1985 (9) TMI 298 - HC - Companies Law

Issues Involved:
1. Non-filing of balance-sheet and profit and loss account under Section 220(3) of the Companies Act, 1956.
2. Liability of directors as officers in default.
3. Wilfulness of the default.
4. Bar of limitation for taking cognizance of the offence.
5. Nature of the offence as a continuing offence.
6. Appropriate punishment for the offence.

Issue-wise Detailed Analysis:

1. Non-filing of Balance-sheet and Profit and Loss Account under Section 220(3) of the Companies Act, 1956:
The company, M/s. Orissa Paper Products Ltd., and its directors failed to file the balance-sheet and profit and loss account for the year ending June 30, 1977, with the Registrar of Companies, Orissa, as mandated by Section 220(3) of the Companies Act, 1956. The Registrar issued a notice on September 13, 1978, but no action was taken, leading to the filing of a complaint on July 6, 1979.

2. Liability of Directors as Officers in Default:
Respondents Bhimsen Misra and Himansu Sekhar Misra, being directors, were considered officers of the company under Section 2(30) of the Act. The court dismissed the argument that only employees are officers, citing that directors fall within the inclusive definition of "officer" for the purpose of Section 220(3).

3. Wilfulness of the Default:
The default must be wilful for the directors to be liable. The court referred to previous judgments, including Vulcan Industries P. Ltd. v. Registrar of Companies, which established that acts or omissions under Sections 166, 168, 210, and 220 are punishable only if wilful. The court inferred wilfulness from the directors' inaction even after receiving the notice and failing to provide any lawful excuse.

4. Bar of Limitation for Taking Cognizance of the Offence:
The respondents argued that the complaint was barred by limitation under Section 468(2)(a) of the Criminal Procedure Code, as it was filed beyond six months from the default date. However, the court treated the default as a continuing offence under Section 472 of the Criminal Procedure Code, relying on the Supreme Court's interpretation in Bhagirath Kanoria v. State of M.P. and State of Bihar v. Deokaran Nenshi.

5. Nature of the Offence as a Continuing Offence:
The court determined that the offence under Section 220(3) is a continuing offence, as the penalty involves a fine for each day the default continues. This interpretation aligns with the Supreme Court's definition of a continuing offence, where non-compliance recurs daily, constituting a fresh offence each day.

6. Appropriate Punishment for the Offence:
The court emphasized that punishment serves to compel duty performance and warn others. Despite the Registrar's delay in filing the complaint, the directors' responsibilities as trustees of the shareholders necessitated accountability. Considering the circumstances, including the six-year delay in proceedings, the court imposed a fine of Rs. 50 on each respondent, with a default sentence of one week of simple imprisonment.

Conclusion:
The appeal was allowed, the trial court's order was set aside, and the respondents were convicted under Section 220(3) of the Companies Act, 1956, with the specified fine and default imprisonment.

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