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TMI Blog1987 (9) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... ively, in the trial court. The other person arraigned in the trial court as accused No. 3 was Sri M. Madhusudhan, another director of the said company. Chandra Spinning and Weaving Mills P. Ltd., Sarvashree M. Krishnamoorthy, M. Madhusudhan and M. Nagaraj would be hereinafter referred to as "the company", A-2, A-3 and A-4, respectively. I have heard learned counsel for the company, Sri C.K. Narayana Rao and S.S. Naganand, learned counsel for A-2 and A-4 and Sri C. Shivappa, learned Senior Standing Counsel for the Central Government, for the Registrar of Companies in Karnataka, Bangalore, the respondent. I have examined the record and proceedings in C.C. No. 79 of 1982 and have read the authorities cited at the Bar. The material facts relevant and necessary to dispose of the revision petition lie in a short compass. Briefly stated, they are as under: The company is a private limited company. It was incorporated in the year 1954 by one Sri D. R. Madhavakrishnaiah. A-2, A-3 and A-4 are his sons. The shareholders of the company at the time of its incorporation and, thereafter, were the four sons and four daughters of Sri D. R. Madhavakrishnaiah. The company consists of the members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was read over and explained to each of them. The offence alleged was tried and evidence was recorded. Before recording of the evidence, the company, represented by A-2, and A-2 and A-4 filed an application under section 633(1) of the Act to relieve them wholly of their liabilities on the grounds stated therein. The respondent on being noticed of the application, filed his objections, opposing the grant of the prayer. The respondent, to substantiate the offence alleged, adduced oral as well as documentary evidence. Gopalakrishna, working in the office of the respondent and in charge of the files relating to the company, gave evidence as PW-1. The documentary evidence, admitted for the respondent in the trial court, consists of the following documents : Exhibit P-1 is the copy of the incorporation certificate issued in favour of the company by the Registrar of Joint Stock Companies in Mysore, on August 5, 1954. Exhibit P-2 is the annual return of the company for the year ending December 30, 1980, showing the names of A-2 to A-4 as its directors, their addresses and particulars of the dates on which they were appointed as directors. Exhibit P-3 is the copy of the notice for defaul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny, A-2 and A-4, during their statutory examination, referred to the application filed by them under section 633(1) of the Act, whereas A-3 stated that he would file his statement separately. The company and A-2 to A-4 in terms admitted during the course of their statutory examination, the offence alleged against them. A-3 in support of his defence, filed his statement stating that he could not be held guilty of the offence alleged. A-3 entered the witness-box and gave evidence as D. W-1. It was in his evidence that exhibit P-15 came to be marked. A-2 went to the witness-box and gave evidence in support of his defence. In all, 13 documents were admitted in evidence for A-2 and A-4 and were marked as exhibits D-1 to D-13 to which I would advert in the course of this order if and when necessary. The learned Presiding Officer, on consideration of the evidence, held that the offence alleged against the company and A-2 to A-4 was a continuing offence and that, therefore, the prosecution was not barred by time. Placing reliance on the decision of the Supreme Court in State of Bombay v. Bandhan Ram Bhandani [1961] 31 Comp. Cas. 1; AIR 1961 SC 186, he held that A-2 to A-4 knowingly and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , manager or secretary of the company, or if there be none of these, by a director of the company, together with three copies of all documents which are required by this Act to be annexed or attached to such balance-sheet or profit and loss account: Provided that in the case of a private company, copies of the balance-sheet and copies of the profit and loss account shall be filed with the Registrar separately:" The other relevant provision, for the present purpose, is section 220(3) of the Act. It reads thus : "If default is made in complying with the requirements of sub-sections (1) and (2), the company, and every officer of the company who is in default, shall be liable to the like punishment as is provided by section 162 for a default in complying with the provisions of sections 159,160 or 161". Section 220(3) of the Act provides that if default is made in complying with the requirements of sub-sections (1) and (2), the company and every officer of the company who is in default shall be liable to the like punish-ment as is provided by section 162 for default in complying with the provisions of section 159, 160 or 161. Section 159 deals with the annual return to be made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd prosecution to make every endeavour to ensure the detection and punishment of the crime quickly. Section 468 of the Code provides that no court shall take cognizance of an offence, after the expiry of the period of limitation, except as otherwise provided elsewhere in the Code, a reference to which is unnecessary, of the categories specified therein. The question as to whether the prosecution launched against the company and A-2 to A-4 on January 25, 1982, which is obviously beyond the prescribed period of limitation is barred or not would depend upon the decision on the question as to whether the default alleged is a continuing one or not. If it is held that it is not a continuing default, then obviously the prosecution initiated