Madhya Pradesh High Court
Jagdishsingh Mehta And Anr. vs Registrar Of Companies on 25 May, 1983
JUDGMENT Bhatt, J.
1. Order passed in the present miscellaneous criminal case would equally govern the disposal of the connected 16 Miscellaneous Criminal cases and two revision petitions (should have also been registered as miscellaneous criminal cases and not as revisions). AH these petitions are against the Trial Magistrate's order dated October 23, 1980, passed in the respective criminal cases, in practically similar terms, but relating to different periods of half-yearly defaults under Section 421 of the Companies Act, punishable under Section 423 ibid.
2. Details of the present petition and the rest, together with the respective criminal cases, out of which they arise, along with the respective periods of defaults to which they relate, are as under:
S. No. M.C.C. No. Arising out of Cr. Case No. Period of default under section 421, Companies Act.
1. 778/81
1875/77 1-7-67 to 31-12-67
2. 747/81 1881/77 1-1-68 to 30-6-68
3. (CR) 93/81 1833/77 1-7-68 to 31-12-68
4. 779/81 1876/77 1-1-69 to 30-6-69
5. 751/81 1873/77 1-7-69 to 31-12-69
6. 726/81 1830/77 1-1-70 to 30-6-70
7. 756/81 1831/77 1-7-70 to 31-12-70
8. 755/81 1832/77 1-1-71 to 30,6-71
9. 748/81 1877/77 1-7-71 to 31-12-71
10. (CR) 26/81 2830/77 1-1-72 to 30-6-72
11. 780/81 1882/77 1-7-72 to 31-12-72
12. 749/81 1872/77 1-1-73 to 30-6-73
13. 754/81 1879/77 1-7-73 to 31-12-73
14. 634/81 1878/77 1-1-74 to 30-6-74
15. 746/81 1871/77 1-7-74 to 31-12-74
16. 753/81 1870/77 1-1-75 to 30-6-75
17. 752/81 1880/77 1-7-75 to 31-12-75
18. 725/81 1834/77 1-1-76 to 30-6-76
19. 750/81 1869/77 1-7-76 to 31-12-76
3. The periods of half-yearly defaults run from July 1, 1967, to the period ending December 31, 1976.
4. The two applicants-accused and one Madanlal Kimti (now deceased) were the duly appointed receivers of M/s. Gwalior Maize Products Co. Ltd., Mandsour. The non-applicant, viz., Registrar of Companies, filed 19 complaints in the Court of Trial Magistrate, against the receivers, viz., the applicants-accused and Madanlal (now deceased) for prosecution under Section 423 of the Companies Act in the matter of breach committed under Section 421 ibid. It was alleged in these complaints--all filed in the court on or about July 14, 1977--that the applicants-accused and Madanlal Kimti, who were the receivers of the property of the company in question, and were in possession thereof, had failed to file the abstract of accounts, i.e., of receipts and payments in the prescribed form, with the Registrar of Companies once in every half year after June 30, 1967, as enjoined by Section 421 of the Companies Act. It was alleged in the complaints that despite the notice dated December 30, 1976, of the non-applicant-complainant, duly served on the applicants-accused, the applicants-accused had failed to furnish these abstracts of accounts for the 19 half-yearly periods, total period running from July 1, 1967, to December 31, 1976, and as such, the applicants-accused were liable for punishment under Section 423 read with Section 421 of the Companies Act.
5. The applicants-accused, on their appearance in the trial court, raised the objection that the alleged offence was punishable with fine only ; and as such, in face of Sub-section 2(a) of Section 468 of the Code of Criminal Procedure, 1973, the trial court was not competent to take cognizance of the offence in question after the expiry of the period of six months from the actual date of commission of the offence. According to counsel for the other side, Section 472 and not Section 468 of the Code of Criminal Procedure, 1973, was applicable to these cases, inasmuch as the alleged offences were continuing offences. The trial court came to hold the view that the offence in question in each complaint case filed in the court was a continuing offence ; and as such, all complaints were within time, in no way attracting the bar under Section 468(2)(a) of the Code of Criminal Procedure, 1973. Accordingly, due cognizance of the offence was taken, and extract of the offence complained of was stated and explained to the accused persons with their pleas duly recorded. Being aggrieved with the same, the applicants-accused have filed the present petition and the connected ones.
6. Respective learned counsel on both sides have cited certain rulings in support of their contentions, one contending for the clear applicability of Section 468(2)(a) of the Criminal Procedure Code, and the other, repelling the same and invoking instead Section 472 ibid.
