Delhi District Court
Roc vs M/S Dash Films Pvt. Ltd. on 7 May, 2014
IN THE COURT OF SH. DEVENDRA KUMAR SHARMA
ADDL CHIEF METROPOLITAN MAGISTRATE (Spl. Acts): CENTRAL
TIS HAZARI COURTS, DELHI
ROC vs M/s Dash Films Pvt. Ltd.
CC No.1569 to 1572/3
JUDGMENT
(a)Serial no. of the case : 02401R0112242007
02401R0112222007
02401R0112202007
02401R0112262007
(b)Date of commission of offence : For Financial Year 20052006
(c)Name of complainant : Registrar of Companies,
NCT of Delhi & Haryana
(d)Name, parentage, residence: 1)M/s Dash Films Pvt. Ltd.,
359/25, Saidullajab, Opp. Anupam
Apartment, IGNOU Road, Saket,
New Delhi
2)Dharmendra Kapoor
H18/2, Malviya Nagar, Delhi /J109A,
st
1 Floor, Gupta Colony, Khirti Exten.,
New Delhi
3)Dayanand
Ward No.5, Jind, Haryana
4)Chaman Lal
H.No.8/864, Shyam Nagar
Near Patiala Chowk, Jind, Haryana
5)Dalip Mallik
88, Shakti Vihar, Pitampura, Delhi
(e)Offence complained of/ proved : U/s 162/220 & 159/162 of Co. Act.
(f)Plea of accused : Pleaded not guilty
(g)Final order : Accused no.1, 2 and 5 convicted
Accused no.3 and 4 acquitted
ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 1 of 23
(h)Date of such order : 07.05.2014
Date of institution : 24.07.2007
Arguments heard/order reserved : 05.05.2014
Date of Judgment : 07.05.2014
Brief statement of the reasons for the decision:
1. This common judgment will dispose off following four complaint cases filed by the complainant Sh. V.K. Gupta, the then Assistant Registrar of Companies, NCT of Delhi & Haryana against the aforesaid accused persons with identical allegations. The details of the complaints are as under: Balance Sheet, Profit & Date for filing Return Date of filing Loss A/c and Annual Return before the ROC of complaint 2006 ( CC No.1569/3) 29.10.2006 (162/220) 24.07.2007 2005 (CC No.1570/3) 29.10.2005 (162/220) 24.07.2007 2005 (CC No.1571/3) 29.11.2005 (159/162) 24.07.2007 2006 (CC No.1572/3) 29.11.2006 (159/162) 24.07.2007
2. Two complaints have been filed for each year. Since the allegations made in these complaints as well as evidence led are common in all the complaints, therefore, complaint case no.1570/3 and complaint case no.1571/3 for Financial Year 2005 are taken up for test.
3. Succinctly, the facts of the case are that accused no.1 M/s Dash Films Private/Public Limited is a company and accused no.2 to 5 are its Directors/Officers and responsible for compliance of the provisions of Companies Act, 1956 ( for short the 'Act'). The allegations against the accused are that the company failed to file the Balance Sheets & Profit and Loss Account and Annual Returns as required U/s 159/162 and 220 of the Act. ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 2 of 23 Hence, present complaints.
4. Accused were summoned for the said offences. Accused no.5 Dalip Mallik is representing accused no.1 company also. A notice u/s 251 Cr.P.C. was given to the accused no.1 company as well as accused no.2 to 5 for the offence punishable u/s 162/220(3) as well as for the offence punishable u/s 162/159 of the Act on 02.12.2008 separately in all four complaints to which they pleaded not guilty and claimed trial.
5. In order to substantiate its allegations made in the complaint, the prosecution examined Sh. Naval Kishore Gupta, the then JTA from the office of ROC, Delhi and Haryana as PW1 and the complainant Sh. VK Gupta as PW2.
PW1 Sh. Naval Kishore appeared before the court with relevant documents and deposed on the basis of record regarding the allegations made in the complaint against the accused persons. He also proved on record copy of the Incorporation Certificate of accused no.1 company Ex.PW1/1 and deposed that as per record, accused no.2 to 4 are/were the directors of the accused no.1 and responsible for the compliance of the Act. The witness also proved on record copy of Annual Return dated 25.09.2004 filed with the office of ROC on 07.03.2005 and stated that accused have not furnished the Annual Return and Balance Sheet of the company for the financial year 31.03.2005 within prescribed period.
