H V Jayaram vs T S Narayana Rao on 16 September, 2010

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Karnataka High Court

H V Jayaram vs T S Narayana Rao on 16 September, 2010

Bench: N.Ananda

IN THE HIGH COURT 014' KARNATAKA AT BANGALQRE
DATED THIS THE 16'?" DAY ox? SEPTEMBER  _
BEFORE  H V

THE HONBLE MR.JUSTIC..E_N.   4'

CRIMINAL APPEAL      

BETWEEN: V _V
H .V.Jayaram '  

S / 0 Late I-I.Venkataramana Setty"-._ 

Aged 70 Years V    -A 

Advocate -- if L

No.517E, 15' C Main Road 

Vijayanagar 2*"! Stage   _  . A  V " 

Bangaiore -- 560.040.  V    '  ...Appe11ant

[By  (Pa::j«*1nVgp'¢r$e¢n) '[absent))

AND:  --------  

I. "I'.S:,Naray
Major r ' .    "
Ex-wi3.oletime VDirector..A_  
(formeriy United Brewerjes Ltd.,}
No,'/O7, Moth Hospi'tal Road
Mgahalakshrhipuramv
Béngajore ---- 560686.

aha. Rao 2 

V'  2:. P;S11'b1faro'a;ii'* --

-Major , . N
" .E::~Compe_.nj? Secretary
(fonneriyv United Breweries Ltd.,]
Company Secretary and Whole Time Director
United "Breweries {Holdings} Ltd.,

., A'  at no. 1, Vittal Mallya Road
"  * Bangalore ~ 560 001.



3. United Breweries (Holdings) Ltd.,
(formerly United Breweries Ltd.,)
R0. at no.1, Vittal Mallya Road    
Bangalore -- 560 001. ...RespV0nidé:r_1ts

(By Sri.K.Chandrashekar, Advocate for S.
Advocate}  '

This appeal is filed under sect'ioni>._3'37:8'(-filth 
praying to grant the appeiiant specia_l- leave to appezil against.

ri. Kiran..S .J_ avaii 0 it " 

order of acquittal dated 1r.01_.2003-..by- vSpecia.1'v«CQt1i't for,'

Economic Offences, Bangalore» in CC.i\I0,273V/1997 of
accused 2, 7 and 8 for an offence punishable under section

205A(8} of the Companies Act_,~'i'95;6» 

This appeal comingonl' this day, the
Court delivered the following V "   .. 

 

 M  
   "  judgment passed in
C.C.N0_.273/ {V997}-'i"iie' of Special Court for Economic

Offences atqlﬁiangalorel. .  é

   .complai1'xan't was a shareholder of M/s.United

 Vﬁreweries"  registered office at 1/ 1, Vittal Mallya

Road; Baiigalore--O1. On 30.09.1996, the said company

 declaredgdixiidend for period from 01.10.1994 to 31.03.1996.

 «coniplainarit held shareholdings under share certiﬁcate

av. aQ\*--~Q""'d~



3
Nos.USO33672 8: USO336?3. The company declared

dividend to sharehoiders in the annual general body meeting
held on 30.09.1996. A sum of Rs.10.61 crore had to be
distributed to shareholders within 42 days from dec1ara.tion.

The dividend warrants bearing Nos.96642«359e3_i"9.?

966423606 for a sum of Rs.300/- each 19:. 

payabie to compiainant were postehdddatdiviadras 

received by the complainant on it

matter of payment of dividend.,.V.V'compar1y_Vdid.'not.:adhere to
mandatory provisions  the «Cornpvanies Act,

1956 (for short, 'the   warrants were

prepared  a period of 42 days from the

date of"dec1aration.,fcf Védividend, yet dividend warrants were

posted aték"  19.12.1996. Therefore, dividend

   under saidwvvarrants had remained unpaid during

  16.11.1996 to 03.12.1996, on which date

tiieddhcompariydlz opened an account under the head "Unpaid

 Diviciendd Account" in Bank of Baroda, K.G.Road Branch,

":9, Sangalore. Therefore, complainant ﬁied a complaint, alleging

'am, 6/\'""&\'



offences punishable under sections 205A{8} and 207 of the
Act. At the inception, cohaplaint was filed, arraying the
Chairman, Whole time Director, Directors, 
Secretary as accused 1 to 7 and company 
accused No.8. Accused Nos}, 3 
in Criminal Petition Nos.577:}fe19Q_8i.:'  
1464/1998, 1479/1998 & 1'i§i.,/1as'8  
issued to them. This Courtp__v:4_ldy..:_order'  g1Jfi3.01.2002,
accepted the criminal"«--._p'etitiVons' riuashed proceedings
against accusedl, 3  were continued

against aCcu3sed;:11No.2V,"whole time "director of the company,

accused i\lo.7.~3CognVipanf,?'"Secretary of M/s.United Breweries
Limiteci pp and'  i\To.8~«CoInpany itself namely

M/ sllnited "BreWe»i'ie st Lifnited.

