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TMI Blog1992 (7) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... Investment Ltd. against the Registrar of Companies, Delhi and Haryana, and the Registrar of Companies, West Bengal, under section 633(2) of the Companies Act. Petitioner No. 9 is an existing company within the meaning of the Companies Act, 1956, and is carrying on business in investment, financing and as an investment financing company, etc. One of the main objects of the said company is financing of industrial enterprises and investment in shares of the companies. The contention of the company is that section 370 of the Companies Act, 1956, which stipulates limits up to which loans can be granted by a body corporate to other corporate bodies had no application to intercorporate deposits. The contention of the petitioner is that though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of account of the petitioner-company were being kept at Virginia House, 37, Chowringhee, Calcutta, which was the registered office of the holding company, pursuant to a board resolution dated June 26, 1983, under section 209 of the said Act. The authorities under the Companies Act, in this case the Regional Director, Eastern Region, had an inspection of the books and records of the company carried out under the provisions of section 209A of the Act. Following such inspection, the Regional Director, Company Law Board, Calcutta, issued a letter, which was served on all the directors including petitioners Nos. 1 to 7 and the secretary of the company, petitioner No. 8 and another director, namely, Mr. F.R. Vevaina, who is the petitioner in C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any and, in fact, according to the Department, the company has contravened the provisions of sub-section (1) of section 370 of the Companies Act, 1956, by not passing any special resolution of its members and by not obtaining the appropriate approval of the Central Government for giving such loans to bodies corporate in excess of the limits prescribed under section 370(1) of the Act. It is in the light of the above facts that petitioners Nos. 1 to 8 and the company have moved the present petition under section 633(2) of the Companies Act praying among other things that the petitioners and the company be excused from the default on the part of the petitioners, if any, as the petitioners acted honestly, reasonably and bona fide at all point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tain preliminary objections. The respondents in their reply have disclosed that one of the main contentions of the Department is that section 370(2)( a )( v ) does not apply to the case of the company, petitioner No. 9., since it is not the sole and the dominant object in the memorandum of association of the company to finance industrial enterprises. According to the Department the said exemption is not applicable to companies which are engaged in the business of general financing. It is contended on behalf of the Department in reply to para 19 that the petitioners have contravened the provisions of section 370 of the Companies Act, 1956, and that they are not covered by the exemption under section 370(2)( a )( v ). They have also conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. In these circumstances, it cannot be reasonably contended that the petitioners' apprehension of prosecution being launched is baseless. Therefore, this contention of the Department is not acceptable because, after initiation of the prosecution, an application under section 633(2) of the Companies Act cannot lie and this court will have no jurisdiction to allow such an application. In that event, an application under section 633(1) only is contemplated. I find support for this view from an earlier pronouncement of this court in the case of Sri Krishna Parshad v. Registrar of Companies, Delhi and Haryana [1978] 48 Comp Cas 397. Counsel for the Department has not pointed out any ruling to the contrary. For the purposes of deciding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereby relieved from their liability in any action that may be brought by the Company Law Board or any other authority under the Companies Act subject, however, to the condition that the said petitioners will render full co-operation to the authorities in their investigation prior to the initiation of action against the company. As regards the company, I am of the view that the protection under section 633 of the Companies Act is not available to the company and is confined only to the officer/officers of the company. For that reason, the petition to the extent it seeks relief in favour of the company is dismissed. The petition is disposed of in the above terms with liberty to the parties to seek any further direction. - - TaxTMI - TMIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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