PW2 Sh. VK Gupta is the complainant who filed the present. Complaint. This witness has also reiterated the facts of the complaint and deposed ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 3 of 23 regarding the allegations in the complaint. He has also identified his signature appearing on show cause notice Ex.PW1/3 issued by him to the accused persons as well as on complaint Ex.PW1/4.
6. The statements of accused persons recorded u/s 313 Cr.P.C read with section 281 Cr.P.C separately in all the complaints.
In their statements accused no.3 Dayanand and no.4 Chiman Lal denied the allegations and stated that they are/were not responsible for compliance of day to day affairs of the company as Mr. Dalip Mallik i.e accused no.5 was running the company and taking all the decisions. They were not in a position to file the return in their individual capacity as all the record were with accused no.5. They are innocent and have not committed any offence.
While in their statements, accused no.2 Dharmendra Kapoor and no.5 Dalip Mallik leveled the allegations on each other and tried to shift the responsibility/liability for compliance of day to day affairs of the company according to the provisions of the Companies Act.
Except accused no.5, all three accused Mr. Dalip Malik admitted regarding receipt of show cause notice and filing their replies to the said notice. Accused no.5 also stated that since he has made a complaint against the accused no.2 on 21.07.2006 before ROC, present complaint is filed against him.
7. In support of claim and contentions, accused examined Sh. RK Saini, Sr. ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 4 of 23 Technical Assistant from the office of ROC as DW1, accused Dharmendra Kapoor examined himself as DW2, one Sh. Divesh Kumar, Branch Manager from Oriental Bank of Commerce, Sarvpriya Vihar, Kalu Sarai, New Delhi, as DW3 and Sh. Ankit Garg, DEO, Trade Mark, Registry, Sector14, Dwarka, Delhi, as DW4 DW1 Sh. RK Saini proved on record two forms 32 dated 19.11.03 and dated 10.02.2004 showing accused persons as directors of the company as Ex.DW1/1 and Ex.DW1/2. The witness also proved on record Annual Return Ex.DW1/3 and stated that the balance sheet and profit and loss account for the year 20032004 was filed by the company on 07.03.2005 and thereafter no balance sheet/annual return has been filed. The status of the company is stated to be dormant.
DW2 is accused no.2 Dharmendra Kapoor who has placed reliance upon the documents i.e certified copy of order passed in CS OS No.1756 of 2005 in a case titled as Prime Production Pvt. Ltd. vs Dash Films Pvt. Ltd. , copy of resolution filed in the said case Ex.DW2/A and Ex.DW2/B and certified copy of charge sheet of FIR No.65/2006 titled as State vs Dalip Mallik Ex. DW2/C. DW3 Sh. Divesh Kumar proved on record several documents Ex.DW3/1 pertaining to account opening form alongwith copies of KYC documents of Director and Chairman of company i.e copy of ration card of accused Dharmendra Kapoor and Dalip Kumar, copy of PAN card of accused Dharmendra Kapoor and Voter ID of accused Dalip, Board Resolution showing ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 5 of 23 accused Dalip Mallik as MD of accused no.1 company for operating bank account and certified copy of MOA and AOA, copy of form 32 and form no.2 of the accused company.
DW4 Sh. Ankit Garg proved on record certified copy of trade mark No. 1248663 in Class9 alongwith its record as Ex.DW4/1 and Ex.DW4/2 and stated that the said trade mark is registered on 10.11.2003 with the Certificate No.770197 in the name of accused no.5 Dalip Mallik.
8. I have given my thoughtful consideration to the submissions advanced on behalf of both the parties and gone through the relevant records as well as written arguments filed on behalf of the accused persons. I have also considered the relevant provisions of law.
