1968 (7) TMI 34 - HC - Companies Law

Summary

Issues Involved:
1. Contravention of Section 614A(1) of the Companies Act, 1956.
2. Responsibility for compliance and the concept of "officers in default."
3. Bona fide inability to comply due to circumstances beyond control.

Issue-wise Detailed Analysis:

1. Contravention of Section 614A(1) of the Companies Act, 1956:
The court found that the accused-appellants failed to comply with the mandatory provisions of Section 614A(1) of the Companies Act, 1956. The evidence presented by P.W. 1, Mahaprabhu Roy, Assistant Officer in the office of the Registrar of Companies, Calcutta, established that the accused-appellants did not submit the required documents within the stipulated six months, despite being duly notified. The court noted, "The failure to comply with the mandatory provisions of section 614A(1) of the Companies Act, 1956, is thus established clearly and conclusively."

2. Responsibility for Compliance and the Concept of "Officers in Default":
The defense argued that the managing director was responsible for the non-compliance, not the other directors, who lacked mens rea and thus were not "officers in default." The court rejected this argument, stating that directors have definite statutory duties that cannot be neglected. The court emphasized, "The offences laid down under the Companies Act are of two kinds... The concept of mens rea or a blameworthy mind, as contended by Mrs. Nag, is not applicable to the second group of offences." The court referenced several cases, including Bhagirath Chandra Das v. Emperor and Dulal Chandra Bhar v. State of West Bengal, to support the principle that directors cannot evade their statutory responsibilities.

3. Bona Fide Inability to Comply Due to Circumstances Beyond Control:
The defense claimed that the relevant books of account were seized by the income-tax authorities, making compliance impossible. The court found this argument unconvincing, noting that the accused-appellants had sufficient time to comply before handing over the documents to the income-tax authorities. The court stated, "It is futile to argue on the basis of exhibit B that the said annual return or balance-sheet could not be submitted to the Registrar of Companies, West Bengal, for any purported non-availability thereof." The court also referenced the case of Ramkishan Dalmia v. Registrar, Joint Stock Companies, Delhi, to underline that directors have a primary responsibility to prepare and submit the required documents, regardless of external circumstances.

Conclusion:
The court upheld the conviction of the accused-appellants under Section 614A(2) of the Companies Act, 1956, but reduced the sentence of fine to Rs. 100 each, in default to suffer simple imprisonment for two weeks each. The court directed that one-third of the fine, if realized, be applied towards the payment of the costs of the proceedings. The court concluded, "In the facts and circumstances of the case and the evidence on record, I hold that the ingredients of an offence under section 614A(2) of the Companies Act, 1956, have been fully established against the accused-appellants and accordingly the order of their conviction must be upheld."