on January 25, 1982, beyond the period prescribed would be barred by limitation. In that event, taking cognizance of the offence would be illegal and the trial proceeding on the basis of such illegal order would be vitiated. If it is held otherwise, then section 472 of the Code which provides that in the case of continuing offence, a fresh period of limitation shall begin to run at every moment of the time during which the offence continues, would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 296): "If once a cause of action arises, and the acts complained of are continuously repeated, the cause of action continues and goes on de die in diem. It seems to me that there was a connection in the present case between the series of acts before and after the action was brought; they were repeated in succession, and became a continuing cause of action. They were an assertion of the same claim-namely, a claim to continue to pour sewage into the stream-and a continuance of the same alleged right. In my opinion, there was here a continuing cause of action within the meaning of the rule". The statement of law made by Lord Lindley and Lord Justice A. L. Smith in Hole's case [1894] 1 Ch 293 has received approval by the Supreme Court in CWT v. Suresh Seth [1981] 129 ITR 328. The distinction between a continuing offence and an offence which is committed once and for all is clearly brought out in the decision of the High Court of Judicature at Bombay in State v. A. H. Bhiwandiwalla, AIR 1955 Bom 161. In that case, the respondent had been charged with two offences, namely, (a) failure to apply for registration of his factory and to give notice of occupation; and (b) running the facto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said injury". In State of Bihar v. Deokaran Nenshi, AIR 1973 SC 908, the respondents who were owners of a stone quarry in greater Bombay, were required to forward certain annual returns in respect of the preceding year, on or before January 21, in each year. Failure to forward the returns as required is punishable under section 66 of the Mines Act, 1952. On the failure of the respondents to furnish the returns by the due date, a complaint had been lodged against them in the court. One of the contentions raised by the respondents was that the complaint was barred by limitation under section 79 of the Mines Act, 1952, which provides that no court shall take cognizance of the offence under that Act unless the complaint was filed within six months of the date of the offence. The Explanation to section 79 provides that if the offence in question is a continuing offence, the period of limitation shall be computed with reference to every part of the time during which the said offence continued. The Supreme Court held that the default which occurred on January 21 of the relevant year, was complete when the owner failed to furnish the annual returns on that date. Since the regulation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent of that liability is ordinarily measured according to the law in force at the time of such completion. In the case of acts amounting to crimes, the punishment to be imposed cannot be enhanced at all under our Constitution by any subsequent legislation by reason of article 20(1) of the Constitution which declares that no person shall be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence. In other cases, however, even though the liability may be enhanced it can only be done by a subsequent law (of course subject to the Constitution) which either by express words or by necessary implication provides for such enhancement. In the instant case, the contention is that the wrong or the default in question has been altered into a continuing wrong or default giving rise to a liability de die in diem, that is, from day to day. The distinctive nature of a continuing wrong is that the law that is violated makes the wrongdoer continuously liable for penalty. A wrong or default which is complete but whose effect may continue to be felt even after its completion is, however, not a continuing wrong or d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of six months would be barred by time. It was brought to the notice of the court by learned counsel for the company and A-2 and A-4 that this court in Criminal Revision Petition No. 549 of 1986 (disposed of on November 7, 1986), has held that the default in complying with section 220(1) of the Act is not a continuing default. It was submitted that this court in the said criminal revision petition affirmed the view taken by the trial court. The record and proceedings in the said matter were sent for and perused. The revision petition had been preferred against the order dated September 7, 1985, made by the Special Court for Economic Offences, Bangalore District, Bangalore, in C.C. No. 115 of 1985, under sections 397 and 482 of the Code, by the Registrar of Companies, Karnataka, dismissing the complaint on the ground that the complaint was barred by time, holding that the default in complying with section 220(1) of the Act was not a continuing offence. Holding that there was no error committed by the court below, this court rejected the revision petition. I now refer to the three decisions of the Calcutta High Court referred to by learned counsel for the company and A-2 and A-4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a failure to obey or comply with a rule or its requirement and which involves a penalty, the liability for which continues until the rule or its requirement is obeyed or complied with'. Section 159 of the Companies Act does not impose any liability which so continues. The offence on the breach thereof is complete with the failure to furnish the return in the manner or within the time stipulated. Such an offence is committed once and for