1986 (3) TMI 251 - HC - Companies Law

Summary

Issues:
1. Acquittal of three directors of a company under sections 209A(2) and 209A(8) of the Companies Act.
2. Question of limitation in filing the complaint against the directors.

Analysis:
The judgment concerns an appeal against the acquittal of three directors of a company under sections 209A(2) and 209A(8) of the Companies Act. The Assistant Registrar of Companies filed a complaint against the directors, alleging irregularities found during inspections and failure to rectify them. The learned Magistrate found the accused guilty but dismissed the complaint on the grounds of limitation. The defence argued that the complaint should have been filed within one year from the last inspection or within fifteen days from the notice. The prosecution contended that limitation starts from the expiry of the final notice. The Magistrate held that limitation starts from the first notice, leading to the complaint being barred by limitation.

The judgment delves into the interpretation of the Companies Act regarding the duty of directors to produce company records during inspections. Section 209A(2) mandates directors to provide books of account and other documents during inspections. The judgment emphasizes that the offence is deemed to occur at the time of inspection if records are not produced. The inspecting authority can require directors to rectify mistakes within a specified time. The Assistant Registrar's power to extend the time is limited, and non-compliance within the period specified in the first notice constitutes the offence, starting the limitation period.

The judgment highlights the distinction between a continuing offence and a one-time offence under the Companies Act. It clarifies that the offence of not producing records during inspection is not a continuing one. The period of limitation starts from the date of the offence, not from subsequent notices or opportunities given to rectify the mistake. The judgment upholds the Magistrate's decision that the complaint was rightly dismissed due to being filed after the expiry of the limitation period. The appeal against the acquittal of the directors fails, and the judgment dismisses the appeal.