1994 (11) TMI 362 - HC - Companies Law

Summary

Issues:
Petition under section 633(2) of the Companies Act, 1956 for relieving petitioners from criminal liability; Dispute regarding default in delivering share certificates within prescribed period; Maintainability of the petition despite criminal proceedings initiated by Registrar of Companies; Interpretation of section 633(1) of the Companies Act; Applicability of judgments from Calcutta High Court and Delhi High Court in similar cases.

Analysis:
The petitioners, who are directors and officers of a company, sought relief from criminal liability under section 633(2) of the Companies Act due to a default in delivering share certificates within the prescribed period. The petitioners argued that they acted honestly and reasonably, attributing the delay to established practices and delegation of responsibilities. The court acknowledged the substance in the petitioners' plea but declined to consider it further.

The Registrar of Companies had already initiated criminal proceedings against the petitioners for the same default. The petitioners argued that the criminal complaint was beyond the period of limitation, questioning its legality. The court deliberated on the maintainability of the petition in light of the ongoing criminal proceedings and cited judgments from Calcutta and Delhi High Courts supporting the petitioners' stance.

The court analyzed the provisions of section 633(1) of the Companies Act, emphasizing that the power to excuse an officer from liability lies with the court hearing the case. It clarified that once criminal proceedings are initiated, the competent authority to grant relief under section 633(1) is the magistrate. The court dismissed the argument that delay in filing the complaint rendered it unlawful, stating that any proceedings related to the offense constitute a valid process.

Referring to judgments from Delhi High Court and Punjab and Haryana High Court, the court reinforced the view that if criminal proceedings have commenced, the officer must seek relief under section 633(1) before the relevant court. Consequently, the court dismissed the Company Petition, noting that the petitioners could still seek relief before the magistrate. The ad interim orders were continued for four weeks, and related applications were disposed of in accordance with the main petition's outcome.