2006 (11) TMI 344 - HC - Companies Law

Issues Involved:
1. Whether failure to comply with the statutory requirement of section 220 of the Companies Act, 1956, constitutes a continuing offence.
2. Applicability of limitation period under section 468 of the Code of Criminal Procedure for offences under section 220 of the Companies Act.
3. Interpretation of sections 162, 220 of the Companies Act, and section 472 of the Code of Criminal Procedure.

Issue-wise Analysis:

1. Continuing Offence under Section 220 of the Companies Act:
The primary issue was whether the failure to file the balance-sheet and profit and loss account as required under section 220 of the Companies Act, 1956, constitutes a continuing offence. The petitioner, a director of a company, was prosecuted for not filing the required documents with the Registrar of Companies by the stipulated date. The court examined various precedents and the statutory provisions to determine if the offence was continuing.

The court referred to section 162 of the Companies Act, which imposes a penalty for every day the default continues, indicating that non-compliance is treated as a continuing offence. The court also examined section 472 of the Code of Criminal Procedure, which states that a fresh period of limitation begins at every moment the offence continues. The court concluded that the default in complying with section 220(1) is a continuing offence.

2. Applicability of Limitation Period under Section 468 of the Code of Criminal Procedure:
The petitioner argued that the complaint filed in 2002 for defaults occurring in 1999 was barred by limitation under section 468 of the Code of Criminal Procedure. However, the court noted that section 472 of the Code provides that for continuing offences, a fresh period of limitation begins at every moment of the time during which the offence continues.

The court discussed various judgments, including the Supreme Court's decision in Bhagirath Kanoria v. State of Madhya Pradesh, which held that non-payment of the employer's contribution to the provident fund is a continuing offence and thus not subject to the limitation period under section 468. The court applied this principle to the present case, concluding that the prosecution was not barred by limitation.

3. Interpretation of Relevant Sections:
The court analyzed sections 162 and 220 of the Companies Act in detail. Section 162 imposes a fine for every day the default continues, reinforcing the concept of a continuing offence. Section 220 mandates filing the balance-sheet and profit and loss account within 30 days of the annual general meeting or the latest date by which the meeting should have been held.

The court also reviewed conflicting judgments from various High Courts. It noted that the Division Bench of the Calcutta High Court in National Cotton Mills v. Asstt. Registrar of Companies had held that offences under section 162 are not continuing offences, but this view was overturned by the Supreme Court in Bhagirath Kanoria's case. The court agreed with the latter decisions of the Calcutta High Court in Luxmi Printing Works Ltd. and the Kerala High Court in Rani Joseph, which held that violations of section 220 are continuing offences.

Conclusion:
The court concluded that the contravention of section 220(1) of the Companies Act, made punishable under section 220(3), is a continuing offence. Consequently, the period of limitation prescribed under section 468 of the Code of Criminal Procedure does not apply, and the prosecution is governed by section 472 of the Code of Criminal Procedure. The reference was answered accordingly, affirming that the failure to comply with section 220 constitutes a continuing offence.

← Previous Next →