1983 (2) TMI 210 - HC - Companies Law

Summary

Issues:
- Quashing of proceedings in Case No. G/2969 of 1975
- Setting aside the order dated October 11, 1979
- Allegations under section 209A(8) of the Companies Act, 1956
- Legal and validity of proceedings challenged before the Metropolitan Magistrate
- Non-production of books of account at the registered office
- Liability of directors under section 209A(8) of the Companies Act, 1956
- Prosecution of directors in absence of company's prosecution
- Specific averments in the petition of complaint regarding directors' responsibility

The judgment delivered by N.G. Chaudhuri, J., involved a petition seeking to quash the proceedings in Case No. G/2969 of 1975 and set aside an order dated October 11, 1979, passed by the Metropolitan Magistrate. The case originated from a complaint filed by the Registrar of Companies, West Bengal, under section 209A(8) of the Companies Act, 1956, against the accused directors of a company. The complaint alleged that the directors failed to produce the company's books of account as required by law. The accused directors challenged the legality of the proceedings on various grounds. One contention was that the offense, if any, occurred in 1974, making the 1975 case time-barred. However, the court found that the complaint clearly indicated the offense date as November 15, 1975, not the earlier dates referenced incidentally. Therefore, the limitation period was not breached.

Another issue raised was the non-production of books of account at the registered office, with the defense arguing that the books were kept at a different location. The court held that under section 209A(1) of the Companies Act, the books must be produced as specified by the inspecting officer, rejecting the defense's argument. The liability of the directors under section 209A(8) was also contested, citing a previous case where the company was primarily liable, and since the company was not prosecuted, the directors should not be either. However, the court differentiated the provisions of the Companies Act from the case cited, emphasizing that directors are unequivocally responsible under section 209A(8) and can be prosecuted individually.

Furthermore, the defense argued that the complaint lacked specific averments regarding the directors' responsibility for the company's affairs and book maintenance. Comparing to a different case under a separate Act, the defense contended the prosecution was untenable. The court, after considering the arguments, found that the Companies Act's provisions impose a duty on any director to allow book inspections, irrespective of specific averments in the complaint. Consequently, the petition was dismissed, and the rule discharged, with directions for expeditious disposal of the case in the lower court.