1962 (8) TMI 19 - HC - Companies Law

Summary

Issues:
Violation of section 271 of the Companies Act, 1956 by directors for failing to file declaration specifying qualification shares. Failure to pay additional fee demanded by Registrar of Companies. Invocation of High Court's powers under section 633(2) due to apprehension of prosecution.

Analysis:
The petition involves ten directors of a company who failed to comply with section 271 of the Companies Act, 1956 by not filing the required declaration specifying their qualification shares within the stipulated time frame. The Registrar of Companies sent a notice demanding a fee for the declaration, which the directors did not fully pay. The directors claimed their failure was due to inadvertence, seeking relief under section 633(2) of the Act to avoid prosecution.

The provision under section 633(2) allows an officer to seek relief from the High Court if there is a possibility of legal action against them. The Registrar's notice warned of prosecution if the fee was not paid, highlighting the directors' non-compliance. The Union of India argued that the directors' persistent failure to pay the additional fee rendered them liable for prosecution, emphasizing the importance of fee payment for document registration.

The court determined that it lacked the authority to reduce or waive the additional fee, advising the directors to address the matter with the Union of India. Regarding potential criminal prosecution, the court deemed the petition premature as the decision to prosecute had not been finalized, contingent upon fee payment. The directors' lack of familiarity with the law and inadvertent non-payment were cited as reasons for seeking relief.

Since the directors had not paid the additional fee, which could have been a basis for relief, the court found no grounds to grant the requested relief under section 633(2) at that stage. Consequently, the petition was dismissed as premature, pending further developments in the payment of the additional fee and the potential decision on prosecution by the authorities.