7. The sole point for consideration is whether the failure of the receivers, while in" possession of the property, to file the abstract, as required under Section 421 of the Companies Act, once in every half year, is a continuing offence or, the offence for every particular half year is complete once and for all on their failure to file the abstract for the particular half year within the prescribed time,
8. I have considered the arguments on both sides in the light of the case-law cited. No decision cited is found to relate specifically to the offence punishable under Section 423 of the Companies Act, with which alone I am presently concerned. Some of the rulings cited deal with the distinction between " offence which takes place when an act or omission is committed once and for all " and " a continuing offence ". All such old rulings of some of the High Courts, as have been cited, are rendered otiose, and need no reference in view of what the Supreme Court has observed in this regard in State of Bihar v. Deokaran Nenshi, AIR 1973 SC 908, after alluding to the various old rulings on the point. Then again, some rulings cited on the other side relate to the offences under certain other Acts, viz., Mines Act, Income-tax Act, Factories Act and Wealth-tax Act, on the strength of which a parallel is drawn for application and adaptation to the case under Section 423 of the Companies Act, the applicability or otherwise thereof needs to be considered at the appropriate stage.
9. Offence under Section 423 read with Section 421 of the Companies Act is one which is punishable with fine only. The Companies Act does not provide any specific procedure for prosecution, and as such, obviously, the Code of Criminal Procedure will apply by virtue of Section 4(2) ibid. Section 468 of the Code of Criminal Procedure will, therefore, be attracted. Since the Companies Act, more particularly in the matter of the offence under Section 423 ibid, does not specifically prescribe any limitation for prosecution, Section 468(2) would consequently come into play, State of M.P. v. S. P. Mathur [1970] JLJ 172 cited by the non-applicant's learned counsel, deals with the offence under Section 72;of the Mines Act and in the light of the provisions regarding limitation for prosecution, as per Section 79 ibid, is of no help to the present case, because Section 423 of the Companies Act does not provide for the period of limitation from the date of the knowledge. For the same reason, the other ruling cited, viz., State v. Umashankar Laxminamyan Jaiswal [1962-63] 23 FJR 162; [1962] JLJ 789 ; AIR 1962 MP 311, dealing with Section 33 of the Factories Act, 1948, has no application to the present case. This apart, the fact of knowledge is neither alleged in the complaint nor proved in evidence, so as to at least attract Clause (b) of Section 469(1) of the Code of Criminal Procedure. The question of condonation of delay or extension of the period of limitation in accordance with Section 473 of the Code of Criminal Procedure, is" equally ruled out, in the absence of any prayer in this regard, backed by any circumstances for explaining the delay.
10. Now, in State of Bihar v. Deokaran Nenshi, AIR 1973 SC 908, the distinction between a "completed offence" and a "continuing offence " is found to be stated thus (at page 909):
" Continuing offence is one which is susceptible of continuance and is distinguishable from the one which is committed once and for all. It is one of those offences which arises out of 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 non-compliance occurs or recurs, there is the offence committed. The distinction between the two kinds of offences is between an act or omission which constitutes an offence once and for all and an act or omission which continues and, therefore, constitutes 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 an act or omission is committed once and for all."
11. A few illustrated cases have also been discussed therein for helping to bring out the distinction between the two types of offences; and in the light of the same, the offence under Section 66 of the Mines Act, 1952, read with regulation 3 has been succinctly considered. In this Supreme Court case, the owners of a stone-quarry had failed to furnish to the Chief Inspector, the annual returns for the year 1959 by the stipulated date, January 21, 1960. Their Lordships of the Supreme Court, considering the language of regulation 3 read with Section 66 of the Mines Act, 1952, have observed as follows (at page 910):
" The language of regulation 3 clearly indicates that an owner, manager, etc., of a mine would be liable to the penalty if he were to commit infringement of the regulation and that infringement consists in the failure to furnish returns on or before January 21 of the succeeding year. The infringement, therefore, occurs on January 21 of the relevant year and is complete on the owner failing to furnish the annual returns by that day. The regulation does not lay down that the owner, manager, etc., of the mine concerned would be guilty of an offence if he continues to carry on the mine without furnishing the returns or that the offence continues until the requirement of Regulation 3 is complied with. In other words, Regulation 3 does not render a continued disobedience or non-compliance of it an offence. As in the case of a construction of a wall in violation of a rule or a bye-law of a local body, the offence would be complete once and for all as soon as such construction is made a default occurs in furnishing the returns by the prescribed date. There is nothing in regulation 3 or in any other provision in the Act or the regulations which renders the continued non-compliance an offence until its requirement is carried out."
