1941 (8) TMI 15 - HC - Companies Law

Summary

Issues: Compliance with section 32 of the Companies Act regarding submission of list of members, Interpretation of 'knowingly' and 'wilfully' in relation to companies, Liability of company and its officers for default in submitting required returns.

The judgment addresses the issue of compliance with section 32 of the Companies Act, which mandates the submission of a list of members by a company within a specified timeframe. In this case, the company failed to file the list within the prescribed period, leading to legal action against the company and its directors. The Sub-Divisional Magistrate acquitted the defendants, ruling that the delay was not due to wilful default but negligence. The Crown appealed against the acquittal of the company.

The judgment delves into the interpretation of the terms 'knowingly' and 'wilfully' in the context of company liability. It highlights that a company, as a corporate entity, cannot possess knowledge or intent, thus these terms do not apply to companies. The legislative language of section 32 specifies penalties for default, attributing 'knowingly' and 'wilfully' only to company officers, not the company itself. The judgment emphasizes the distinction in liability, where the company is inherently liable for non-compliance, while officers are liable if they knowingly or wilfully permit the default.

The judgment references a case law to support the interpretation of 'default' as continuous neglect to fulfill a required act. It distinguishes the case at hand from the cited precedent, emphasizing that penalties may differ based on the circumstances and ability to remedy the omission. Additionally, it mentions an Indian case where officers were acquitted due to lack of wilful default, but the company was penalized. Similarly, in the present case, as the officers were found not guilty of wilful default, the company is held liable for the penalty. Consequently, the court sets aside the Magistrate's order and imposes a penalty of Rs. 50 on the company for the non-compliance with section 32 of the Companies Act.