9. Learned counsel for accused no.1 & 5 and 2 to 4 have relied upon the following judgments in support of claim and contentions:
a) 2007 (4) JCC 2905
b) [2012] 171 Comp Cas 280 Delhi
c) (2010) 10 Supreme Court Cases 479
d) 2005 Supreme Court Cases (Cri) 1975
e) 2005 Supreme Court Cases (Cri) 1988
f) 2009 [3] JCC [NI] 204
g) 2006 [2] JCC 894
h) 2009 [3] JCC 1951
i) 2008 (1) JCC 287
j) AIR 2010 Supreme Court 2986
k) 145 (2007) Delhi Law Times 582 A) The relevant provisions of section 220/159 of Companies Act is reproduced below for ready reference: ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 6 of 23 Section 220. Three copies of balancesheet, etc., to be filed with Registrar. (1) After the balancesheet and the profit and loss account have been laid before a company at an annual general meeting as aforesaid, there shall be filed with the Registrar [within thirty days from the date on which the balancesheet and the profit and loss account were so laid] [or where the annual general meeting of a company for any year has not been held, there shall be filed with the Registrar within thirty days from the latest day on or before which that meeting should have been held in accordance with the provisions of this Act].
Section 159. Annual return to be made by company having a share capital. (1) Every company having a share capital shall within [sixty] days from the day on which each of the annual general meetings referred to in section 166 is held, prepare and file with the Registrar a return containing the particulars specified in Part I of Schedule V, as they stood on that day, regarding
(a) its registered office,
(b) the register of its members,
(c) the register of its debentureholders,
(d) its shares and debentures,
(e) its indebtedness,
(f) its members and debentureholders, past and present, and
(g) its directors, managing directors, [***] [managers and secretaries], past and present.
B) Firstly, it is argued on behalf of accused 2 to 4 that the present complaint is not maintainable being barred by limitation and placed reliance upon the judgments reported in "2007 [4] JCC 2905 Webcity Infosys Ltd. vs ROC"". It is argued on behalf of accused no.2 to 4 that they are/were not responsible for compliance of the aforesaid provisions of Companies Act as accused no.5 Mr. Dalip Mallik was running the company and taking all the decisions at the relevant time. It is further argued that accused no.2 to 4 were not in a position to file the return in their individual capacity as they were not having access to the company statutory records and all the records were with accused no.5. Accused no.2 and 5 in their arguments shifted the liability on each other and ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 7 of 23 tried to shift the responsibility/liability for compliance of day to day affairs of the company according to the provisions of the Companies Act. They further argued that because of dispute with each other, they were not in position to comply with the provisions of Companies Act and thus, there was no mens rea on their part.
It is further argued that the burden of proof lies on the prosecution to prove the allegations which they have failed to prove against the accused beyond reasonable doubt and accused persons deserve to be acquitted. C) Learned company prosecutor, on the other hand argued that the complainant has proved the contentions as mentioned in the complaints, the accused failed to file the BalanceSheet and Annual Return of the accused company within prescribed period. She also argued that the present complaint is not barred by the limitation as the offence is still continuing and relied upon the judgments reported in "State of Bihar vs. Deokaran Nenshi on 24 August, 1972 and [2012] 171 Comp Cas 355 (Patna) titled as Binay Kishore Prasad and Another vs Union of India". It is further argued that since the allegations regarding directorship of accused has been proved by the prosecution witness thus, the onus to disprove the allegations of complainant shifted upon the accused which they failed to discharge. It is also argued that as the case of complainant stands proved, the accused may be held guilty and convicted for the aforesaid offences.
D) Since, the issue raised pertaining to limitation and liability are a legal issues, ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 8 of 23 let the same be discussed first as it would affect the decision of the case. Thus, first and foremost it is required to be considered as to whether the offences u/s 159/220/162 of the Act are continuing offence or not. I have also perused the judgments relied upon by the parties. For appropriate disposal of this issue the judgments relied upon by the parties are being reproduced below for ready reference:
10.The relevant para of the judgments "Webcity Infosys Ltd (supra) relied upon by the learned defence counsel is reproduced below: Para 5. Distinction between offences which take place when an act or remission is committed once for all and a continuing offence has been pithly drawn in the decision of the Supreme Court reported as AIR 1973 SC 908 State of Bihar v. Devokaran Nenshi & Anr.
