Madras High Court
K. Seethalakshmi vs Registrar Of Companies And Anr. on 2 February, 1999
Equivalent citations: [2001]103COMPCAS532(MAD)
JUDGMENT A. Raman, J.
1. Criminal Revision Case No. 114 of 1996--A. complaint was filed by the Registrar of Companies under sections 159 and 162 of the Companies Act, 1956, against South India Oil Complex Limited as the first accused and Sri K.K. Kunchi Krishna Poduval, the managing director of the first accused-company as the second accused. The allegation is as follows :
2. The company and its directors are under statutory obligation to file with the complainant an annual return in the prescribed form made up to the date of the annual general meeting and in default, the company and every officer of the company, shall be punishable with fine which may extend to Rs. 50 for every day during which the default continues. The annual general meeting of the company in the year 1991 should have been held latest by September 30, 1991, and the annual return made up to that date should have been filed with the complainant on or before November 28, 1991. A default notice was issued by the complainant to the accused, which was acknowledged by the second accused. But the notice issued to the company was returned undelivered. The accused have not filed the annual return in spite of service of notice. Thus, they have wilfully and knowingly contravened the provisions of Section 159 of the Companies Act, 1956.
3. Pending the proceedings, the second accused, Kunchi Krishna Poduval, the managing director of the first accused-company died. The petitioner herein Smt. Seethalakshmi was impleaded as an accused after the death of her husband, viz., Kunchi Krishna Poduval. At that stage, the petitioner herein, who was impleaded as an accused, on the death of her husband, filed an application for her discharge from the case under Section 204 of the Criminal Procedure Code. The Sub-Divisional Magistrate, Mahe, by his order dated November 14, 1995, dismissed the application filed by the petitioner herein in Crl. M. P. No. 360 of 1995 in STR No. 587 of 1994. Hence, this revision.
4. Criminal Revision Case No. 115 of 1996.--A complaint was filed by the Registrar of Companies, under sections 159 and 162 of the Companies Act against South India Oil Complex Limited as the first accused and Sri K.K. Kunchi Krishna Poduval, the managing director of the first accused-company as the second accused. The allegation is as follows ;
5. The company and its directors are under statutory obligation to file with the complainant an annual return in the prescribed form made up to the date of the annual general meeting and in default, the company and every officer of the company shall be punishable with fine which may extend to Rs. 50 for every day during which the default continues. The annual general meeting of the company in the year 1992 should have been held latest by September 30, 1992, and the annual return made up to the date should have been filed with the complainant on or before November 28, 1992. A default notice was issued by the complainant to the accused, which was acknowledged by the second accused. But the notice issued to the company was returned undelivered. The accused have not filed the annual return in spite of service of notice. Thus, they have wilfully and knowingly contravened the provisions of Section 159 of the Companies Act, 1956.
6. Pending the proceedings, the second accused Kunchi Krishna Poduval, the managing director of the first accused-company died. The petitioner herein Smt. Seethalakshmi, was impleaded as an accused after the death of her husband, viz., Sri Kunchi Krishna Poduval. At that stage, the petitioner herein, who was impleaded as an accused, on the death of her husband, filed an application for her discharge from the case under Section 204 of the Criminal Procedure Code. The Sub-Divisional Magistrate, Mahe, by his order dated November 14, 1995, dismissed the application filed by the petitioner herein in Crl. M. P. No. 361 of 1993 in S. T. R. No. 583 of 1994. Hence, this revision.
7. Crl R. C. No. 116 of W96.-The Registrar of Companies filed a complaint against South India Oil Complex Limited as the first accused and Sri K.K. Kunchi Krishna Poduval, the managing director of the first accused company, as the second accused, under Section 220 read with Section 162 of the Companies Act. The gist of the complaint is as follows :
8. According to the provisions of Section 210(1) of the Companies Act, at every annual general meeting of a company, the company shall lay before the company the balance-sheet at the end of the period specified in Sub-section (3) and a profit and loss account for the period. The company and its directors are under statutory obligation to file with the Registrar of Companies within 30 days from the date on which the balance-sheet and profit and loss account were laid before the company at the annual general meeting, three copies of the balance-sheet and profit and loss account, in the prescribed form or where the annual general meeting of a company for any year has not been held, they shall be filed with the Registrar within 30 days from the latest day on or before which the meeting should have been held. If default is made in complying with the requirements of Section 220 of the Companies Act, 1956, the company and every officer of the company, who is in default shall be punishable with fine. The first balance-sheet and profit and loss account of the company were required to be placed in the annual general meeting by a date not later than September 30, 1991, that is to say, within six months of the close of the financial year. Three copies of the said balance-sheet were further required to be filed in the office of the Registrar of Companies not later than October 29, 1991. But the accused have not filed the balance-sheet. A default notice was issued by the complainant to the accused. The notice addressed to the company was returned undelivered, while the notice issued to the second accused has been duly acknowledged. As the accused have not filed the copies of the said balance-sheet and profit and loss account, they have contravened the provisions of Section 220 of the Companies Act. Hence, they are liable to be punished.
