2009 (1) TMI 488 - HC - Companies Law

Non filing of annual returns - non convening of annual general meeting - Held that - Non-availability of various documents like returns, profit and loss account, balance-sheet, etc., would not in any way prevent the petitioner from approaching the appropriate authority complaining the same as contemplated under section 167 of the Companies Act. Even under section 169 of the Companies Act, there was a possibility for the petitioner to call for extraordinary general meeting by requisition. But, the case of the petitioner is only that it was the abovesaid Mr. S. Venkataramanan, who was in charge of the entire documents and also living in the registered office of the company has not taken any steps for convening the annual general meeting. When the petitioner has not acted as per the provisions of the Act, in this regard, by resorting to various other ways for convening meeting, the conduct of the petitioner cannot be held to be honest and reasonable in the circumstances of the case, in such view of the matter, it is of considered view that in relation to the duty of the petitioner in convening annual general meeting, the petitioner cannot be held to have acted honestly and reasonably, in the circumstances of the case, so as to enable him to be excused and consequently relieved of the responsibility. The company petition stands disposed of by relieving the petitioner from the obligations under section 159, read with section 162, of the Companies Act regarding non-filing of annual returns for the accounting years 2001-02, 2002-03 and 2003-04 and under section 220, read with section 220(3), of the Companies Act for non-filing of balance-sheet and profit and loss account for the said accounting years. However, the petitioner shall be liable to be proceeded with for the statutory obligation under section 166, read with section 168, of the Companies Act for not convening annual general meeting as per the show-cause notice issued by the respondent dated 23-7-2005. In view of disposal of the main company petition, connected company application is closed.

Issues Involved:
1. Relief from liabilities under Section 633(2) of the Companies Act, 1956.
2. Non-filing of annual returns and balance sheets.
3. Non-convening of annual general meetings.
4. Honest and reasonable conduct of the petitioner.

Detailed Analysis:

1. Relief from liabilities under Section 633(2) of the Companies Act, 1956:
The petitioner sought relief under Section 633(2) of the Companies Act, 1956, to be wholly or partly relieved from liabilities mentioned in the show-cause notice dated 23-7-2005, issued by the Registrar of Companies. The court examined whether the petitioner acted honestly and reasonably in the circumstances.

2. Non-filing of annual returns and balance sheets:
The petitioner admitted non-compliance with Sections 159, 166, and 220 of the Companies Act for the financial years 2001-02, 2002-03, and 2003-04. The court noted that the statutory obligations under these sections were not met, which could attract penalties. However, it was crucial to determine if the petitioner's failure was due to genuine reasons beyond his control.

3. Non-convening of annual general meetings:
The petitioner failed to convene annual general meetings as required under Section 166 of the Companies Act, resulting in a show-cause notice under Section 168. The court assessed whether the petitioner made any efforts to convene the meetings or sought assistance from the Central Government as per Section 167.

4. Honest and reasonable conduct of the petitioner:
The petitioner claimed he had no access to the company's records, which were in the custody of another director, Mr. S. Venkataramanan, who allegedly denied him access. The court evaluated the petitioner's actions and communications to determine if he acted honestly and reasonably.

Court's Findings:

Non-filing of annual returns and balance sheets:
The court found that the petitioner had taken steps to inform the authorities about his inability to access the company's records, which were under the control of Mr. S. Venkataramanan. The petitioner had filed a petition under Sections 397 and 398 of the Companies Act against Mr. S. Venkataramanan, indicating his efforts to resolve the issue. The court concluded that the petitioner acted honestly and reasonably regarding the non-filing of annual returns and balance sheets. Consequently, the petitioner was relieved from liabilities under Sections 159, 162, and 220 of the Companies Act.

Non-convening of annual general meetings:
The court noted that the petitioner and his wife jointly held 50% of the company's shares, and the petitioner, being a director, failed to take necessary steps to convene annual general meetings. The petitioner did not approach the Central Government or use other provisions under the Companies Act to call for meetings. The court determined that the petitioner did not act honestly and reasonably in this regard and was liable under Sections 166 and 168 of the Companies Act.

Conclusion:
The petitioner was relieved from obligations under Section 159, read with Section 162, and Section 220, read with Section 220(3), of the Companies Act for non-filing of annual returns and balance sheets for the accounting years 2001-02, 2002-03, and 2003-04. However, the petitioner remained liable for non-convening annual general meetings under Section 166, read with Section 168, of the Companies Act.

← Previous Next →