Para 6. In para 5 of the judgment is was opined as under:
"5.Continuing offence is one which is susceptible of continuance and is distinguishable from one which is committed once and for all. It is one of those offences which arises out of a failure to obey or comply with a rule or its requirement and which involves a penalty, the liability for which continues until the rule or its requirement is obeyed or complied with. On every occasion that such disobedience or noncompliance occurs and recurs, there is the offence committed. The distinction between the two kinds of offences is between an act or omission which continues and therefore constitute a fresh offence every time or occasion on which it continues. In the case of a continuing offence there is thus the ingredient of continuance of the offence which is absent in the case of an offence which takes place when act or omission is committed once and for all.
Para 11. Interpreting Section 162 of the Companies Act, in para 14 of the decision of the Division Bench of the Calcutta High Court reported as "1984 Tax L.R. 2043 National Cotton Mills Ltd. vs Assistant Registrar of Companies", it was held as under: "14. On a careful review of the legal position, it is difficult for us to agree with the view expressed by a learned single Judge in the above case. As pointed out by the Supreme Court, in order to constitute a continuing offence, the offence must arise out of a failure to obey or comply with a rule or its requirement and which ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 9 of 23 involves a penalty, the liability for which continues until the rule or its requirement is obeyed or complied with. Section 150 of the Companies Act does not impose any liability which so continues. The offence on the breach thereof is complete with the failure to furnish the return in the manner or within the time stipulated.
Such offence is committed once and for all as and when one commits the default. That provision does not contemplate that the obligation to submit such returns continues from day to day until the return is actually submitted nor does it provide that continuance of business without filing of such returns is prohibited so that nonfulfillment of a continuing obligation or continuing of business without filing of such returns becomes a continuing offence. When Section 162 of the Companies Act prescribed the penalty of fine' which may extend to fifty rupees for every day during which the default continues', it merely prescribed the measure of penalty - such a prescription being made with the object of enforcing strict compliance with the requirement of Section 159 under the threat of enhanced penalty and getting relief from such penalty on enhancing scale by early submission of returns even after the default. That does not render the initial default a continuous one. It can not be said that the offence is repeated or committed from day to day after the initial default. It is only where the offence is committed from day to day that it can be called a continuing offence. There being no express provision in Section 234, 598 etc. of the Companies Act it will not be proper to hold that the offence under Section 162 is a continuing offence. When the statute itself provides for continuance of offence irrespective of initial default in some cases but does not make similar provisions in respect of some other offences, it would not be correct to say that the later class of cases also would be continuing offences".
11.The relevant para of the judgments relied upon by the learned company prosecutor are reproduced below: [2012] Comp Cas 335 (Patna) Binay Kishore Prasad and Anr. Vs UOI Para 13. "Nature of offence to be continuing one has also been considered by a Bench of this Court, as reported in [2004] 2 East Cr. C. 213, wherein at paragraph 12 it has been held "Applying the norms and guidelines given by the Supreme Court in Bhagirath Kanodia's case and all the more looking to the purpose which has been intended to be achieved by constituting a particular Act as the offence, it is held that the default in filing the balance sheet of the profit and loss of the companies within the prescribed statutory period was a continuing offence".
ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 10 of 23
12.In an earlier judgment, the Hon'ble High Court of Delhi in the following case has held that the offences u/s 159, 162, 220 is continuing offence. The relevant para of the judgment is reproduced below: 74 (1998) DLT 537 titled as Anita Chadha vs ROC Para 6 "In so far as the first question is concerned, this Court in Kuldip Singh and Another v. State and Another, 34 (1988) DLT 11 held that considering the objects of the provisions of Sections 159 and 220 read with section 162 of the Act and the language used therein, the offences of which the accused were charged, namely nonfiling of annual return, balance sheet and profit & loss account, within the period prescribed, were continuing offences and therefore, the period of limitation provided by section 468 of the Code did not haver any application. It was further held that the said offences will be governed by Section 472 of the Code, according to which a fresh period of limitation shall began to run at very moment of time during which the offences continue. This Court considered the following three decisions of the Supreme Court, which dealt with the question as to whether a particular offence was a continuing offence or not:
1.State of Bihar v. Deokaran Nanshi, AIR 1973 SC 908;
2.Bagirath Kanoria v. State of MP, (1984) 3 Company Law Journal 49; and
3.Maya Rani Punj v. CIT, Delhi, (1986) 157 ITR 330 Para 7 "In Deokaran Nanshi (supra) the Supreme Court was of the view that when law requires submission of a return within a certain period and there is a failure to do so, such noncompliance is ordinarily complete on the expiry of the period and is not a continuing offence. This was a case under Section 66 of the Mines Act, 1952, which provides for filing of an annual return before the appropriate authority by owner, manager etc. of the Mine within the time prescribed. Since there was no provision postulating that the offence continues until the requirement of the statute is complied with, failure to file the return within the prescribed period was held not to be a continuing offence. As a sequitur, the inference which must be drawn from the decision of the Supreme Court in Deokaran's case, is that if the relevant law has not only made the default punishable as an offence, but has further provided that the penal liability therefor would be a continuing offence. In Bhagirath Kanoria's case (supra) the Supreme Court while construing the provisions of Section 14(2A) of the Employees Provident Fund and Family Pension Act, 1952, considered the question whether failure to pay the employees contribution to the provident fund withing the time prescribed therefor was a continuing offence. The Supreme Court viewed the offence of nonpayment of the employer's contribution to the provident fund to be continuing offence. The Supreme Court distinguished its ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 11 of 23 earlier decision in Deokaran Nanshi's case as in that case there was no provision which laid down that the owner of a Mine would be guilty of an offence, if he continued to work the Mine without furnishing the return. The Supreme Court in Bhagirath Kanoria's case observed that the question whether a particular offence was a continuing offence depends upon the language of the statute which creates the offence, the nature of the offence and the purpose which was intended to be achieved by constituting the particular act as an offence. The Supreme Court in this regard observed as follows"
"The imposition of penalty not confined to the first default, but with reference to the continued default is obviously on the footing that non compliance with the obligation of making return is an infraction as long as the default continued. Without sanction of law, no penalty is impossible with reference to the defaulting conduct. The position that penalty is imposable not only for the first default, but as long as the default continues basis is indicative of the legislative intention in unmistakable terms that as long as the assessee does not comply with the requirements of law, he continues to be guilty of the infraction and exposes himself to the penalty proved by law."
Para 12 "Accordingly I hold that the offences under Section 159 and 220 read with Section 162 of the Act are continuing offences within the meaning of section 472 and Section 468 of the Code, is not attracted."
E) It is well settled law that upon an identical issue the judgment earlier in point of time would be considered to be precedent unless and until in the later judgment, earlier judgment has been referred/discussed and distinguished. In the present case the judgment reported in "74 (1998) DLT 537 titled as Anita Chadha vs ROC" relied upon by the complainant qua the proposition that the offences u/s 159/220 read with section 162 is continuing in nature was passed prior in time than the judgment relied upon by the accused, therefore, is the authority to be followed. In view of the same, it is held that the present complaint is not barred by limitation.
F) Further, section 303 of the Companies Act provides for maintaining the register ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 12 of 23 regarding the status of the directors, therefore, it was the duty of the accused persons to maintain such register so as to arrive at a conclusion that which of the accused was the Managing Director/Chairman/Director/Person with whose instructions the accused no.1 company accustomed to act upon or the board of directors were accustomed to act upon.
G)Relevant provisions of section 303 of the Companies Act is reproduced for ready reference:
303. Register of directors, [***] etc. (1) Every company shall keep at its registered office a register of its directors, managing director [***] manager and secretary, containing with respect to each of them the following particulars, that is to say:
(a) in the case of an individual, his present name and surname in full; any former name or surname in full; [his father's name and surname in full or where the individual is a married woman, the husband's name and surname in full] his usual residential address; his nationality; and, if that nationality is not the nationality of origin, his nationality of origin; his business occupation, if any; if he holds the offence of director, managing director, [***] manager or secretary in any other body corporate, the particulars of each such held by him; and except in the case of a private company which is not a subsidiary of a public, the date of his birth;
(b) ...
(c) ...
(d) ...
(e) ...
Explanation. For the purpose of this subsection (1) any person in accordance with [whose directions or instructions], the Boar od directors of a company is accustomed to act shall be deemed to be a director of the company;
(2) ...
