1978 (6) TMI 128 - HC - Companies Law

Summary

Issues Involved:
1. Whether the offences under sections 159 and 162(1) of the Companies Act are continuing offences.
2. Whether the absence of specific averments regarding the dates of annual general meetings and the "due time" for filing annual returns invalidates the cognizance of the offence.
3. Competence of the Assistant Registrar to file complaints under the Companies Act.
4. Maintainability of prosecution against directors or managing director without the company being proceeded against.
5. Impact of earlier proceedings being stopped and the petitioner released on the maintainability of subsequent proceedings on the same facts.

Issue-wise Detailed Analysis:

1. Continuing Offences:
The court held that the offences under sections 159 and 162(1) of the Companies Act are indeed continuing offences. The judgment referenced the Supreme Court case, *State of Bihar v. Deokaran Nenshi* (AIR 1973 SC 908), which clarified that a continuing offence is one that arises out of a failure to comply with a rule or requirement and incurs a penalty until compliance is achieved. Section 162 of the Companies Act specifies that the company and every officer in default shall be fined for every day the default continues, distinguishing it from offences that are completed once and for all.

2. Specific Averments:
The court found that the absence of specific averments regarding the dates of annual general meetings and the "due time" for filing annual returns rendered the cognizance of the offence invalid. The complaints merely stated that the annual general meeting ought to have been held by "due date" and the returns filed "in time," without specifying exact dates. This lack of specificity was deemed insufficient to sustain the prosecution.

3. Competence of the Assistant Registrar:
The court rejected the argument that the Assistant Registrar was incompetent to file complaints. The Companies Act defines "Registrar" to include Additional, Joint, Deputy, and Assistant Registrars. The court held that the Assistant Registrar is empowered to file complaints under the Act, as the duty of registering companies applies to all these positions, not just the Registrar.

4. Prosecution Without the Company:
The court agreed that the prosecution against directors or the managing director without the company being proceeded against is not maintainable. The liability of the directors is derivative of the company's liability. Hence, the company is a necessary party to the proceedings, and the prosecution should include the company as an accused.

5. Impact of Earlier Proceedings:
The court found that the earlier proceedings being stopped and the petitioner released did not bar subsequent proceedings on the same facts. The previous release was due to procedural non-compliance (violation of section 200 of the Code of Criminal Procedure) and not an acquittal or discharge on merits. Therefore, section 300(5) of the Code of Criminal Procedure, which pertains to double jeopardy, was not applicable.

Conclusion:
The court quashed the proceedings on the grounds that the complaints lacked specific averments regarding the dates of annual general meetings and the "due time" for filing returns, and the prosecution against directors without including the company was not maintainable. The competence of the Assistant Registrar to file complaints was upheld, and the offences were deemed continuing offences, thus not barred by limitation.