1971 (11) TMI 80 - HC - Companies Law

Annual return - General, Annual Return Penalty for not filing, Winding up - Power of registrar to strike defunct company off register, Powers of court to grant relief in certain cases

Issues Involved:
1. Whether the petitioners should be relieved of their liabilities from filing the return under the Companies Act in respect of the years 1969 and 1970.
2. Whether the pending prosecutions are liable to be quashed.

Issue-wise Detailed Analysis:

Issue No. 1:
The petitioners contended that the Registrar should strike off the defunct company from the register, relieving them from filing returns for the years 1969 and 1970. However, the court clarified that the language of Section 560 of the Companies Act does not impose a duty on the Registrar to strike off a defunct company but rather grants the Registrar the power to do so. The court emphasized that the company's duty to submit statutory returns continues until the company is either wound up or struck off the register by the Registrar.

The court noted that the third petitioner had requested an extension for filing the statement of accounts as late as July 2, 1970, indicating ongoing compliance efforts. The court also referenced the Registrar's reply, which indicated no opposition to granting relief under Section 633(2) for defaults in 1969 and 1970. Nonetheless, the court concluded that the liability to file statutory returns persists until the company is officially dissolved or struck off the register.

The court expressed hope that the Registrar would take steps under Section 560 to strike off the company after the pending prosecutions are resolved, as indicated in exhibit R-2.

Issue No. 2:
The court referred to the Full Bench decision in Andhra Provincial Potteries v. Registrar of Companies, which held that holding an annual general meeting and laying before it a balance-sheet and profit and loss account is essential for prosecution under Section 220(3). However, the holding of such a meeting is not necessary for prosecution for defaults under Sections 159 to 166 and 210. The court concurred with this view, stating that the company's non-functioning does not excuse it from complying with statutory requirements.

The court cited Madan Gopal Dey v. State, which emphasized that the Registrar's duty is to enforce compliance with the Act's provisions to protect shareholders' interests, regardless of whether the company is functioning. The court noted that the Companies Act excludes mens rea as a constituent element of the offence, making mere failure to comply with statutory provisions punishable.

The court also highlighted that it lacks jurisdiction to grant relief under Section 633(2) if proceedings have been instituted in a criminal court. The court referenced In re Auto Link Financiers Pvt. Ltd. and C.L. Sabharwal v. Registrar of Companies, which supported this view.

While the court acknowledged that the violations were technical and did not harm any shareholders, it stated that this aspect is for the learned Magistrate to consider. The court reiterated that the Registrar might consider taking action under Section 560 after the prosecutions are over and suggested that the petitioners could also voluntarily wind up the company.

Conclusion:
The petition was dismissed without costs. The court concluded that the petitioners are not relieved of their liabilities from filing returns for the years 1969 and 1970, and the pending prosecutions are not liable to be quashed. The court expressed hope that the Registrar would take appropriate action under Section 560 after the pending prosecutions are resolved.

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