that the inspection by the Securities and Exchange Board of India shall be made in respect of matters covered under sections referred to in section 55A] (2) It shall be the duty of every director, other officer or employe of the company to produce to the person making inspection under subsection (1), all such books of account and other books and papers of the company in his custody or control and to furnish him with any statement, information or explanation relating to the affairs of the company as the said person may require of him within such time and at such place as he may specify.
(3) It shall also be the duty of every director, other officer of employee of the company to give to the person making inspection under this section all assistance in connection with the inspection which the company may be reasonably expected to give.
(4) The person making the inspection under this section may , during the course of inspection,
(i) make or cause to be made copies of books of accounts and other books and papers; or
(ii) place or cause to be placed any marks of identification thereon in token of the inspection having been made.
(5)Notwithstanding anything contained in any other law for the time being in force or any contract to the contrary, any person making an inspection under this section shall have the same powers as are vested in a civil Court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:
(i) the discovery and production of books of account and other documents, at such place and such time as may be specified by such person;
(ii) summoning and enforcing the attendance of persons and examining them on oath;
(iii) inspection of any books, registers and other documents of the company at any place.
(6) Where an inspection of the books of account and other books and papers of the company has been made under this section, the person making the ROC vs JK Singh etc. 8-16 inspection shall make a report of the Central Government [or the Securities and Exchange Board of India in respect of inspection made by its officers].
(7) Any officer authorized to make an inspection under this section shall have all the powers that Registrar has under this Act in relation to the making of inquiries.
(8) If default is made in complying with the provisions of this section, every officer of the company who is in default shall be punishable with fine which shall not be less than [fifty thousand rupees], and also with imprisonment for a term not exceeding one year.
(9) where a director or any other officer of a company has been convicted of an offence under this section he shall, on and form the date on which he is so convicted, be deemed to have vacated his office as such and on such vacation of office, shall be disqualified for holding such office in any company, for a period of five years such date.]
8. Section 209A of the Act provides that the books of accounts and other books and papers of every company shall be open to inspection during business hours by the registrar or by any such officer of the government as may be authorized by the central government in this regard. Subsection 2 of this section provides that it shall be the duty of every director, other officer or employee of the company to produce to the person making inspection, all such books of account and other books and papers of the company in his custody or control and to furnish them with any statement, information or explanation relating to the affairs of the company as the said person may require at such time and at such place as he may specify. Subsection (3) of this Act mentioned that it shall also be the duty of every director, other officer of employee of the company to give to the person making inspection under this section all assistance in connection with the inspection which the company may be reasonably expected to give. Subsection (8) of this Act contains that if default is made in complying with the provisions of this section, every officer of the ROC vs JK Singh etc. 9-16 company who is in default shall be punishable with fine which shall not be less than [fifty thousand rupees], and also with imprisonment for a term not exceeding one year.
9. It is not in dispute that the accused have failed to produce the relevant records despite notices in this regard issued by the complainant. Accused have taken a specific defence throughout the case that they could not produce the relevant records on the ground that during the relevant period they were in custody on accounts of various baseless charges pursuant to conspiracy against them. Accused have taken one another stand that the books of accounts and other relevant documents were seized by the Income Tax Department during the raid conducted at the registered office of the company. It is argued that accused no.1 JK Singh remained in custody from 22.05.2000 to 10.08.2000 in Central Jail Tihar and further from 30.09.2000 to 30.11.2000 in District Jail, Lucknow and further from 04.12.2000 to 06.12.2000. Accused no. 2 Rita Singh stated to have remained in custody from 01.07.2000 to 14.09.2000 and further from 30.09.2000 to 24.11.2000 and further from 29.11.2000 to 07.12.2000. Accused no.3 Natasha Singh stated to have remained in custody from 19.09.2000 to 15.10.2000 in Central Jail, Tihar and further from 10.11.2000 to 07.12.2000. From the testimony of prosecution witnesses as well as defence witnesses it is proved that accused have repeatedly taken the same defence throughout the case that they could not produce the relevant records as they were in custody during the relevant period and this fact ROC vs JK Singh etc. 10-16 appears to have been produced through defence witnesses. The factum of income tax raid and siezure of the documents by the income tax authority is also not disputed/denied by the complainant. Further the complainant not proved categorically that all accused are responsible for day to day affairs/business of the company and there is nothing on record except bald averments in complaint/oral testimony. It is proved that at relevant time, the directors were involved in criminal cases and were also sent to JC during/about the relevant period and the business of the company remained disturbed.
