1959 (8) TMI 21 - HC - Companies Law

Summary

Issues: Relief sought under section 633 of the Companies Act, 1956 for failure to comply with specific provisions of the Act.

In this judgment, the petitioners, a banking company and its directors, sought relief under section 633 of the Companies Act, 1956, to avoid prosecution for non-compliance with sections 159, 166, 210, and 220 of the Act, which are punishable under sections 162(1), 168, 210(5), and 220(3) respectively. The petitioners became directors of the company following a court-sanctioned reconstruction scheme. Due to the seizure of branch books by the police in connection with ongoing criminal cases, the company could not prepare its financial statements and get them audited, leading to non-compliance with the mentioned provisions. The court acknowledged that the default was beyond the company's and directors' control, justifying relief from criminal liability.

Regarding the application of section 633, the court noted that relief could only be granted to an officer of the company, not the company itself. Consequently, the petition related to the company was dismissed. The court analyzed sub-sections (1) and (2) of section 633, emphasizing that while sub-section (1) covers proceedings for negligence, breach of duty, including criminal prosecutions, relief under sub-section (2) is granted for claims. The court interpreted "claim" in sub-section (2) broadly to encompass criminal prosecutions, aligning with precedents from English law and the Orissa High Court. Therefore, the court held that relief could be granted against an impending criminal prosecution under sub-section (2) of section 633.

In the specific circumstances of this case, the court relieved petitioners 1 to 11 from criminal liability for the non-compliance, subject to the condition that the obligations specified in the relevant provisions must be fulfilled within six months. The court allowed for an extension if necessary due to unavoidable reasons. This judgment clarifies the scope of relief under section 633 of the Companies Act, 1956, emphasizing the court's authority to grant relief against apprehended criminal prosecutions for non-compliance with statutory provisions.