1956 (4) TMI 20 - HC - Companies Law

Summary

Issues:
Relief from liabilities under the Indian Companies Act for defaults committed by the petitioners. Relief against the pending criminal prosecution for the same defaults.

Analysis:

1. Relief from Liabilities under the Indian Companies Act:
The petitioners sought relief under section 281 of the Indian Companies Act of 1913, now corresponding to section 633 of the new Companies Act of 1956. The petitioners, a company and its directors, faced defaults in holding annual general meetings due to the death of the accountant responsible for accounts. The court noted that the accounts were subsequently audited, and meetings were held. The petitioners argued that they should be relieved from liabilities due to unavoidable circumstances. The court acknowledged the negligence was due to such circumstances and granted relief for future liabilities. However, the relief was confined to future defaults only. The court emphasized that relief under the Act is granted by the court handling the matter complained of, and in this case, the relief was limited to future liabilities, not the pending prosecution.

2. Relief against Pending Criminal Prosecution:
The petitioners also faced a criminal case initiated by the Assistant Registrar of Joint Stock Companies for alleged violations under various sections of the Indian Companies Act. The petitioners sought relief against the criminal prosecution, contending that they should be excused for the defaults. The court explained that relief under the Act is specific to the court handling the case of negligence or default. Since the petitioners approached the court after the institution of the criminal proceedings, the relief granted was limited to future liabilities only. The court cited a similar legal position in England and emphasized that the relief granted by the court does not prejudice the ongoing criminal proceedings. The Magistrate handling the criminal case retains the authority to make decisions independently of the relief granted by the court.

In conclusion, the court granted relief to the petitioners for future liabilities under the Indian Companies Act due to unavoidable circumstances leading to defaults. However, the relief did not extend to the pending criminal prosecution, as relief under the Act is specific to the court handling the matter complained of. The court's decision does not impact the Magistrate's authority to reach conclusions based on the facts and evidence presented in the criminal case, independent of the relief granted by the court.