(3) (i)...
(ii)...
(iii)...
(2) The company shall, within the periods respectively mentioned in this subsection, send to the Registrar [a return in duplicate in the ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 13 of 23 prescribed form] containing the particulars specified in the said register and [ a notification in duplicate in the prescribed form] of any change among its directors managing directors, [***] managers or secretaries [***] specifying the date of change.
The period within which the said return is to be sent shall be a period of [thirty] days from the appointment of the first directors of the company and the period within which the said notification of a change is to be sent shall be [thirty] days from the happening thereof;
H) In the present case, no such register has been placed on record or proved on behalf of the accused persons and they are shifting the liability upon each other stating that neither of them were in the control of the documents nor were responsible for day to day affairs of the company. Further, they are relying upon the documents wherein some of the accused have been arrayed as Managing Director/Chairman but without maintaining any such register in the company or without furnishing any such information to the office of ROC. In this regard reliance may be placed upon the judgment reported in "(2011) 3 SCC 351 titled as Harshendra Kumar D. v. Rebatilata Koley & Ors".
"16. Every company is required to keep at its registered office a register of its directors, managing director, manager and secretary containing the particulars with respect to each of them as set out in clauses (a) to (3) of subsection (1) of Section 303 mandates every company to send to the Registrar a return in duplicate containing the particulars specified in the register. Any change among its directors, managing directors, managers or secretaries specifying the date of change is also required to be furnished to the Registrar of Companies in the prescribed form within 30 days of such change. There is, thus, statutory requirement of informing the Registrar of Companies about change among directors of the company."
I) In the present case no such register is placed and proved on record. Therefore, status of accused no.2 to 5 remains to be of director in the eyes of law. Thus, in the circumstances it is now to be seen as to which of the accused ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 14 of 23 was having control over the affairs of the company from the documents/evidence already on record as theur self proclaimed status as Managing Director/Chairman has no sanctity in the eyes of law. The accused Dharmendra Kapoor has placed much reliance upon the order passed by the Hon'ble High Court dated 30.05.2008 Ex.DW2/A alongwith the board resolution dated 27.03.2005 Ex.DW2/B with the argument that an injunction order was passed by the Hon'ble High Court under order 39 rule 1 and 2 CPC relying upon the board resolution Ex.DW2/B and therefore, due to non cooperation of accused Dalip Mallik, the necessary compliance as alleged in the present complaints could not be made. However, this argument is misplaced. With due respect, it is settled law that any order passed under order 39 rule 1 and 2 CPC does not tantamount the expression upon the merits of the case. Furthermore, in the resolution relied upon, it was clearly mentioned that it is he who will make necessary compliance with the ROC etc. Though, it has been argued on behalf of the accused that a letter dated 27.12.2005 was sent to the accused Dalip Mallik but no such letter has been placed on record or has been proved by him. It is settled law that no accused can be given benefit of his own wrong and in the present case the accused are shifting the liability upon each other though there is nothing on record even remotely to suggest that any correspondence was made by them with each other so as to comply the statutory obligation by them. Nothing has been proved on record that they were not having access to documents. Contrary to it, if the aforesaid board resolution is taken into consideration, accused no.2 ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 15 of 23 and 5 were signatory to the same and were having good relations till the year 2005. Therefore, now it is to be seen from record that who was the officer in default for noncompliance and whether such default was willful or not. J) Now let us see the role of the accused no.3 and 4 first because throughout the case they have taken a defence that they were not active directors and responsible for compliance of the provisions of the Companies Act on behalf of the accused company. They have also taken same defence in reply to the show cause notice issued by the complainant. As such to prove these particular allegations, the onus was on the complainant to put on record some concrete evidence. These allegations of the complainant does not find any support from the documents proved by them during their evidence. The complainant was required to establish on record that accused no.3 and 4 were also responsible for the day to day affairs of the accused no.1 company and was actively participating in the business of accused no.1 company. Only then, they can be held liable for noncompliance of the aforesaid provisions of Companies Act. Complainant has not proved on record any documents to show that accused no.3 and 4 ever actively participated in the affairs of the company. Complaint has placed on record copy of annual return Ex.PW1/2 and the copy of extract of board meeting held on 27.03.2005. But these documents are not sufficient to assume that accused no.3 and 4 were actively involved in day to day affairs of the accused company at the relevant point of time. Copy of annual return Ex.PW1/2 containing copy of list of directors does not bear the signature of accused no.3 and 4. Albeit, the copy of extract of ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 16 of 23 board meeting bore the signature of accused no.3 and 4 but bare perusal of the same shows the role of the accused no.3 and 4 as mute spectator and merely a signatory. In the said board meeting, the company appears to have assigned/sold all its Titles etc authorizing accused no.2 Dharmendra Kapoor to assign/sale all Copyrights and Trademarks with their raw material whatsoever he deems fit. No role has been assigned to accused no.3 and 4. It is also mentioned in the said board meeting extract that it has been decided by board to sale/assign all titles (approx. 