Delhi District Court
Roc vs M/S Gomukh Finance & Investment Ltd. on 17 August, 2012
IN THE COURT OF SH. GORAKH NATH PANDEY
ADDL CHIEF METROPOLITAN MAGISTRATE (Spl. Acts): CENTRAL
TIS HAZARI COURTS, DELHI
ROC vs M/s Gomukh Finance & Investment Ltd.
CC No.1233/03
JUDGEMENT
(a)Serial no. of the case :
(b)Date of commission of offence : In the year 1999
(c)Name of complainant : Registrar of Companies, NCT of Delhi & Haryana
(d)Name, parentage, residence: 1)M/s Gomukh Finance & Investment Limited having its registered office at: 62/9A, Laxmi Market, Near Canara Bank, Munirka, New Delhi
2)K.C. Mishra, 62A/8, Laxmi Market, Near Canara Bank, New Delhi
3)S.L. Mishra, Sector 7/1209 RK Puram, New Delhi
4)Dinesh Negi, G202, Nauraji Nagar, New Delhi
5)Surender Yadav, 8647/14B, Sidhi Puar, Karol Bagh, New Delhi
6)Rita Kala, F1581, Laxmi Bai Nagar New Delhi
(e)Offence complained of/ proved : U/s 370 of Companies Act, 1956
(f)Plea of accused : Pleaded not guilty
(g)Final order : Convicted
(h)Date of such order : 17.08.12 Date of institution : 13.08.02 Date of Reservation of Judgment : 17.08.12 Date of Pronouncement of Judgment : 17.08.12 ROC vs M/s Gomukh Finance & Investments Ltd. 1 of 7 Brief statement of the reasons for the decision:
1. The Registrar of Companies NCT of Delhi & Haryana (hereinafter called the complainant) filed the present complaint u/s 371 of the Companies Act, 1956 (hereinafter called the Act) against the above mentioned accused persons alleging that accused no.2 to 6 are officers/directors in default of the accused no.1 company M/s Gomukh Finance & Investments Limited and are responsible for compliance of the provisions of section 370 of the Companies Act, 1956.
During course of trial accused no.1, no.2 K.C. Mishra, no.3 S.L. Mishra and no.4 Dinesh Negi compounded the matter with the ROC and accordingly they were discharged from this case vide order dated 28.04.04. Now this judgment is directed against the accused no.5 and 6 who are facing trial.
As contended, inspection of the books of accounts and other records of the accused company was carried out u/s 209A by Sh. P.K. Malhotra the then Ex. Asstt. Director (Inspection) and during the course of inspection it was found that the company did not obtain prior approval of the Central Government before granting loan of Rs.4.36 lacs to M/s Gomukh Hotels Pvt. Ltd. on various dates between 16.09.95 and 28.06.96 which was in the excess of the prescribed limit of 30% of its paid up capital and free reserves Rs.6.16 lacs as on 31.03.96. As such accused have rendered themselves liable for the penal action as contemplated u/s 370 of the Companies Act.
2. The accused were summoned for the aforesaid offence and a notice u/s 251 Cr.P.C. was served upon the accused persons vide order dated 20.07.05 for ROC vs M/s Gomukh Finance & Investments Ltd. 2 of 7 contravention of section 370 of the Act punishable u/s 371 of the Act to which accused pleaded not guilty and claimed trial.
3. In order to substantiate its allegations made in the complaint, the complainant examined two witnesses namely Sh. P.K. Malhotra the then Joint Director, Ministry of Corporate Affairs as PW1 and Sh. P.K. Batta, the then Deputy Registrar of Companies as PW2.
PW1 reiterated the allegations mentioned in the complaint and deposed that an inspection of accused company was carried out by him in the year 1999 and the inspection report was submitted on 08.05.01. During evidence PW1 also proved on record copy of forwarding letter of inspection report with request to file prosecution in this matter as Ex. PW1/A. PW1 further deposed that he had also given a preliminary finding letter, based on his inspection to the accused company and its directors dated 31.01.2000, copy of the same is marked as mark A. PW1 also deposed that accused Surender Yadav and Rita Kala replied the same. Copy of the said reply is marked as mark B and C. In the reply both accused admitted that they were appointed as director in 1995 but neither any notice for meeting of Board of Directors was received nor any board meeting was attended by them. This witness was cross examined at length on behalf of accused. In the cross examination PW1 was confronted with some documents which are exhibited as Ex. PW1/DA to Ex. PW1/DG (which are in the connected case no.1227/3/9 to1230/3/09) In the letter Ex. PW1/DB and Ex. PW1/DE accused Surender Yadav and Rita Kala admitted ROC vs M/s Gomukh Finance & Investments Ltd. 3 of 7 that they were appointed as director of the accused company in the year 1995. PW2 the complainant who filed the present complaint, deposed regarding the relevant documents and proved on record the copy of certificate of incorporation Ex. PW2/1, copy of annual return made upto 28.09.01 Ex. PW2/2, the letter/directions Ex PW2/3 received from the Office of Regional Director to file the complaint against the accused persons, show cause notice dated 18.07.01 Ex. PW2/4 and complaint as Ex. PW2/5B. The witness further deposed that accused Surinder Yadav and Rita Kala are the persons responsible for day to affairs of the company was not maintaining proper books of accounts in respect of deficiencies/irregularities.