PW1 is the formal witness who deposed regarding this complaint and during cross examination the witness has deposed that he never visited the office of the company for the purpose of inspection or taking part in the inspection and deposed on the basis of inspection report only. None of the relevant documents were signed by PW1 as deposed.
PW2 Sh. RK Meena and PW3 Sh. VP Singhal are the most material witnesses who conducted the inspection in this matter and deposed regarding the averments made in the complaint. They have deposed that the registered office of the company was found closed when they visited the company for inspection on 01.08.2000 and 17.08.2000 and same shows that the company was not working/functional when the inspection was ordered or was to be carried out. It is not disputed that after service of the first notice to produce the documents, the accused requested for some time to produce the relevant records which is on record. After issuance of the second notice/service which ROC vs JK Singh etc. 11-16 is disputed by the accused, the accused failed to produce the documents. The defence of the accused is that they were in JC at the relevant stage and the same is also proved in view of the testimony of defence witnesses. The testimony of the defence witnesses is sufficient to show that the directors were not working regularly and were involved in many cases and as a result of which they were sent to JC also in criminal cases. In such circumstances, they were unable to produce the documents and the same appears to be tenable and contained plausible defence. The nonproduction of documents by the accused, therefore, by no stretch of imagination can be considered as willful.
PW2 during cross examination admitted the receipt of the reply of the accused seeking some time to produce the documents whereby accused has explained reasons for not producing the relevant records. The witness also in one way or the other admitted the closure of office of the accused but he failed to state the reasons for the closure. The witness further admitted in one way or the other the defence of the accused regarding publication of certain irregularities and defaults as well as allegations published in news papers leading to their criminal involvement, sending to JC as well as the irregularities in conducting the business. The accused during her examination u/s 313 Cr.P.C. detailed and explained the reasons for not producing the relevant records at the time of inspection which were stated to the inspecting officer and communicated to the complainant during various correspondence/request and the defence of the accused appears altogether the same throughout. The happening of the incident as explained by the accused is not even disputed by ROC vs JK Singh etc. 12-16 the complainant. It is not the case at all that accused not responded to this action of the complainant.
10.It is not the case that the accused had intentionally not produced the records for inspection u/s 209A of the Act. It is argued that the registered office of the company was raided by Income Tax Department and pursuant to the income tax raids the office was closed down, all the books of accounts were seized and taken away by the Income Tax Authorities vide Panchnama Ex. DW1/A to Ex. DW1/G. It is further argued that the the operations of the company was curtailed completely since there was no sales or production hence all the senior executives and employees left the company and there was nobody to attend the day to day work and the company was referred to Board for Industrial and Financial Reconstruction (BIFR). In view of the submissions and testimony of witnesses, the default in producing the record was due to the circumstance beyond the control of the accused and cannot be considered as willful.
11.Learned defence counsel argued that present complaint is time barred as sanction to launch prosecution was granted on 23.03.01 and show cause notice Ex. PW1/9 was issued on 17.07.01 while present complaint was filed in December, 2001. The period of limitation starts from expiry of period mentioned in notice. In support of her claim and contentions learned defence counsel also relied upon judgment reported as "1986 60 Comp Case 889 Mad".
ROC vs JK Singh etc. 13-16 Learned company prosecutor, on the other hand, argued that the present complaint is not barred by the limitation as the offence is still continuing. In support of her claim and contentions relied upon case law reported as "Crl. M.C. 531, 532 and 533/2009, Sanjay Suri and Ors. Vs State and Anr".
