1960 (2) TMI 31 - HC - Companies Law

Annual return - General Meetings and proceedings Company Law Board s power to call annual general meeting Accounts Annual accounts and balance sheet Powers of court to grant relief in certain cases

Issues Involved:
1. Failure to hold annual general meetings.
2. Failure to submit annual list of members and other particulars.
3. Failure to lay balance-sheet and profit and loss account before the company in general meeting.
4. Failure to send copies of balance-sheet and profit and loss account to the Registrar.
5. Whether the defaults were intentional and wilful.
6. Applicability of Section 281 for condonation of defaults.

Detailed Analysis:

1. Failure to hold annual general meetings:
The petitioners, including the company and its directors, were prosecuted for not holding a general meeting as required under Section 76 of the Indian Companies Act, 1913. The last meeting was held on December 24, 1952, and no subsequent meetings were held until January 11, 1957. The petitioners contended that due to the company's financial difficulties and a resolution to transfer assets to settle debts, they were not responsible for calling meetings. The court found this defense insufficient and upheld the conviction under Section 76.

2. Failure to submit annual list of members and other particulars:
The petitioners were also prosecuted under Section 32(3) for not submitting the annual list of members and other required particulars. The petitioners argued that since no general meeting was held, it was impossible to comply with this requirement. However, the court held that the duty to submit the list was independent of the requirement to hold a general meeting, and thus, the conviction under Section 32 was upheld.

3. Failure to lay balance-sheet and profit and loss account before the company in general meeting:
The petitioners were convicted under Section 131(1) for not laying the balance-sheet and profit and loss account before the company in a general meeting. The court rejected the argument that this was impossible due to the absence of a general meeting, stating that the directors had a duty to ensure these requirements were met regardless of the meeting's occurrence. The conviction under Section 131 was therefore upheld.

4. Failure to send copies of balance-sheet and profit and loss account to the Registrar:
The petitioners were also convicted under Section 134 for not sending copies of the balance-sheet and profit and loss account to the Registrar. The court examined conflicting authorities on this issue but ultimately held that the requirement to send these documents was not contingent upon their presentation at a general meeting. The conviction under Section 134 was thus upheld.

5. Whether the defaults were intentional and wilful:
The court considered whether the defaults by the petitioners were intentional and wilful. It was noted that the company had received notices from the Registrar to comply with the statutory requirements, which were ignored. The court concluded that the defaults were committed knowingly and wilfully, as the petitioners failed to act despite being aware of their obligations. This finding was crucial for upholding the convictions of the individual directors.

6. Applicability of Section 281 for condonation of defaults:
The petitioners sought relief under Section 281, which allows for condonation if the defaults were committed honestly and reasonably. The court found that the petitioners' conduct did not meet the dual requirements of honesty and reasonableness. The persistent neglect of statutory duties over several years, despite warnings, was deemed unreasonable and reckless. Consequently, the court denied the benefit of Section 281 to the petitioners.

Conclusion:
The revisions were dismissed, and the convictions under Sections 32, 76, 131, and 134 of the Indian Companies Act, 1913, were upheld. The petitioners' arguments regarding the impossibility of compliance due to the absence of general meetings were rejected, and their conduct was found to be wilful and unreasonable, disqualifying them from relief under Section 281.

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