4. The statement of accused Surender Yadav and Rita Kala was recorded u/s 313 Cr.P.C read with section 281 Cr.P.C on 02.03.12 wherein both accused admitted that they were served with the show cause notice and they filed reply to the said show cause notice but both accused stated that they were not responsible for affairs of the company at any point of time as they were not the director of the company. They further stated that they were investor in the company along with other investors and when they saw the affairs of the company were not conducted in the fair manner and some bungling was there then they made a complaint in this regard to the ROC and they have been falsely implicated in this case.
5. I have heard the arguments by learned company prosecutor and learned counsel for accused and gone through the relevant records. I have also ROC vs M/s Gomukh Finance & Investments Ltd. 4 of 7 considered the relevant provisions of Companies Act.
6. The present complaint is filed by complainant against the accused/officer in default as they failed to comply the provisions of section 209 of the Companies Act. Relevant provisions of section 370 is reproduced below:
370. Loans, etc., to companies under the same management. (1) No company (hereinafter in this section referred to as "the lending company") shall
(a) make any loan to, or
(b) give any guarantee, or provide any security, in connection with a loan made by any other person to, or to any other person by, any body corporate [***] unless the making of such loan, the given of such guarantee or the provision of such security has been previously authorised by a special resolution of the lending company:
[ Provided that no special resolution shall be necessary in the case of loans made to other bodies corporate not under the same management as the lending company where the aggregate of such loans does not exceed [ such percentage of the aggregate of the subscribed capital of the lending company and its free reserves as may be prescribed:] Provided further that the aggregate of the loans made to all bodies corporate shall not exceed without the prior approval of the Central Government
(a) [ such percentage of the aggregate of the subscribed capital of the lending company and its free reserves as may be prescribed] where all such other bodies corporate are not under the same management as the lending company;
(b) [such percentage of the aggregate of the subscribed capital of the lending company and its free reserves as may be prescribed] where all such other bodies corporate are under the same management as the lending company.
7. Section 371 contains Penalty for contravention of sections 369, 370 or 370A. (1) Every person who is a party to any contravention of section 370 [excluding subsection (1C) or (1D)], including in particular any person to whom the loan is made, or in whose interest the guarantee is given or the security is provided, shall be punishable with fine which may extend to [fifty thousand rupees] or ROC vs M/s Gomukh Finance & Investments Ltd. 5 of 7 with simple imprisonment for a term which may extend to six month.
8. The case of the prosecution is that the company did not obtain prior approval of the Central Government before granting loan of Rs.4.36 lacs to M/s Gomukh Hotesl Pvt. Ltd. on various dates between 16.09.95 and 28.06.96 which was in the excess of the prescribed limit of 30% of its paid up capital and free reserves Rs.6.16 lacs as on 31.03.96. This fact has not been disputed. Though in their statement recorded u/s 313 Cr.P.C. both accused have taken a specific defence that they are/were not responsible for the affairs of the company as they were not the directors of the company. They have also relied upon complaint Ex. PW1/DA i.e complaints made by the accused with the ROC (original of Ex. DW2/A to Ex. DW2/DG are on the case file no. 1227/3/09 to1230/3/09). In the letters Ex. PW1/DB and Ex. PW1/DE both accused themselves admitted that they were appointed as director of the accused company in the year 1995 but they have taken a defence that neither any notice for the meeting of Board of Directors was received and nor any board meeting was attended by them as such they are ceased to be a director of the company u/s 283(1)(g) of the Companies Act and it is understood that the company has not dropped their name from its directors which is illegal. This court does not find any force in this plea. If it was the case, the accused ought to have take appropriate steps for removal of their names from the directors of the company. Accused ought to have resigned the company as per the prescribed provisions of Companies Act and they would have to file form ROC vs M/s Gomukh Finance & Investments Ltd. 6 of 7 32 in this regard. But accused did not do so. Accused have also not examined any witness to prove on record that they were not the director and responsible for the affairs of the company. Mere filing of complaint Ex.PW1/DA is not sufficient to presume that accused were not directors of the company at the relevant time and they were not responsible for affairs of the company. Except bald statement accused have not produced anything on record to show that they were not directors of the company at the relevant time and were not responsible for affairs of the company and compliance of provisions of section 370 of the Companies Act.
9. In this case most of the material contentions/allegations in the complaint against the accused in one way or the other is either admitted or not rebutted. Thus, in view of the aforesaid discussions and facts and circumstance of the case, it is held that the prosecution has proved its case against the accused persons beyond reasonable doubt. Thus, it is held that accused Surender Yadav and Rita Kala were also directors and responsible for the affairs of the company and they were under obligation to comply with the provisions of Companies Act. Accordingly both accused are held guilty and convicted for the offence u/s 370 of the Act which is punishable u/s 371 of the Companies Act.
(GORAKH NATH PANDEY) ACMM(Special Acts) CENTRAL TIS HAZARI COURTS DELHI Announced in open court on 17.08.12 ROC vs M/s Gomukh Finance & Investments Ltd. 7 of 7