It is relevant to note that that section 209A(2) does not contemplate that that the inspecting authority may call upon the director to give information or produce documents within such time or within the extended time. If the director of the company does not comply with the notice within the period prescribed in the first notice, the offence must be deemed to have been committed and, therefore, limitation would start only from expiry of the period mentioned in the first notice/show cause notice. In this matter, the show cause notice Ex. PW1/9 dated 17.07.01 was sent calling upon the accused to produce the relevant records within fifteen days from the date of notice Ex.PW1/9. Thus, the period of limitation starts from the expiry of period mentioned in the notice Ex.PW1/9 and as per settled law the complaint was to be filed within period of limitation. Present complaint appears to have been filed on 10.12.01. Therefore, the present complaint is not also barred by limitation as held in the judgment reported as "1986 60 Comp Case 889 Mad".
12.Vicarious liability cannot be imputed merely on the ground that accused was director of the company. The complainant was required to prove its case beyond reasonable doubt. The burden of proof in a criminal trial never shifts and it is always the burden of the prosecution to prove its case beyond ROC vs JK Singh etc. 14-16 reasonable doubt. It is held in the following case laws: "JT 2001 (4) SC 92".
"10. The presumption under Section 4(1) in reference to an offence under section 161 IPC is, as already noticed, a rebuttable presumption. The only evidence led in this case is to establish charge under Section 161 IPC, of appellant having received gratification other than legal reward, as a motive or reward for doing or forbearing to do any official act in the exercise of his official functions to favour the prime mover is the statement of the contractor, PW2. As already noticed, the contractor has given different versions of the occurance in his statement before the vigilance wing and in the court. At the trial, he has not supported the prosecution case fully. On the other hand, the explanation given by the appellant both during the crossexamination of prosecution witnesses and in his own statement, recorded under section 313 Cr.P.C. is quite plausible. Where an accused sets up a defence or offers an explanation it is well settled that he is not required to prove his defence beyond a reasonable doubt but only by preponderance of probabilities. On prosecution's own showing, in this case, that onus can be said to have been duly discharged by the appellant, more particularly, when the prosecution did not lead any evidence to show as to who made the payment to Kamalasanan who had removed the bump from the road which bump was otherwise required to be removed by PW2 for getting refund of his earnest money and security. May be, the allegation that the appellant accepted the amount as bribe to process his refund application is true but the court cannot convict an accused only on such probability or suspicion, howsoever strong it may be. 'Between may be true and must be true, there is a long distance to travel' and in this case the prosecution has failed to travel that distance through any unimpeachable, evidence. The case of the prosecution has not been established beyond a reasonable doubt".
2003 [3] JCC 1358 "It is no doubt a matter of regret a foul coldblooded and cruel murder should go unpunished. There may also be an element of truth in the prosecution story against the accused. Considered as a whole, the prosecution story may be true; but between 'may be true' and must be true' there is inevitably a long distance to travel and the whole of this distance must be covered by the prosecution by legal, reliable and unimpeachable evidence before an accused can be convicted." 2007(1) Crimes 181 (SC)
15..."153. A close analysis of this decision would show that the following conditions must be fulfilled before a case against an accused can be said to be fully established.
(1) The circumstances from which the conclusion of guilt is to be drawn should be fully established.
It may be noted here that this Court indicated that the circumstances ROC vs JK Singh etc. 15-16 concerned "must or should" and not "may be" established. There is no only a grammatical but a legal distinction between "may be proved" and must be or should be proved" as was held by this court in Shivaji Sahabrao Bobade vs. State of Maharashtra where the observations were made:[SCC para 19, p.807: SCC (Cri) p.1047] "Certainly, it is a primary principle that the accused must be not merely may be guilty before a court can convict and the mental distance between 'may be' and 'must be' is long and divides vague conjectures from sure conclusions".
13.Thus, in view of the aforesaid discussions and facts and circumstance of the case, it is held that the accused persons could not produce the books of account and other books and papers of the company as they were not in their custody or control during the relevant period. Therefore, accused cannot be held guilty for the offence punishable u/s 209A(8) of the Companies Act. Accordingly, all accused are acquitted of charges leveled against them. Their bail bonds cancelled, sureties are discharged and security if any be returned back after endorsement cancelled thereupon. File be consigned to the record room.
(GORAKH NATH PANDEY) ACMM(Special Acts) CENTRAL TIS HAZARI COURTS DELHI Announced in open court on 08.06.12.
ROC vs JK Singh etc. 16-16