9. Pending the proceedings, the managing director of the first accusedcompany, who was impleaded as the second accused, died. On his death, the petitioner herein was impleaded as an accused. Therefore, the petitioner herein filed an application under Section 204 of the Criminal Procedure Code, praying for her discharge. The application which was taken on file in Crl. M. P. No. 362 of 1995 in S. T. R. No. 589 of 1995 was dismissed by the Sub-Divisional Magistrate, Mahe, on November 14, 1995. Hence, this revision.
10. Crl R. C. No. 117 of 1996.~The Registrar of Companies filed a complaint against South India Oil Complex Limited as the first accused and Sri K.K. Kunchi Krishna Poduval, the managing director of the first accused-company, as the second accused under Section 220 read with Section 162 of the Companies Act. The gist of the complaint is as follows :
11. According to the provisions of Section 210(1) of the Companies Act, at every annual general meeting of a company, the company shall lay before the company the balance-sheet at the end of the period specified in Sub-section (3) and a profit and loss account for the period. The company and its directors are under statutory obligation to file with the Registrar of Companies within 30 days from the date on which the balance-sheet and profit and loss account were laid before the company at the annual general meeting, three copies of the balance-sheet and profit and loss account, in the prescribed form or where the annual general meeting of the company for any year has not been held, they shall be filed with the Registrar within 30 days from the latest day on or before which the meeting should have been held in accordance with the provisions of the Act. If default is made in complying with the requirements of Section 220 of the Companies Act, 1956, the company and every officer of the company, who is in default shall be punishable with fine. The first balance-sheet and profit and loss account of the company for the year 1992 were required to be placed in the annual general meeting by a date not later than September 30, 1992, that is to say, within six months of the close of the financial year and three copies of the said balance-sheet were further required to be filed in the office of the Registrar of Companies not later than October 29, 1992. But, the accused have not filed the balance-sheet. A default notice was issued by the Registrar of Companies to the accused. The notice addressed to the company was returned undelivered, while the notice issued to the second accused has been duly acknowledged. As the accused have not filed the copies of the said balance-sheet and profit and loss account, they have contravened the provisions of Section 220 of the Companies Act. Hence, they are liable to be punished.
12. Pending the proceedings, the managing director of the first accused-company, who was impleaded as the second accused, died. On his death, the petitioner herein was impleaded as an accused. Therefore, the petitioner herein filed an application under Section 204 of the Criminal Procedure Code, praying for her discharge. The application which was taken on file in Crl. M. P. No. 363 of 1995 in S. T. R. No. 590 of 1994 was dismissed by the Sub-Divisional Magistrate, Mahe, on November 14, 1995. Hence, this revision.
13. The petitioner is the same in all the above four cases. The first accused-company is the same and the complainant is the same in all the complaints. Common questions of fact and law arise in all the above four revision cases. Hence, all these four revision cases have been taken up together and were heard. Hence, these cases are disposed of by a common order, as hereunder.
14. Learned counsel for the petitioner submitted that during the relevant point of time, the petitioner was not the managing director and therefore, she cannot be proceeded against under law. He further contended that the notice has not been served upon the petitioner. It is also his contention that the complainant has picked out the petitioner to proceed against when there are other directors available.
