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TMI Blog1990 (10) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... July 29, 1968, whereby 65 per cent. of the amount due to the creditors was to be paid within a period of two years and for the balance 35 per cent. shares of the company were to be allotted. The scheme also divested the shareholders of their right to vote etc. A new board of directors was appointed by the court to supervise the affairs of the company and make payment to the creditors. In C.A. No. 516 of 1973, vide order dated February 7, 1974, the court superseded the previous board of directors, as was appointed under the scheme, and in its place, appointed the petitioner, as the chairman of the board of directors. According to the petitioner, he continued to discharge the functions of the chairman till such time when the company was ordered to be wound up, vide order dated February 3, 1982, pursuant to the report of the chairman, as, the court was satisfied that the scheme, as sanctioned under section 391 of the Act could not be worked out, with or without modification. The official liquidator attached to this court was appointed as the liquidator of the company. It is further alleged that the Registrar of Companies was in full knowledge of all the proceedings. The schem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, this court has jurisdiction to relieve the petitioner from the liabilities relating to the aforesaid defaults, in view of the fact that the respondent had already filed complaints against the petitioner, prior to the filing of the pre sent application ; (2)Whether the offences for which the criminal complaints have been filed against the petitioner are continuing offences, and (3)Whether, under the facts and circumstances of the present case, cognizance of the offences for which the complaints have been filed against the petitioner has been taken by the learned Additional Chief Metropolitan Magistrate, Delhi. Identical questions arose in Company Petition No. 133 of 1989, S. P. Punj v. Registrar of Companies, [1991] 71 Comp. Cas. 509 (Delhi). In that case, the petitioners filed a petition under section 633(2) of the Act for being relieved from prosecution for their alleged liability for non-filing of returns, under rule 10 of the Companies (Acceptance of Deposits) Rules, 1975. The petition was filed after launching of the prosecutions by the Registrar of Companies. Vide my judgment dated September 11, 1990, I allowed that petition, and relieved the petitioners therein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent petitioner, are continuing ones or not. In CWT v. Suresh Seth [1981] 129 ITR 328, their Lordships of the Supreme Court were considering the question whether the default committed under section 18(1)( a ) of the Wealth-tax Act, 1957, was a single default or a continuing one. The facts, in that case, were that the assessee filed his wealth-tax returns for the assessment years 1964-65 and 1965-66, on March 18, 1971, while he was required, by section 14(1) of the Wealth-tax Act, to file the same, for the year 1964-65, on or before June 30, 1964, and the return, for the assessment year 1965-66, on or before June 30, 1965. The Supreme Court held (at pages 338, 339) : "Section 18 of the Act, with which we are concerned in this case, does not require the assessee to file a return during every month after the last day to file it is over. Non-performance of any of the acts mentioned in section 18(1)( a ) of the Act gives rise to a single default and to a single penalty, the measure of which, however, is geared up to the time lag between the last date on which the return has to be filed and the date on which it is filed. The default, if any committed, is committed on the last da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking the default in question a continuing one. The principle enunciated therein applies on all fours to the case on hand. The failure to repay the excess deposits on or before April 1, 1975, is a single default, which gets completed on the expiry of the aforesaid period and cannot be said to be a continuing one." Following the dictum of the Supreme Court in CWT v. Suresh Seth [1981] 129 ITR 328, and relying upon the judgment in Asst. Registrar of Companies, Madras v. R. Narayanaswamy [1985] 57 Comp. Cas. 787 (Mad.), I, in my judgment in S. P. Punj [1991] 71 Comp. Cas. 509 (Delhi), held that the principles of law, enumerated above, apply on all fours to the default under rule 11 of the Rules. The words in rule 11 that the fine may extend to Rs. 50 for every day after the first indicate only the multiplier to be adopted in determining the quantity of penalty, and did not have the effect of making the default in question a continuing one. The principles of law enumerated above apply on all fours to the defaults/offences, allegedly committed by the petitioner in the present case. The provisions thereby extending the fine for every day after the first indicate only the mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and in the circumstances of the case that the delay has been properly explained or that it is necessary so to do in the interests of justice." In Hindustan Wire and Metal Products [1983] 54 Comp. Cas. 104 (Cal), the facts were that a petition under section 633 of the Act for relieving the petitioner as a consequence of default and violation of section 295 of the Act in granting a loan to another company was filed on June 28, 1980. The Registrar of Companies filed a complaint before the Chief Metropolitan Magistrate, Calcutta, on June 12, 1980. An interim stay was granted by the court, on July 2, 1980, whereby the Registrar of Companies was personally restrained from commencing any prosecution against the petitioners for the default and the delay was condoned by the Chief Metropolitan Magistrate, on November 4, 1980, ex parte . The fact remains that the complaint was filed on June 12, 1980, i.e. , 16 days prior to the filing of the petition under section 633 of the Act. The following points arose (1) whether the application under section 633 of the Act was maintainable after the complaint had been filed and cognizance of the same having been taken by the Magistrate, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he period of limitation. It means that, in the facts and circumstances of the present case, unless the bar of limitation was lifted by condonation of delay by an order of the Magistrate made under section 473 of the Criminal Procedure Code, it cannot be said that cognizance of an offence has been taken on the mere filing of the complaint against the accused. Coming to the merits of the present case, it is not disputed that the petitioner was appointed chairman by this court, under a scheme of arrangement. Vide order dated July 29, 1968, in C.A. No. 128 of 1968, it was directed that the shareholders of the company would not exercise any voting and any other right until and unless unsecured creditors had been paid 65% of their dues in accordance with the terms of the aforesaid scheme of arrangement, and then until the shares have been allotted to the creditors under the scheme. It is also not disputed that before 60 per cent. could be paid to the creditors as per the scheme of arrangement, the company went into liquidation. The company was wound up on the basis of the report submitted by the chairman. Thus, by the order of the court, the rights of the shareholders of the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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