9911796707
TMI Blog1958 (4) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... in which the unexploited value of five cinematographic pictures produced by the company should be determined for the purpose of computing annual profits or losses of the company. The case of the petitioner is that until the value of these unexploited pictures was finally determined, it would not be possible for the auditors to prepare a true and fair balance-sheet and profit and loss account except on a hypothetical basis. It appears, therefore, that there is considerable force in the contention of the petitioners that it was due to this difference of views between the company and the Income-tax authorities that the balance-sheet and the profit and loss account for the year 1955-56 could not be prepared in time to enable the petitioners to file the same with the Registrar of Companies as required by the Act. It may be stated that it is not the case of the Registrar, who opposes this petition, that this omission to file the balance-sheet and the profit and loss account was due to any deliberate attempt on the part of the petitioners to delay in preparing the profit and loss account and the balance-sheet. On behalf of the Registrar it was conceded that no dishonesty could be imputed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese words, therefore, mean that it would not be this court which can grant relief under sub-section (1) but the court before whom the proceeding has commenced and is pending. Subsection (2) , on the other hand, creates a fiction and provides that in respect of an apprehended claim this court shall have the same power to grant relief as it would have had under this section if it had been the court before which proceedings for negligence, default, breach of duty, misfeasance or breach of trust had been brought. The question then is what meaning should be attached to the word "claim" occurring in sub-section (2) and whether the word "claim" would also include proceedings such as penal proceedings under section 162 read with section 220 of the Act. It is urged that the word "claim" would prima facie mean a civil claim, such as a claim for damages which may be made by a company against a defaulting director or an officer of the company or where the company is in liquidation by the liquidator or a creditor or a contributory, and not a penal proceeding contemplated by sections such as section 162. The dictionary meaning of the word "claim" is undoubtedly an assertion of a right to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... negligence, default etc. had been brought. It seems to me that if the word "claim" was intended to mean only a civil demand such as damages, sub-section (2) would not have contained the words "under this section" which must also mean relief against proceedings described in sub-section (1). Besides, misfeasance is a civil remedy and yet sub-section (1) speaks of a proceeding connected with misfeasance and even breach of trust. It seems, therefore, that there is no clear demarcation made in this section between proceedings of a penal nature and a civil remedy by way of a claim provided in sub-section (2) of this section. Inasmuch as a proceeding in connection with misfeasance is included in sub-section (1), the word "proceeding" therein used cannot be said to mean proceeding of a penal nature only but would include proceedings also of a civil nature. As I have pointed out section 633 is the exact replica of section 372 of the English Act of 1929. That section came up for consideration in at least two decisions pointed out to me. In Barry and Staines Linoleum Ltd., In re [1934] 1 Ch. 227, 232; 4 Comp. Cas. 196 , 247 , a director failed to obtain his qualification shares within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a "proceeding" and a "claim" appearing in section 372 as is sought to be urged. In fact he held that a proceeding would include a civil proceeding under the misfeasance section as it would include proceedings for penalties in both of which he held that the court would have the jurisdiction to grant relief under sub-section (2) although no proceeding has commenced or is pending. The only distinction that Maugham J. seems to make is between a proceeding for a fine and a penalty and a proceeding where the company might make a claim with regard to something which the director may be liable to pay to the company in which case he thought the company court would not readily grant the relief without knowing the wishes of the shareholders. This section again came up for consideration by Crossman J. in Gilt Edge Safety Glass Ltd., In re [1940] 1 Ch. 495, 501; 10 Comp. Cas. 244 , where although the case fell under sub-section (1) of section 372, the learned Judge, on the decision of Maugham J. being cited before him, observed as follows : "I think that it follows from the decision of Maugham, J., in Barry and Staines Linoleum, Ltd., In re [1934] 4 Comp. Cas. 196 ; [1934] 1 Ch. 227, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and loss account for the year 1955-56 and is also restricted, as the learned counsel for the petitioners stated before me, for relief against fine or penalty arising under section 220 in respect of the balance sheet and the profit and loss account for the year 1955-56 only. As already observed, there being a conflict and a radical conflict, of view between the company on the one hand and the Income-tax authorities on the other hand with regard to the manner in which the unexploited pictures produced by the company should be valued, it would not have been possible for the directors to prepare a fair and true balance-sheet giving exact information with regard to the profit made in respect of these pictures to the shareholders. At best, such a balance-sheet would be hypothetical. It would not have been possible also for the accountants of the company to give an exact and a precise closing and opening stock. Likewise it would not be possible for the company to lay before the shareholders a true and correct picture of the state of affairs of the company in respect of these five pictures. I understand, however, from the learned counsel for the petitioners that the assessment orders are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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