15. The gist of the complaint is that under Section 159 of the Companies Act, 1956, the company and its directors are under statutory obligation to file the annual return in the prescribed form within a particular period of time. The complaints concerned in Criminal R. C. Nos. 114 of 1996 and 115 of 1996, relate to the years 1991 and 1992. According to the complainant, the accused ought to have filed the annual return made up to September 30, 1991, on or before November 28, 1991, and they have contravened the said provision. The gist of the complaint in Criminal R. C. No. 115 of 1996 is that the annual return should have been filed with the complainant before November 28, 1992, and the same has not been done. As regards the Revision Case No. 116 of 1996, the gist of the offence alleged is that the first balance-sheet and profit and loss account ought to have been placed in the annual general meeting for the year 1991 not later than September 30, 1991, and three copies of the said balance-sheet ought to have been filed with the complainant not later than October 29, 1991, and the same has not been done. As regards Criminal R. C. No. 117 of 1996, the offence alleged is that the first balance-sheet and profit and loss account of the company for the year 1992 ought to have been placed in the annual general meeting not later than September 30, 1992, and three copies of the said balance-sheet ought to have been filed with the complainant not later than October 29, 1992, and the same has not been done. Thus, there is contravention of the provisions of sections 159, 221 of the Companies Act read with Section 162 of the said Act. Section 159 of the Companies Act, reads as follows :
"159. (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 debenture-holders,
(d) its shares and debentures,
(e) its indebtedness,
(f) its members and debenture-holders, past and present, and
(g) its directors, managing directors (managing agents, secretaries and treasurers), (managers and secretaries), past and present :
Provided that if any of the five immediately preceding returns has given as at the date of the annual general meeting with reference to which it was submitted, the full particulars required as to past and present members and the shares held and transferred by them, the return in question may contain only such of the particulars as relate to persons ceasing to be or becoming members since that date and to shares transferred since that date or to changes as compared with that date in the number of shares held by a member.
Explanation.--Any reference in this section or in Section 160 or 161 or in any other section or in Schedule V to the day on which an annual general meeting is held or to the date of the annual general meeting shall, where the annual general meeting for any year has not been held, be construed as a reference to the latest day on or before which that meeting should have been held in accordance with the provisions of this Act.
(2) The said return shall be in the form set out in Part II of Schedule V or as near thereto as circumstances admit (and where the return is filed even though the annual general meeting has not been held on or before the latest day by which it should have been held in accordance with the provisions of this Act, the company shall file with the return a statement specifying the reasons for not holding the annual general meeting) :
Provided that where the company has converted any of its shares into stock and given notice of the conversion to the Registrar, the list referred to in paragraph 5 of Part I of Schedule V shall state the amount of stock held by each of the members concerned instead of the shares so converted previously held by him."
16. Section 220 of the Companies Act, reads as follows :
"220. (1) After the balance-sheet 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 balance-sheet 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--
(a) three copies of the balance-sheet and the profit and loss account, signed by the managing director, (managing agent, secretaries and treasurers), manager or secretary of the company, or if there be none of these, by a director of the company, together with three copies of all documents which are required by this Act to be annexed or attached to such balance-sheet or profit and loss account :
Provided that in the case of a private company, copies of the balance-sheet and copies of the profit and loss account shall be filed with the Registrar separately :
Provided further that,--
(i) in the case of a private company which is not a subsidiary of a public company, or
(ii) in the case of a private company of which the entire paid-up share capital is held by one or more bodies corporate incorporated outside India, or
(iii) in the case of a company which becomes a public company by virtue of Section 43A, if the Central Government directs that it is not in the public interest that any person other than a member of the company shall be entitled to inspect, or obtain copies of, the profit and loss account of the company, no person other than a member of the company concerned shall be entitled to inspect, or obtain copies of, the profit and loss account of that company under Section 610.
(2) If the annual general meeting of a company before which a balance-sheet is laid as aforesaid does not adopt the balance-sheet or is adjourned without adopting the balance-sheet or, if the annual general meeting of a company for any year has not been held, a statement of that fact and of the reasons therefor shall be annexed to the balance-sheet and to the copies thereof required to be filed with the Registrar.
(3) If default is made in complying with the requirements of Sub-sections (1) and (2), the company, and every officer of the company, who is in default, shall be liable to the like punishment as is provided by Section 162 for a default in complying with the provisions of Section 159, 160 or 161."
17. Section 5 of the Companies Act, is to the following effect:
"For the purpose of any provision in this Act which enacts that an officer of the company who is in default shall be liable to any punishment or penalty, whether by way of imprisonment, fine or otherwise, the expression "officer who is in default" means all the following officers of the company, namely :
(a) the managing director or managing directors ;
(b) the whole-time director or whole-time directors ;
(c) the manager ;
(d) the secretary ;
(e) any person in accordance with whose directions or instructions, the board of directors of the company is accustomed to act ;
(f) any person charged by the Board with the responsibility of complying with that provision :
Provided that the persons so charged has given his consent in this behalf to the Board.