all as and when one commits the default. That provision does not contemplate that the obligation to submit such returns continues from day-to-day until the return is actually submitted nor does it provide that continuance of business without filing of such return is prohibited so that non-fulfillment of a continuing obligation or continuing of business without filing of such returns becomes a continuing offence. When section 162 of the Companies Act prescribed the penalty of fine 'which may extend to fifty rupees for every day during which the default continues', it merely prescribed the measure of penalty-such a prescription being made with the object of enforcing strict compliance with the requirement of section 159 under the threat of enhanced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not imprisonment or fine up to a limit but a fine which may extend to Rs. 50 for every day during which the default continues. Such a provision is absent in the statutes dealt with in most of the above decisions. Section 162 makes it clear that the default or offence is not something which takes place once and for all but is one which continues. That is why, instead of prescribing a fine up to a limit as punishment as in certain other statutes, the Legislature prescribed punishment of fine for every day during which the default continues. The idea implicit in this provision is that the offence is a continuing offence notwithstanding the fact that for the performance of the particular act, a time limit has been prescribed. This has to be taken in the light of the provisions in section 611(2) of the Act which enables filing of documents with the Registrar after the time prescribed on payment of additional fees as prescribed therein. Section 629A of the Act also makes a distinction between the offences of the two types. That is a residuary provision prescribing punishment. The punishment prescribed is a fine which may extend to Rs. 500 and where the contravention is a continuing one, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... la High Court. We have now to consider whether the contravention of section 220(1) of the Act is a continuing contravention attracting section 472 of the Code or not. The determination whether a given crime is a continuous offence is a matter of statutory interpretation. But the judicial consensus is that the doctrine of continuing offences should be applied only in limited circumstances, since the doctrine effectively extends the statute of limitations beyond its stated term. A particular contravention or offence should not be deemed to be a continuous one unless the explicit language of the substantive criminal statute compels such a conclusion. The Supreme Court in CWT v. Suresh Seth [1981] 129 ITR 328 referred to earlier, has held that the court should not be eager to hold that an act or omission is a continuing wrong or default unless there are words in the statute concerned which make out that such was the intention of the Legislature. To the same effect is the dictum laid down by the Supreme Court in Bhagirath Kanoria's case, AIR 1984 SC 1688; [1986] 68 FJR 98 referred to earlier. The balance-sheet of the company is a document and not an account in the strict sense. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t within three months from November 5, 1984. This then is the provision in the Act which seeks to ensure compliance with the provisions of the Act contravened, to achieve the fundamental principle and secure compliance with the principal safeguard. It was urged on behalf of the respondent that since section 162(1) of the Act imposes penalty at the rate of Rs. 50 for every day during which the default continues, it must be held that the default in complying with the provisions in section 220(1) of the Act is a continuing default. Having examined the language of sections 220(1) and 162(1) of the Act, the nature of the default and the purpose for which section 220(1) of the Act was enacted and the purpose which the said provision is intended to be achieved, I am unable to hold that the default alleged against the company and A-2 to A-4, for which they were tried, is a continuing default attracting section 472 of the Code. The reasons are these: A continuing cause of action in civil law is a cause of action which arises from the repetition of acts or omissions of the same kind as that for which the action was brought. Similarly, it is the very essence of a continuing wrong that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpliance with the requirement of section 220(1) of the Act under the threat of enhanced penalty and getting relief from such penalty on enhancing scale by early submission of copies even after the default. However, that does not make or render the initial default a continuing one. It is impossible to hold that the default is repeated from day to day after the initial default. There is no express provision in section 162, the penal provision, as we find in sections 234(4)(a) and 598 of the Act. In the absence of such a provision, it would be changing the language of section 162 to infer that the offence punishable under it is a continuing offence. Having carefully examined the language of section 220(1) which creates an obligation and the purpose which is intended to be achieved by constituting the omission or default as an offence, I hold that the default of section 220(1) is not a continuing offence. I respectfully agree with the reasons given by the Calcutta High Court in National Cotton Mills' case [1984] 56 Comp. Cas. 222. The principal reason of the Kerala High Court in taking the view that the offence under section 220(3) of the Act is a continuing offence is the punishme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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