9911796707
TMI Blog1991 (10) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... cial years 1980, 1981 and 1982, the investments made by the company in the shares of other bodies corporate, was in excess of the 30 per cent, limit prescribed under section 372(2) and the approval of the Central Government and the required resolution under section 372(4) of the Act had not been obtained. After issue of show-cause notices, the complaint was filed. During the trial, on behalf of the prosecution, the Inspecting Officer was examined as PW-1 and a Senior Technical Assistant in the office of the Registrar of Companies, Madras, was examined as PW-2. The printed balance-sheets for the years 1980, 1981 and 1982 were marked as exhibits P-1 to P-3 respectively. The letter dated August 24, 1984, from the Regional Director, Company Law Board, Madras, to the Registrar of Companies, Madras, was marked as exhibit P-4 and the copy of the show-cause notice sent to the company and its directors as exhibit P-5 and the reply, covering letter, further replies and covering letters as exhibits P-6 to P-10, and the printed copy of memorandum and articles of association of the company as exhibit P-11. The respondents, when questioned, denied having committed the offence and claimed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es continued to be the main object and exhibits P-1 to P-3 and also the other records of the company proved that this was so. Learned counsel further urged that income from investments was not the real test and that the real test would only be the extent of investment made. Learned counsel, therefore, justified the acquittal. The question that arises for consideration is whether the acquittal of the respondents by the learned Magistrate, can be sustained. It is seen that respondents Nos. 4 and 5 have since died and the charge abates as against respondents Nos. 4 and 5. This appeal is dismissed against them on the above ground. Taking up the first point, namely, limitation, we find that the offence under section 372 read with section 374 of the Act is punishable only with fine and as such, under section 468(2)( a ), the period of limitation is six months. The relevant part of section 469(1), Criminal Procedure Code, relating to the commencement of the period of limitation is as follows: "469. Commencement of the period of limitation. (1) The period of limitation, in relation to an offender, shall commence ... ( b ) where the commission of the offence was not known to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hibit P-3 on May 30, 1983. According to the appellant, limitation would not start running from these dates for each of the offences, since the Registrar of Companies did not have knowledge about the commission of the offence. The appellant cannot contend that, in spite of the receipt of exhibits P-1 to P-3, the Registrar of Companies had no knowledge about the commission of the offence and that it was only after the report of PW-1 was received, that knowledge was obtained. It is not disputed that the contents in exhibits P-1 to P-3 are true and correct and that they were received on the dates stated above. While so, it cannot be urged that the Registrar of Companies which definition in section 2(40) of the Act means an additional or a Joint or a Deputy or an Assistant Registrar performing the duty of registering companies under the Act had no knowledge of the contents of exhibits P-1 to P-3 or of the offence. The Registrar of Companies is deemed to have knowledge of the contents of exhibits P-1 to P-3 and of the offence on the day when they are received by him. After receiving the balance-sheets, it is not open to the Registrar to keep these balance sheets in cold storage, keep h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n defined in the Act, though a description of an investment company is found in sub-section (10) of section 372 of the Act. Sub-section (10) is as follows: "(10) Provided that in the case of a company whose principal business is the acquisition of shares, stocks, debentures and other securities (hereinafter in this section referred to as 'an investment company')". An investment company is, therefore, a company whose principal business is the acquisition of shares, stocks, debentures or other securities. It is clear that the income derived from the business is not the criteria. The test would rather be, as to what the principal business of the company is. A balance-sheet should show what the principal business of the company is. In the instant case, exhibit P-11 is the printed memorandum and articles of association. The object of the company is shown as "to carry on the business of an investment trust and to buy, underwrite and invest in and acquire and hold shares stocks, debentures, debenture stocks, bonds, applications and securities issued or guaranteed by any company constituted for carrying on business", and so on. Sub-clauses (2) and (5) also make it clear that the obje ..... X X X X Extracts X X X X X X X X Extracts X X X X
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