1984 (7) TMI 293 - HC - Companies Law

Summary

Issues:
Violation of section 220 of the Companies Act, 1956 - Failure to file balance-sheet and profit and loss account within the stipulated time frame.

Analysis:
The petitioners, a private limited company and its directors, were accused of contravening section 220 of the Companies Act, 1956 by failing to file the balance-sheet and profit and loss account within the prescribed time. The Registrar of Companies filed a complaint against them, leading to criminal proceedings initiated by the Chief Metropolitan Magistrate, Kanpur. The petitioners sought relief under section 633(2) of the Act, claiming that their default was due to income-tax authorities seizing their documents, hindering the preparation of financial statements. They argued that their actions were honest and reasonable, warranting an excuse for the delay and the quashing of the prosecution.

The court examined section 633 of the Act, which allows relief for officers of a company facing allegations of negligence or default if they can prove they acted honestly and reasonably. However, the relief is only applicable to officers and not the company itself. In this case, the company and its directors sought relief after criminal proceedings had commenced, making them ineligible for relief under section 633(2). The court emphasized that only the court before which the proceedings are pending can grant relief under section 633(1) to the directors, not the High Court.

The court referenced legal precedents, including the case of Tolaram Jalan, emphasizing that relief under section 633 is specific to the court where proceedings are pending. Additionally, the court cited the Andhra Pradesh High Court's decision in Andhra Provincial Potteries Ltd. v. Registrar of Companies, which upheld the obligation to file financial statements only after an annual general meeting. The judgment clarified that the petitioners must present their case for relief before the criminal court handling the proceedings.

Furthermore, the court highlighted the Central Government's authority under section 637B of the Act to condone delays in filing documents with the Registrar of Companies, emphasizing that the High Court's decision does not prevent the petitioners from seeking condonation from the Central Government. Ultimately, the court concluded that the petitioners were not entitled to the relief sought or to invoke the High Court's jurisdiction under section 633(2) of the Act, leading to the dismissal of the petition with costs.