1994 (1) TMI 213 - HC - Companies Law

Officer who is in default - Whether where neither in the complaint nor the evidence on record there was any averment that the respondent was knowingly guilty of the default in non-compliance or he knowingly and wilfully authorised or permitted a default of non-submission of balance sheet in time as provided under the Act nor was evidence adduced by prosecution on that score, it could be said that respondent was an officer in default thereby liable to punishment for offence under section 220(3) - Held, no

Summary

Issues:
Interpretation of the term "officer in default" under section 220(3) of the Companies Act, 1956.

Analysis:
The judgment revolves around the interpretation of the term "officer in default" under section 220(3) of the Companies Act, 1956. The appeal was filed by the Registrar of Companies, Orissa, challenging the acquittal of the respondent by the Second Additional Sessions Judge in a case involving the non-filing of the balance sheet of a company in time. The complainant alleged that the respondent, along with others, committed an offence under section 220(3) by failing to file the balance sheet within the stipulated time. The trial proceeded against the respondent alone, and he was convicted by the learned Magistrate based on the evidence of a prosecution witness. However, the Additional Sessions Judge acquitted the respondent on the grounds that the complaint did not specifically mention his responsibility as a director for the non-filing of the balance sheet within the required timeframe.

The key question before the court was whether the respondent could be considered an "officer in default" under section 220(3) of the Act. The relevant provisions of section 220 require the filing of the balance sheet and profit and loss account within a specified timeframe. The term "officer in default" includes any director of the company who knowingly permits the default in compliance with the Act. The court referred to precedents to interpret the term, emphasizing that the prosecution must establish the specific liability of the officer in default. The court cited previous cases where convictions were set aside due to a lack of averments or evidence proving the accused's role as an officer in default.

In this case, the court found that the prosecution failed to prove that the respondent was an "officer in default" regarding the filing of the balance sheet within the required time. The evidence presented did not establish that the respondent knowingly permitted the default or was guilty of non-compliance. The prosecution did not provide any specific averments or evidence linking the respondent to the default. The court noted that the witness admitted the balance sheet was signed by the Managing Director, not the respondent, and there was no other document proving the respondent's directorship in the company. Consequently, the court upheld the acquittal of the respondent, stating that there was no merit in the appeal, which was dismissed accordingly.