2010 (2) TMI 579 - HC - Companies Law

Offences - Offences against Act to be cognizable only on complaint by Registrar, shareholder or Government

Summary

Issues:
Prosecution under section 196(3) of the Companies Act, 1956 for failure to furnish copies of meeting minutes and documents within the specified time period. Interpretation of section 621 of the Companies Act, 1956 regarding the entitlement to file a complaint for offences under the Act.

Analysis:
The petitioners, a company and its office bearers, faced prosecution in C.C. No. 762 of 2002 for not providing copies of meeting minutes and documents to a member within the stipulated time as per section 196(3) of the Companies Act, 1956. The respondent alleged that this failure constituted an offence punishable with a fine of Rs. 5,000 per offence. The respondent filed a complaint based on section 196 of the Companies Act, 1956, before the Additional Chief Metropolitan Magistrate, E.O.I., Egmore, Chennai.

The petitioners contended that the respondent had obtained the required copies through the Company Law Board and that any offence committed was trivial. They argued that under section 621 of the Companies Act, 1956, only specific individuals, such as the Registrar or a shareholder, could file a complaint for offences against the Act. As the respondent did not fall within these categories, the complaint should be quashed.

The respondent, on the other hand, relied on section 41 of the Companies Act, 1956, to assert that as a member of the club, he was deemed to be a shareholder and therefore entitled to file a complaint under section 621. However, the court noted that the respondent did not meet the criteria outlined in section 41 to be considered a shareholder or a person entitled to file a complaint under section 621.

Ultimately, the court found that the complaint did not adhere to the strict requirements of section 621 of the Companies Act, 1956. As the respondent did not qualify as a person authorized to file a complaint for offences under the Act, the court allowed the quash petition, leading to the closure of the proceedings in E.O.C.C. No. 762 of 2002 on the file of the Additional Chief Metropolitan Magistrate, E.O.I., Egmore, Chennai.