115) to M/s Cine Prime Entertainment as already discussed with one Mr. Sanjay. Therefore, it has been undertaken by all the Directors of the company that they shall be bound to the act of Mr. Dharmendra Kapoor and they will also comply with the terms and conditions of the agreement/assignment to be executed in favour of M/s Cine Prime Entertainment which is to be executed by Mr. Dharmendra Kapoor on behalf of company. Mr. Dalip Mallik will provide all sale purchase accounts/company books and other related documents which are in his possession for submitting company returns in sale tax, income tax, ROC etc. Thus, it is crystal clear that even there is no access of accused no.3 and 4 to the documents of the accused company.
K) Present case is a criminal proceedings and criminal responsibility cannot be fastened on a particular partner/director unless he/she was personally responsible for the day to day affairs of the accused company. For holding a particular partner/director liable, it has to be proved on record that he/she was responsible for looking after the day to day affairs of the accused company ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 17 of 23 and was also liable to comply with the provisions of the Act and in the absence of any such evidence, the complaint has to fail against that particular partner/director. This court does not find any evidence on record which could show that accused no.3 and 4 were active directors and were responsible for complying of the provisions of Companies Act on behalf of accused company at the relevant time.
L) It has been held by the Hon'ble Supreme Court in the following case which was a case u/s 10 of Essential Commodities Act that in the absence of any proof, no partner can be convicted and in this regard relevant para of the judgment reads as under: AIR 1989 SC 1982 Sham Sundar and others vs State of Haryana "9. It is, therefore, necessary to add an emphatic note in this regard. More often it is common that some of the partners of a firm may not even be knowing of what is going on day to day in the firm. There may be partners, better known as sleeping partners who are not required to take part in the business of the firm. There may be ladies and minors who were admitted for the benefit of partners. They may not know anything about the business of the firm. It would be a travesty of justice to prosecute all partners and ask them to prove under the proviso to subsection (1) that the offence was committed without their knowledge. It is significant to note that the obligation for the accused to prove under the proviso that the 'offence took place without his knowledge or that he exercised all due diligence to prevent such offence arises only when the prosecution establishes that the requisite condition mentioned in subsection (1) is established. The requisite condition is that the partner was responsible for carrying on the business and was during the relevant time in charge of the business. In the absence of any such proof, no partner could be convicted". M)Further, vicarious liability cannot be imputed merely on the ground that ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 18 of 23 accused was director of the company. Law in this regard has been summarized by our own High Court in case titled as Sudeep Jain vs M/s ECE Industries Ltd in Cri. M.C. No. 1822/2013, order dated 06.05.2013. While discussing the vicarious liability of the director, it was observed that vicarious liability on the part of a person must be pleaded and proved and not inferred. Same view has been taken by the Hon'ble Apex court in "National Small Industries Corp. Ltd. vs. Harmeet Singh Paintal and Anr., 2010 (2) SCALE 372". Relevant para of the judgment is reproduced below: "24. ... if the accused is not one of the persons who falls under the category of "persons who are responsible to the company for the conduct of the business of the company" then merely by stating that "he was incharge of the business of the company" or by stating that "he was incharge of day to day management of the company" or by stating that "he was incharge of, and was responsible to the company for the conduct of the business of the company", he can not be made vicariously liable under Section 141(1) of the Act. To put it clear that for making a person liable under Section 141(2), the mechanical repetition of the requirements under Section 141(1) will be of no assistance, but there should be necessary averments in the complaint as to how and in what manner the accused was guilty of consent and connivance or negligence and therefore, responsible under Subsection (2) of Section 141 of the Act". N) 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 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 ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 19 of 23 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 can not 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.
