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.1227/03
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 211 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 & Investment 1 of 8 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 211(7) 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 under section 211 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 balance sheet of the company as at 31.03.97, 31.03.98 and 31.03.99 do not reflect the true and fair view of the state of affairs of the company as at the end of the financial year. As such accused have rendered themselves liable for the penal action in respect of balance sheet for the aforesaid years as contemplated u/s 211(7) of the Companies Act, 1956 read with Schedule VI of the Companies Act, 1956.
2. The accused were summoned for the offence u/s 211 of the Act and a notice ROC vs M/s Gomukh Finance & Investment 2 of 8 u/s 251 Cr.P.C. was served upon the accused persons vide order dated 20.07.05 for the offence punishable u/s 211(7) 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. Batta, the then Deputy Official Liquidator as PW1 and Sh. P.K. Malhotra, the then Joint Director, Ministry of Corporate Affairs as PW2.
PW1 the complainant who filed the present complaint, deposed regarding the relevant documents and proved on record the letter/directions Ex PW1/1 received from the Office of Regional Director to file the complaint against the accused persons, show cause notice dated 18.07.01 Ex. PW1/2, complaint as Ex. PW1/3 and copy of annual return made upto 28.09.01 as Ex. PW1/4. The witness further deposed that accused Surinder Yadav and Rita Kala are the persons responsible for day to affairs of the company along with three other directors. PW1 further deposed that the balance sheet as at 31.03.97, 31.03.98 and 31.03.99, do not reflect the true fair view of the state of affairs of the company and as observed by the inspecting officer an advance of Rs. 20,794.57/ to Sh. K.C. Mishra and Rs.4.36 lacs to accused company in which directors were interested were not shown separately under the head "Current Assets Loans and Advances" in the balance sheets. Further there is a suspense account of Rs.10,246/ as on 31.03.97 has been shown in the major head "Loans and Advances" account. This witness was cross examined at ROC vs M/s Gomukh Finance & Investment 3 of 8 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/DF. In the letter Ex. PW1/DB and Ex. PW1/DE accused Surender Yadav and Rita Kala admitted that they were appointed as director of the accused company in the year 1995.
PW2 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 PW2 also proved on record copy of forwarding letter of inspection report with request to file prosecution in this matter as Ex. PW2/A. PW2 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. PW2 also deposed that accused Surender Yadav and Rita Kala replied the same. Copy of the said reply is marked as mark B. 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.
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 16.11.11 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 ROC vs M/s Gomukh Finance & Investment 4 of 8 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 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 211 of the Companies Act. Section 211 is reproduced below:
211. Form and contents of balance sheet and profit and loss account. [(1) Every balance sheet of a company shall give a true and fair view of the state of affairs of the company as at the end of the financial year and shall, subject to the provisions of this section, be in the form set out in Part I of Schedule VI, or as near thereto as circumstances admit or in such order form as may be approved by the Central Government either generally or in any particular case; and in preparing the balance sheet due regard shall be had, as far as may be, to the general instructions for preparation of balancesheet under the heading "Notes" at the end of that part:
(2) Every profit and loss account of a company shall give a true and fair view of the profit or loss of the company for the financial year and shall, subject as aforesaid, comply with the requirements of Part II of Schedule VI, so far as they are applicable thereto:
As per the provisions of Part I of Schedule VI the balance sheet of a company shall be either in horizontal form or vertical form. As per the provisions of Part II of Schedule VI, profit and loss account shall ROC vs M/s Gomukh Finance & Investment 5 of 8 be so made out as clearly to disclose the result of the working of the company during the period covered by the account and shall disclose every material feature, including credits or receipts and debts or expenses in respect of non recurring transactions or transactions of an exceptional nature.
7. Subsection 7 of section 211 of this Act contains punishment that if any such person as is referred to in subsection (6) of section 209 fails to take all reasonable steps to secure compliance by the company, as respects any accounts laid before the company in general meeting, with the provisions of this section and with the other requirements of this Act as to the matters to be stated in the accounts, he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to six months, or with fine which may extent to [ten thousand rupees], or with both:
8. The case of the prosecution is that the balance sheet of the company do not reflect the true and fair view of the state of affairs of the company as at the end of the financial years. 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. 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 ROC vs M/s Gomukh Finance & Investment 6 of 8 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 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 211 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 ROC vs M/s Gomukh Finance & Investment 7 of 8 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 211 of the Act which is punishable u/s 211(7) 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 & Investment 8 of 8