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TMI Blog1985 (12) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... f the companies and the directors that the prosecution cannot be launched against all the directors for failure to comply with any provision of the Act but should be filed only against the company and those directors who are in default as defined under the Act, and since the complainant has mechanically stated that "the companies and the directors are under statutory obligation to file the statutory returns and since they failed to file the returns, all of them are liable", the complaints are not maintainable and the prosecution cannot be launched. The learned trial Magistrate upheld the objection and dismissed all the complaints as such. Hence, these revisions by the Assistant Registrar of Companies. Section 159 of the Act deals with submission of annual return by the company having a share capital. Sub-section (1) of this section provides that every company having a share capital shall, within sixty days from the day on which each of the annual general meetings is held, prepare and file with the Registrar a return containing the particulars specified in Part I of Schedule V to the Act. Under section 220 of the Act, three copies of the balance-sheet and profit and loss account h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directors are under a statutory obligation to file with the complainant an annual return.' This statutory obligation is imposed under sections 159 and 162 of the Companies Act. If all the directors are liable for every default, then the expression 'every officer who is in default' becomes redundant and meaningless." In the above case, the complaint did not contain a specific plea as to the officers who are in default apart from the company. The Calcutta High Court held that the complaint was bad. Further, the company in that case was not an accused and, therefore, the court held that the company was a necessary party and that the prosecution should be conducted only in the presence of the company as accused and that only if the company was convicted, the other officers in default can be convicted. On both the above said grounds, the court quashed the prosecution. In the instant case, since in none of the complaints the complainant has fixed the liability on any director as officer in default but has simply stated that all the directors of the company are liable for non-compliance of the requirements under the Act, the trial Magistrate, following the above decision of the Calcutta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no need to include the term "officer in default" alone should be liable, in the Act and that is why the Calcutta High Court has pointed out that if all the directors are liable for every default, then the expression "every officer who is in default" becomes redundant and meaningless. In the decision in Arcot Citizen Bank, In re [1957] 27 Comp. Cas. 550 (Mad.), for failure of laying of balance-sheet before the meeting, the company and its directors were sought to be prosecuted. Against the conviction, the directors filed a revision to this court contending that they cannot be held to have knowingly and wilfully defaulted. This court dismissed the revision and while considering the scope of the word "knowingly and wilfully", it has quoted with approval the following passage of the Calcutta High Court in Bhagirath Chandra Das v. Emperor [1947] 17 Comp. Cas. 93 : "If directors, who are responsible for the management of a company and who presumably know the duties imposed upon them by law, make no attempt to see that those duties are carried out, there is justification for holding, in my opinion, that they have wilfully and knowingly permitted the company to fail to carry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nviction under the sections involved in the present cases of ' an officer of the company ' may be sustained, the only thing to prove is that that particular officer knowingly and wilfully authorised or permitted these defaults. The offence is complete if the officer of the company knew of the defaults and permitted the same." (p. 125) Learned counsel for the petitioner also relied on the decision in Shyam Sundar Jalan v. State [1977] 47 Comp. Cas. 61 (Cal.) in support of his contention that whether a particular director is an officer in default or not is a matter of evidence and the complaint cannot be thrown out at the threshold. In that case, prosecution was launched under the Income-tax Act against the directors of a company for failure to deduct income-tax on the salary of the employees, for failure to submit the returns in time, and for other violations of the provisions of the Income-tax Act. It was contended, that under the Income-tax Act, the principal officer designated is responsible for compliance of the requirements under the various provisions of the Income-tax Act and, therefore, all the directors cannot be prosecuted. It was held that it was a matter of evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble on evidence. In this connection, the decision in V. M. Thomas v. Registrar of Companies [1980] 50 Comp. Cas. 247 (Ker.) relied on by the learned counsel for the respondents herein requires mention. In that case, prosecution was launched against the company, its managing director and another director. The company and its managing director pleaded guilty, but the other director disputed his liability. The other director was also found guilty and convicted. He preferred a revision to the High Court. The Kerala High Court in that case found that a notice was sent to the director by the Registrar of Companies but it was returned unserved. Taking that fact into consideration, the Kerala High Court held that it cannot be said that in spite of the petitioner before it having been cautioned in time, the default took place and, therefore, he had knowingly and wilfully authorised or permitted the default or non-compliance. From this observation, conversely it follows, that if notice is served and if no reply is received, it must be held that that officer has knowingly committed default. In the instant case, admittedly the company is the first accused and notices have been served on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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