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TMI Blog2001 (12) TMI 816X X X X Extracts X X X X X X X X Extracts X X X X ..... and 31-3-1996 the company have under the guise of sheep units and through other schemes invited and accepted deposits from the public and the amounts outstanding under the above heads in the balance sheet as at 31-3-1995 and 31-3-1996 are Rs. 10.51 crores and Rs. 10.44 crores respectively. It is the case of the respondent-complainant that the aforesaid amounts were accepted by the said company without complying the requirements of advertisement limits as stipulated under section 58A(1) and (2). The company did not comply with the Rules of the Companies (Acceptance of Deposits) Rules, 1975 which stipulate the requirements of maintenance of liquid assets, the limits up to which the deposits can be invited and accepted, filing of text of advertisement/statement in lieu of advertisement, maintenance of deposits and filing of return of deposits etc. 4. The first respondent-Registrar of the Companies issued a show-cause notice to the petitioners on 17-11-1997 as to why legal action should not be initiated for the said contravention. The first petitioner herein sent a reply stating that the proceedings under the Act have to come to an end consequent upon the orders of the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he circumstances, this court at this stage does not propose to express any opinion whatsoever. No relief could be granted to the petitioners on this count. The complaint itself cannot be quashed on that ground. The issue is left open. 8. Sri C. Padmanabha Reddy, the learned senior counsel, however, further contends that even if at all under section 58A(6) the company must be punished and then every officer of the company who is in default shall be liable to be punished, but in the present case the complainant has not made the company as an accused and in the absence of impleadment of the company as one of the accused, the officers alone are not liable for any punishment for the offence if any committed by the company by the respondent-complainant. 9. In order to appreciate the said contention, it is required to notice the averment made in the complaint, which is to the following effect : "That the complainant herein respectfully submits that by an order dated 24-7-1997 made in C.P. No. 83 of 1993, the Hon ble High Court of AP, Hyderabad was pleased to appoint the Official Liquidator attached to the High Court of AP, Hyderabad as a provisional Liquidator of the above named ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an fifty thousand rupees; ( b )every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to five years and shall also be liable to fine." 12. On a true and fair construction of sub-section (6) of section 58A would make it clear that the company and every officer of the company shall be punishable where a company accepts or invites, or allows or causes any other person to accept or invite on its behalf, any deposit in excess of the limits prescribed under sub-section (1) of section 58A or in contravention of the manner or condition prescribed under that sub-section or in contravention of the provisions of sub-section (2), as the case may be. Sub-section (6)( a ) declares that the company shall be punishable, whereas sub-section (6)( b ) declares that every officer of the company who is in default shall be punishable. We are not concerned with the details of the punishment to be imposed upon the company and every officer of the company who is in default. Both the company and every officer of the company are liable to be punished. It is not as if the company alone is liable to be punished. The language of section 58A(6)( a ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be found guilty and punished. The following observations made by the Court clearly bring out the view of the Court (Para 3): It was urged that the two respondents were in charge of, and were responsible to, the company for the conduct of the business of the company and, consequently they must be held responsible for the sale and for thus contravening the provisions of clause 5 of the Iron and Steel (Control) Order. This argument cannot be accepted, because it ignores the first condition for the applicability of section 10 to the effect that the person contravening the order must be a company itself. In the present case, there is no finding either by the Magistrate or by the High Court that the sale in contravention of clause 5 of the Iron Steel (Control) Order was made by the Company. In fact, the Company was not charged with the offence at all. The liability of the persons in charge of the Company only arises when the contravention is by the Company itself. Since, in this case, there is no evidence and no finding that the Company contravened clause 5 of the Iron Steel (Control) Order the two respondents could not be held responsible. The actual contravention w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rase would embroil the persons mentioned in the first category within the tentacles of the offence on a part with the offending company. Similarly the words shall also in sub-section (2) are capable of bringing the third category persons additionally within the dragnet of the offence on an equal par. The effect of reading section 141 is that when the company is the drawer of the cheque such company is the principal offender under section 138 and the remaining persons are made offenders by virtue of the legal fiction created by the Legislature as per the section. Hence the actual offence should have been committed by the company, and then alone the other two categories of persons can also become liable for the offence. If the offence was committed by a company it can be punished only if the company is prosecuted. But instead of prosecuting the company if a payee opts to prosecute only the persons falling within the second or third category the payee can succeed in the case only if he succeeds in showing that the offence was actually committed by the company. In such a prosecution the accused can show that the company has not committed the offence, though such company is not made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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