12. A Division Bench of this court in Addl. CIT v. Smt. Manjuladevi Mucchal [1979] 119 ITR 43 (MP) dealing with Section 18A of the Wealth-tax Act, 1957, has equally held that the non-filing of the return on the particular stipulated date of the corresponding year is a complete default and not a continuing default. There are some other decisions also of other High Courts, the facts and circumstances whereof are quite akin to those as in the present case. In Mohit Kumar Mukerjee v. Registrar of Companies, West Bengal [1981] Cri LJ 134 (NOC), the Calcutta High Court, dealing with the offence under Section 296(4) of the Companies ct, has held that an act of advance of loan to companies, without prior approval of the Central Government, was complete on the date the loan was advanced, and was not a continuing offence; and as such, the prosecution launched after the period of six months was held to be illegal. In State of Orissa v. Duriodhan Parita [1981] Crl LJ 1671, the Orissa High Court, dealing with the offence under Section 14(2) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, has held that the failure to deposit the contribution of provident fund relating to the period from September, 1975, to November, 1975, was not a continuing offence and the offence was complete on the date of failure, necessitating the filing of the complaint within the prescribed time only. In Channabasappa v. State of Karnataka [1979] Crl LJ 185, the Karnataka High Court has held that the non-payment of quarterly vehicle tax under Section 12(1) of the Karnataka Motor Vehicles Taxation Act was not a continuing offence and, therefore, the prosecution launched after the prescribed period was barred by time. In John Joseph v. State of Maharashtra [1979] Crl LJ 1150, the Bombay High Court, dealing with the offence under Section 18(1) of the Bombay Rent Hotel and Lodging House Rates Control Act, has held that receiving of premium or other like sum in contravention of the said Act was an offence, relatable to the date of receipt only, and as such, the offence was complete on the date the amount was received. Similar view is expressed in Ritz Continental Hotels Ltd. v. State [1980] Crl LJ 414, where the Calcutta High Court has held that failure to repay deposits by the company after maturity under Section 58A(3) of the Companies Act, 1956, was complete as soon as the company failed to return the amount; and as such, it did not constitute a continuing offence.
13. In the light of the decisions discussed above, the provisions of Section 421 of the Companies Act deserve scrutiny. This provision envisages that the receiver, while he remains in possession of the properties of the company shall, once in every half year, file with the Registrar an abstract of accounts in the prescribed form of his receipts and payments during the period to which the abstract relates. The wording of this provision is unmistakably lucid. Default committed, for every half year, is obviously intended to be "a completed offence" for the respective half-year period to which the abstract of accounts relates. Neither this provision nor the penalty provision, viz., Section 423 ibid, purports to suggest in the least that the default of any half-year period is a continuing offence. Non-compliance or disobedience in the matter of filing of the abstract of the accounts for any particular half-yearly period does not render the offence to be a continuing offence till the requirement of Section 421 of the Companies Act is carried out. I am, thus, of the view that breach or non-compliance in the matter of filing of the abstract of accounts for any particular half-yearly period, as enjoined by Section 421 of the Companies Act, is " a completed offence " and not a continuing offence; and the offence regarding breach or non-compliance becomes complete as soon as the particular half-yearly period during which he is required to file the abstract comes to a close. Mandatory provision of Section 468(2)(a) of the Code of Criminal Procedure, 1973, therefore, holds the field and controls the period of limitation for taking cognizance of the offence under Section 423 read with Section 421 of the Companies Act. If the court, after the lapse of such period of limitation, takes cognizance, it. would be acting without jurisdiction, as Section 468 of the Code, which is mandatory and not directory, creates a bar to the taking of cognizance (see Shri Krishna Sanghi v. State of M. P. [1976] MPLJ 559. It is, thus, clear that only in Criminal Case No. 1869 of 1977, for the period from July 1, 1976, to December 31, 1976, cognizance of the offence under Section 423. read with Section 421 of the Companies Act, 1956, is found to be rightly taken by the trial court within six months of the commission of the offence, in accordance with Section 468(2)(a) of the Code of Criminal Procedure, 1973; and the trial court is found to have acted erroneously in taking cognizance of the said offence in the rest of the 18 cases.
14. In the result, the present Miscellaneous Petition No. 778 of 1981 and the connected ones, viz., Miscellaneous Petitions Nos. 747 of 1981, 779 of 1981, 751 of 1981, 726 of 1981, 756 of 1981, 755 of 1981, 748 of 1981, 780 of 1981, 749 of 1981, 754 of 1981, 634 of 1981, 746 of 1981, 753 of 1981 and 752 of 1981 and Criminal Revision Nos. 26 of J981 and 93 of 1981 are allowed. Cognizance of the offences as taken in all these cases is quashed ; and the applicants-accused are, accordingly, discharged.
15. However, Miscellaneous Case No. 750 of 1981 is alone dismissed; and the impugned order passed by the trial court in Criminal Case No. 1869 of 1977 is maintained.