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 concerned "must or should" and not "may be" established. There is not 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".
ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 20 of 23 O)Thus, it is clear that for holding a director responsible for a criminal offence, it has to be established by the prosecution that he/she was the person incharge for the day to day affairs of the firm during the relevant time. It is also clear from the law laid down by the Hon'ble Supreme Court that a partner/director cannot be made personally liable for the offences committed on behalf of the firm/company and the criminal liability can not be extended to another partner/director merely by virtue of his being partner in the firm/company unless something concrete is proved on record to show that he/she was the person incharge and responsible for the conduct of the business of the firm/company. Thus, in view of the aforesaid discussions, it is held that accused no.3 and 4 are not liable for any of the offences allegedly committed by the accused no.1 company. Accordingly, accused no.3 and 4 are acquitted of charges leveled against them.
P) Now let us discuss the case on merit qua accused no.1 company as well as accused no.2 and 5. The complainant has filed the aforesaid complaints for not filing the BalanceSheet and Annual Returns for the relevant year of the accused company. It is admitted position of fact that accused no.2 and 5 were also directors of the accused no.1 company. The annual return Ex.PW1/2 is containing list of directors' name which bore the signature of accused no.2 Dharmendra Kapoor and no.3 Dalip Mallik. From the statement of DW3 and documents Ex.DW3/1, it is clear that accused no.2 and 5 were active director of accused no.1 company. In their reply Ex.PW1/X3 and Ex.PW1/X1, it is clear that both accused no.2 and 5 have endeavoured to shift the ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 21 of 23 responsibility/liability for compliance of day to day affairs of the company according to the provisions of the Companies Act. However, from the bare perusal of reply Ex.PW1/X3 and Ex.PW1/X1 and copy of extract of meeting, it is clear that in one way or the other, both accused no.2 and 5 are actively involved in day to day affairs of the company and responsible for complying with the provisions of the Act on behalf of accused no.1 company. At the cost of repetition, it is would be pertinent to mention that they tried to shift liability upon each other but they failed to prove anything on record that they made any sincere effort to comply with statutory obligation by calling the documents from each other or making any communications in writing to each other for the same.
Q) In view of the aforesaid discussions and facts and circumstances of the case, it is held that the prosecution has proved its case beyond reasonable doubt against the accused no.1 company as well as accused no.2 Dharmendra Kapoor and accused no.5 Dalip Mallik. Accordingly, they are held guilty for the offence punishable u/s 159/220 read with section 162 of the Act for nonfiling of Annual Return and Balance Sheet in complaint case complaint case no. 1570/3 and complaint case no.1571/3.
Since, other complaints have also been filed with the identical allegations against accused no.1, 2 and 5 for the aforesaid offences, hence they are also held guilty for the offences 159/220 read with section 162 of the Companies Act, 1956, in remaining complaint cases No.1569/3 and No.1572/3. Let accused be heard on sentence on 10.05.2014. However, accused no.3 and ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 22 of 23 4 are acquitted in all four complaint cases. Bail bonds of accused no.3 and 4 stand cancelled in all four complaints. Surety stands discharged. Original documents, if any, be returned back to the rightful applicant after endorsement cancelled thereupon. Accused no.3 and 4 are directed to furnish fresh bail bond in terms of section 437A Cr.P.C in all four complaint cases. A copy of this judgment be placed in all the complaint cases.
Main file be consigned to the record room. Ahlmad to prepare a Miscellaneous file for the purpose of arguments on sentence.
Judgment be sent to the server www.delhidistrictcourt.nic.in.
(DEVENDRA KUMAR SHARMA) ACMM(Special Acts) CENTRAL TIS HAZARI COURTS DELHI Announced in open court on 07.05.2014 (Total number of page 21) (One spare copy attached) ROC vs M/s Dash Films Pvt. Ltd. CC No.1569 to 1572/3 23 of 23