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Issues: Violation of Indian Companies Act - Failure to file balance-sheet and profit and loss account, Relief under section 633 of the Companies Act, Directors' duty in preparation of balance-sheet, Audit by auditors, Seizure of company documents by police, Holding of annual general meetings, Filing of annual returns with Registrar.
The judgment by the High Court of Calcutta involved eighteen revision cases arising from violations of the Indian Companies Act. The cases were tried together as they shared common questions of fact and law. The first set of cases, Criminal Revision Cases Nos. 305 to 310 of 1965, pertained to The Great Indian Steam Navigation Company Limited being prosecuted for not filing balance-sheets and profit and loss accounts with the Registrar from 1956 to 1961. The second set, Criminal Revision Cases Nos. 311 to 316 of 1965, involved three directors of the same company charged with similar offenses during the same period. Additionally, in cases Criminal Revision Cases Nos. 317 to 322 of 1965, the directors faced charges under section 210(5) for not complying with the Act's requirements regarding balance-sheets and profit and loss accounts at annual general meetings. The learned Magistrate convicted all accused in the eighteen cases and imposed a fine of Rs. 50 on each. The defense sought relief under section 633 of the Companies Act, citing the seizure of company documents by the police in 1957, hindering the preparation of financial statements. However, the court referenced the case of Ram Krishna Dalmia v. Registrar, Joint Stock Companies, Delhi, and found that the accused were not entitled to relief as they had sufficient opportunities to access the necessary documents for preparing the balance-sheets and profit and loss accounts. The judgment highlighted the directors' primary duty in preparing balance-sheets and emphasized that the audit by auditors follows the directors' actions. Despite the difficulties faced, the directors were expected to take steps in preparing the financial statements, which they failed to do despite ample opportunities. The court noted that the company's business was ongoing, annual general meetings were held, and annual returns were filed with the Registrar during the relevant years, indicating that the company was operational and had obligations to fulfill under the Act. Ultimately, the court discharged all eighteen rules, concluding that there was no valid case for granting relief to the directors from their liability under the Companies Act. The judgment underscored the importance of directors fulfilling their duties in preparing financial statements and complying with statutory requirements, regardless of challenges faced during the process.
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