 V'  .  The 'ieamedvtrial Judge proceeded with the case as if it

  'wpereei Va«.._wafrant case instituted otherwise upon a police

c'otnplaint',i:ti-_r'ecorded evidence before charge and framed

 charges 'for offences punishable under sections 205A[8} and

 2i)*?*«_.of the Act. The learned trial Judge on appreciation of

we Qﬁk/~M'ﬁ'\""~'Q{x.



evidence adduced by the complainant and after hearing
learned counsel for parties held accused 2, 7 & 8 _of_an

offence punishable under section 207 of the  

trial Judge has held that since di.xzid_end had 

complainant, there was no need for ac'cu.s'ed'2_, "7_'& 8 yoiien

a special account relating'to~.._f'Unpaid Div3'.dend....Account".f

under section 205A of the   learned trial
Judge has held accused"   not committed an
offence punishable   of the Act.
Aggrieved  grtdgrrient  for an offence
punishable.yV.u;d_derv. Act' accused 2, 7 & 8
filed   i.3.,_?eoo3 to 1 15/2003 before the
XXIII   Judge at Bangalore. The

learned Sessiovns.rfudgelldismissed said appeals on merits by

  "d.%1ted'vl1V2".'O'9.2003. Thereafter, accused 2, 7 & 8

 wereel  'this Court in CrI.R.P.No.1139/2003 c/W

cr_1}'R.P,_Nds?..__:140/03 er 1141/2003. This Court by order

 datedV"e5.o7.2o04, dismissed Crl.R.P.Nos.1139/2003 to

A  lv1V;1h4l/2003, conﬁrming the judgment of conviction made by

{Va QQg\~s...¢Z3~.w~<d¢e.



the trial Court and I Appellate Court. Thus, ﬁnding of trial
Court that accused 2, 7 & 8 are guilty of anuoffence
punishable under section 207 of the Act and

imposed thereon have attained ﬁnality.

4. This appeal is ﬁled against  of
8 for an offence punishable  the Act] ' if
inter alia contending that _2, 8.   8,} had not
transferred unpaid    unpaid dividend
account within the.  205A of the

Act.

5.  is absent. I have heard
Sn'  counsel for accused 2, 7 82 8.
In View of the  the Supreme Court, reported in

2ooe:{A1a sou} ;r;5c7f§__(;fr;t the case of Dharam Pal & Others Vs.

   'Pr__adesh), I have perused the records and taken

 the.--appea1j_fordisposal on merits.

 6. ~. facts established from evidence on record on the

A X1' " hasispof which accused 2. 7 8: 8 were convicted for an offence

l
N. ' 



punishable under section 207 of the Act may be stated
thus:~

The company at its annual general body rneeti9ng'_:heuld
on 30.09.1996, deciared payment of  ' .
shareholders. In terms of section  of   V 2
then prevailing), dividend warrants,1'shea1d. 
Within 42 days from 30.09.'19_ 96.  
marked as Ex.P.1 & Ex.P.2   were
prepared on 1 1.09.   ofvuétilﬁivvdays from
the date of dec1ﬁra«uAQn"V:.C:f ~66./,.I*}:e'§veVer, dividend

Warrants were  to  19.12.1996. From

the  1 ﬁndycompany had Opened its
specia1x7divider1dV"aAcceuaiit'*~eii 02.12.1996 in the Bank of

Baroda. K.G.1§oad'.-.B1Fane3~§., Bangalore. On 03.12.1996, the

 had transferred a sum of Rs.10,00,000/- to the

  Vlrjt View of admitted facts, it is clear dividend

 have been sent to complainant Within 42

 days frergi the date of declaration of dividend. The dividend

A X1' " tyvafitants were posted on 19.12.1996 and they were received

N o,Q..-9,...Q .



by complainant on 28.12.1996. In terms of section 205A[1)
of the Act, where dividend has been declared by the coinpany
had not been paid within 42.days to entitle to pasyiln-ent._ of

dividend, company shaii, Within 7 days from3V_:the'»5date9'.o1' 

expiry of the said period of 42 days, = 

amount of dividend which remains  
Within said period of 42 da.ys,___.t0  
opened by the company in anydﬂscheduied
bank, to be called»    of the
Company". In terms Aof_'AAt~o:vvb...-osection 205A(1),

"dividend   any dividend the

warrant in"1'eg~53peotf,thei*eo'f has. not been encashed or which

has othervvise not claimed".

