1990 (10) TMI 259 - HC - Companies Law

Summary

Issues Involved:
1. Jurisdiction of the court under section 633(2) of the Companies Act, 1956.
2. Whether the offences are continuing offences.
3. Cognizance of the offences by the Additional Chief Metropolitan Magistrate, Delhi.

Detailed Analysis:

1. Jurisdiction of the Court under Section 633(2) of the Companies Act, 1956:
The petitioner filed an application under section 446 of the Companies Act, 1956, which the court treated as one under section 633(2) of the Act. The key question was whether the court had jurisdiction to relieve the petitioner from liabilities related to defaults, given that complaints had already been filed against the petitioner before the application was made. The court referenced the case of Sri Krishna Parshad v. Registrar of Companies [1978] 48 Comp. Cas. 397 (Delhi), which elucidated that section 633(2) allows the High Court to grant anticipatory relief and, if a case is actually initiated, only the court where the complaint is pending can grant relief. The court agreed with this view, indicating that the petitioner could not be relieved of liabilities if the prosecution had already commenced.

2. Whether the Offences are Continuing Offences:
The court examined whether the defaults committed by the petitioner were continuing offences. The Supreme Court's ruling in CWT v. Suresh Seth [1981] 129 ITR 328 was pivotal, where it was held that non-performance of acts under section 18(1)(a) of the Wealth-tax Act gives rise to a single default and a single penalty, and does not constitute a continuing offence. Similarly, the Madras High Court in Assistant Registrar of Companies v. R. Narayanaswamy [1985] 57 Comp. Cas. 787 held that failure to repay excess deposits is not a continuing offence. Following these precedents, the court concluded that the defaults under sections 159, 210, and 220 of the Companies Act were not continuing offences. The provision for extending fines for each day of default was merely a multiplier for determining the penalty, not an indication of a continuing offence.

3. Cognizance of the Offences by the Additional Chief Metropolitan Magistrate, Delhi:
The court considered whether cognizance of the offences had been taken by the Additional Chief Metropolitan Magistrate. The period of limitation for filing complaints under sections 159, 210, and 220 of the Companies Act is six months, as these offences are punishable with fines only. According to sections 467, 468, 469, and 473 of the Criminal Procedure Code, the court cannot take cognizance of an offence after the expiry of the limitation period unless the delay is condoned. The court referenced Hindustan Wire and Metal Products [1983] 54 Comp. Cas. 104 (Cal), where it was held that cognizance of an offence is not taken merely by filing a complaint if it is beyond the limitation period without condonation of delay. In the present case, the complaints were filed after the six-month period, and no steps for condonation of delay were taken. Thus, cognizance of the offences could not be considered to have been taken.

Conclusion:
The petitioner was appointed as chairman under a court-approved scheme of arrangement, which suspended the shareholders' voting rights and negated the requirement for holding annual general meetings. Consequently, the balance-sheets and profit and loss accounts could not be laid before any such meetings. Considering these circumstances, the court relieved the petitioner from the liabilities and defaults under sections 159, 210, and 220 of the Companies Act, and from the consequences of said defaults. The application (C.A. No. 827 of 1987) was disposed of with no order as to costs.