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4. It is on these allegations that the Additional Registrar of Companies Maharashtra filed a private complaint against the company and five of its directors petitioners Nos 1 to 6 respectively being Criminal Case No 1301/RC of 1985 under section 205A(8) for contravention of section 205A(1) of the Companies Act of 1956 in the court of the learned Additional Chief Metropolitan Magistrate Third Court Esplanade Bombay.

5. The process has been issued on the said complaint by the learned Magistrate and the said order is being placed under challenge in this petition invoking the inherent powers of the court under section 482 of Code of Criminal Procedure as also powers of superintendence under article 227 of the Constitution of India.

6. The dominant plank submitted by Shri Vashi learned counsel for the petitioner in assailing the impugned order relates to the construction of provisions of section 205A as also section 207 of the Act. Accord ing to him since there was an obstacle or prohibition by the operation of law to paying the money as under the provisions of the Foreign Exchange Regulation Act the permission of the Reserve Bank of India is necessary for transmitting any amount to non-residents and the said permission was not obtained till then the moneys could not be remit p=09 ted. So Shri Vashi learned counsel contends further that if that be so the once non-payment is excluded even specifically under section 207 under its proviso them it must be tagged and transplanted into the second provision of section 205A holding that if the payment was not permissible by operation of law then the further fact that the said amount was being treated as unpaid dividend was not required to be deposited in the unpaid dividend account since according to him the initial disqualification would continue till the end creating an umbrella of protection for the petitioner. In other words when there was no default at the initial stage there cannot be default at the consequential stage also. The alternate plank is that even assuming there was a default it could not be said as wilful as required by law especially when three of the directors are ordinarily residing abroad while the other two are not associated with the daily routine work. As a third count it was submitted that even assuming otherwise still on facts if properly construed there is no propriety of continuing the prosecution especially when the amounts have been deposited in full even prior to the lodging of the complaint. All these contentions are countered by Shri P M Vyas learned public prosecutor for the State. According to him even though there might be protection under the proviso of section 207 of the Act for not depositing the amount on account of statutory disqualification since the Reserve Bank's permis sion had not been obtained still the protection stops at that and the further consequence of non-depositing the said unpaid amount to the special account cannot be excused. It is also submitted that peti tioners Nos. 2 to 6 being directors would be presumed to have acted wilfully. It is therefore submitted that issuance of process is justified.

7. As regards the first count canvassed by Shri Vashi learned counsel the contention is wholly unsustainable. In that behalf the provisions of section 205A sub-section (1) and sub-section (8) and section 207 become relevant. Section 205A(1) reads as:

"205A(1) Where after the commencement of the Companies (Amendment) Act 1974 a dividend has been declared by a company but has not been paid or the warrant in respect thereof has not been posted within forty-two days from the date of declaration to any shareholder entitled to the payment of the dividend the company shall within seven days from the date of expiry of the said period of forty-two days transfer the amount of dividend which remains unpaid or in relation to which no dividend warrant has been posted within the said period of forty-two days to a special account to be opened by the company in that behalf in any scheduled bank to be called Unpaid Dividend Account of......Company Limited/Company (Private) Limited".

15. However the defence as carved out under the proviso to section 207 as incompetence on the part of the company to make the payment due to some legal hurdle cannot be transplanted into the provisions of sec tion 205A to serve as a parallel defence for the consequence of non- payment. In other words it may be a good defence for non-payment to a shareholder entitled to payment but it is hardly a defence to the consequence which may ensue under section 205A under which the company is under an obligation to deposit all such amounts of unpaid dividend in a special account of the said company. The protection therefore for non-payment very much stops at that point of time inasmuch as if the payment cannot be made due to operation of law then no offence is made out under section 207 since the payment could not be made. However in spite of this protection which is for the limited purpose of non-payment to the shareholder the further consequence is not suspended much less wiped out. In other words even if the company is exempted from paying such amounts on account of operation of law still the said amount which remains unpaid will fall in the same category along with other amounts which remained unpaid to the shareholder entitled to the payment. The right of the shareholder to be entitled to the payment as also the obligation of the company to make payment to such shareholder both remain intact though the obligation to make immediate payment is suspended till the legal hurdle is wiped out. That does not affect is any manner the further obligation as stipulat ed under section 205A which comes into operation only after the non- payment and that too only after the period of forty-two days is over. It is thereafter that the company is enjoined to deposit the said unpaid amount in the special account as prescribed thereunder until the further formalities are observed. In other words therefore there is nothing in section 205A to support the claim that where dividend is remittable to a shareholder entitled to the said payment but cannot be made due to some legal hurdle or impediment as in the instant case it could not be done without the Reserve Bank's permission the company is exempted from the provisions of section 205A(1) in not depositing the said unpaid dividend amount in the unpaid dividend account of the company. The obligation cast within the span of forty-two days and the obligation that comes into existence after the said period of forty-two days is over and within seven days thereafter are distinct and the protection afforded under proviso to section 207 obviously cannot be engrafted to serve as a protection even for the second part of section 205A. This is also because the disqualification is for the payment of the amount to the shareholder entitled to the payment as in the instant case it could not be paid unless there is permission of Reserve Bank as the directors are non-residents and as stipulated by the Foreign Exchange Regulation Act. However this so called disquali fication merely suspends the payment to be made till the hurdle is removed and it is not as if that the protection of non-payment remains in force all throughout or even assuming otherwise it hardly makes any difference to the conclusion because non-payment to the shareholder does not serve as exemption for non-deposit of the said unpaid amount to the special account whereas the obligation to deposit the unpaid amount in the special account is independent of everything and comes into operation when the bare fact that the amount has not been paid or could not be paid within the stipulated period is established. Com p=09 pliance with the stipulations under section 205A(1) is necessary as per the scheme of the provisions contained in all the sub-sections of section 205A as the amount after a particular period has to be trans ferred to the general revenue account of the Central Government while the person to whom the amount is due can lodge his claim and get the amount. All these provisions form a complete unit with a specific purpose in the interest of all the parties concerned highlighting the object and utility of transferring such amounts of unpaid dividends. Therefore in effect it is not the reason for non-payment but it is the consequence of non-payment that brings into play the second part of section 205A casting an obligation on the part of the company to deposit the unpaid amount in a special account within the period of seven days after the said stipulated period of forty two days is over. This position is manifestly clear and admits of no doubts.