(g) Where any company does not have any of the officers specified in clauses (a) to (c), any director or directors who may be specified by the Board in this behalf or where no director is so specified, all the directors : Provided that where the Board exercises any powers under Clause (f) or Clause (g), it shall, within thirty days of the exercise of such powers, file with the Registrar a return in the prescribed form."
18. Now, in the background of the above provisions of the Companies Act, we have to decide the submissions made by learned counsel for the petitioner. It is no doubt true that during the relevant point of time, the petitioner herein was not the managing director. It was her husband, who was the managing director. But, the petitioner has admitted that she was a director of the company, during the relevant period. Under Section 159 of the Companies Act the company has to file with the Registrar a return containing certain particulars, and if it is not done, it is a contravention of the Act. Section 5 of the Companies Act defines the officer, who is in default. It includes the whole-time director of a company, within its definition. Section 220 of the Companies Act, reads that if default is made in complying with the requirements of Sub-sections (1) and (2), the company, and every officer of the company, who is in default, shall be liable to the like punishment as is provided by Section 162 for a default in complying with the provisions of Section 159, 160 or 161. Section 162 of the Companies Act provides that if a company fails to comply with any of the provisions contained in Section 159, 160 or 161, the company, and every officer of the company, who is in default, shall be punishable with fine which may extend to fifty rupees for every day during which the default continues. Section 162 of the Act further provides that the expressions "officer" and "director" shall include any person in accordance with whose directions or instructions the board of directors of the company is accustomed to act.
19. In this case, the husband of the petitioner, who was the managing director died. It is the admitted case that the returns as required under the relevant sections have not been furnished by the company. Section 5 of the Companies Act defines that the officer in default includes a director. The petitioner herein was a director of the company, during the relevant point of time as to which there is no controversy. Therefore, for the non-compliance of the provisions of sections 159 and 221, the director is also liable to be proceeded against under law and is punishable under law. In such circumstances, the contention of learned counsel for the petitioner that the petitioner was not the managing director and, therefore, she cannot be proceeded against under law, is without merit. A director of the company is liable to be proceeded against for the default committed by the company in complying with the mandatory provisions of sections 159 and 221 of the Companies Act. It is not an answer for the director to say that he is not liable, more so, when the managing director is dead.
20. The contention that no notice has been issued to the petitioner and it has not been served upon the petitioner cannot be accepted. The complainant has alleged that default notice was issued by the complainant to the company and the directors, viz., Kunchi Krishna Poduval, managing director, Mrs. Seethalakshmi and Velliyar Kulang'ara Kurotti Narayanan, directors. According to the allegation made in the complaint, the notice was acknowledged by the second accused and the notice issued to the company was returned as "door closed". Moreover, whether notice has been served or not is a question of fact, which is to be established only in the course of the trial. Therefore, on the basis of an interested allegation made by the petitioner, the matter cannot be decided. Therefore, this ground urged by learned counsel for the petitioner must also fail.
21. Lastly, it is contended by learned counsel for the petitioner that when there are other directors, the complainant has picked out the petitioner herein to proceed against. As stated already, the complaint has been filed against South India Oil Complex Limited, as the first accused and Kunchi Krishna Poduval as the second accused, who was the managing director of the first accused company. Pending the proceedings or pending the service of notice, the second accused Kunchi Krishna Poduval, the managing" director of the first accused company died. The petitioner herein is the wife of Kunchi Krishna Poduval, the then managing director. The petitioner herein is admittedly a director of the company. Therefore, on the death of Kunchi Krishna Poduval proceeding has been initiated against the petitioner herein to bring her into the array of the accused. At the time the complaint was presented, the managing director was alive, and he died only after initiation of the proceedings. On the death of the managing director, under law, the existing director or person responsible has to be proceeded against. It is the duty of the petitioner herein, as the surviving director to comply with the provisions of the Companies Act. Therefore, the complainant has impleaded the petitioner herein as accused on the death of her husband, not merely because she is the wife of the deceased managing director, but because she is a director as well of the said company and thus liable to comply with the mandatory requirements of the Companies Act. As to the other director, the Department has filed a counter, stating that they could not trace the whereabouts of the other director Velliyar Kulangar Kurotti Narayanan and, therefore, they have impleaded the available director, viz., the petitioner herein. Hence, it is not a question of picking out the petitioner herein to proceed against. Hence, this contention would also fail.
22. Therefore, on an analysis, I am satisfied that there are no merits in these revisions. Hence, these revisions are dismissed, confirming the order passed by the court below. Consequently, Criminal M. P. Nos. 444 to 447 of 1996 shall stand closed.