 "In. the c'as_e"on hand, dividend warrants were prepared

 1'   a period of 42 days. They should have

    compiainant (shareholder) within 42 days

ffom 39.09.1996, which fell on 11.11.1996. However, as per

 Apostadi.-endorsements marked as Ex.P.3 & Ex.P.4, dividend

 were posted at Madras on 19.12.1996 and they

I\;. C£\»x..1'}v\.~£,\.



were received by complainant on 23.12.1996. Therefore,

dividend payable in terms of Ex.P.1 & Ex.P.2 had4.remlained

unpaid to complainant till 19.12.1996. In the  

company should have transferred to it 

"Unpaid Dividend Account" within a:_.pe_m5a  

after expiry of 42 days as specified under section  

the Act. Therefore, the company:_}.'1ad violated 'thedprovisions
of section 205A and   punishable
under section 205A[8)   trial Judge
Without noticing '   section 205A and
provisions   Act are not mutually
 had received dividend
warrants on  h1:9S»96';.:;therefore, it was paid and question

of transferringvthee  to "Unpaid Dividend Account" did

-"'~._v'Anot._'é1ri$e. Vfhe approach of the trial Court is erroneous.

  of tria} Court that accused 2, 7 8: 8 have

 of the cannot be sustained.

 an offence punishable under section 205A{8)

f\/» 



10

7. According to the provisions of section 205A of the Act,
as it stood before amendment of the Act by Coriipanies

(Amendment) Act, 2000, which provided for

from the date of declaration of dividend forithejeornpanyvpitoie . 

pay dividend to the shareholdersﬂif 
terms of explanation to section_.205«{iiof the A'cz;u,y   ,
period, the same should  transferred  "Unpaid
Dividend Account"     of said 42

days.

In       should have
transferred.  to s'ai'd~ac'count on 16.11.1996. We
ﬁnd the corapanjj-~ 'account under head "Unpaid
DividendV"A_ccoVunt'_' in  of Baroda, K.G.Road Branch at

Bangalore on " and transferred a sum of

it Rsi.ii1o,'oo,oQ'o/~__ on 03.12.1996 i.e., there was delay of 15

  ivniiiitrarisfeining unpaid dividend to special dividend

account. 'Section 205A{8} of the Act is the penal section for

  contravention of provisions of section 205A{1) of the Act.

A Section 205A(8) states that contravention of section 205A{1}

f\9,  



11

is punishable with fine, which may extend to Rs.5,0_Q/- for

every day during which the failure continues.

In the case on hand, failure continued. from 

16.11.1996

to 03.12.1996, which.'ismfor«a p¢r:oa,:_§£,V1.5'aays. Therefore, I hold accused 2, & Siareliable paya Rs.7,500/- [R5500/~ x 15 day's)j.V"V--.,

8. In the result, I The judgment as it relates to 8i V8 for an offence under aside. Accused 2, '7 & 8 are convictedl' for section 205A{1), punishable under secti'on_V2.05A[$'}. ofthe Companies Act. Accused 2 & 7 lxsenteneced to"lpay'"a fine of Rs.l,OOO/- each and accused No_.E3 to pay a fine of Rs.5.000/- for an offence 205A{1). punishable under section 205A(8] of the Companies Act. After deposit of ﬁne amount, Rs.5,000/-- A shall be paid as compensation to the complainant. The fine '\J. ',\,k _C;;«~u\.-.La&\.« 12 imposed shall be deposited before the trial Court a period of two months from today, failing whieh..jihef..sa,;ne shall be recovered as arrears of land revenue_._~'After" ﬁne amount is deposited/recovered, _C'o1'1rl':if;3n'a1iv"notify the complainant and pay eon;1per:1sat=§.'on:'ofA "'§"t_1e remaining amount of Rs.2,00@_[- sI*21a.11 "b-e fo'r'fe:AfLcdpVp§o.~§varcisV ﬁne.

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