9911796707
TMI Blog2008 (1) TMI 607X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said Company at the end of every financial year duly records the true and fair profit and loss position of the Company for such period. On instructions of Ministry of Corporate Affairs, the office of Regional Director under section 209A of the Companies Act, 1956 had ordered inspection of the books of account and other records etc. of the Company. The Company duly provided free and fair inspection of the books of account and other records to the Regional Director. After completion of the said inspection, the Regional Director on 12-9-2007 issued a letter to the Company alleging that various irregularities of the violation of the provisions of the Act were noticed and the Company was requested to furnish explanation/reply within 10 days as to why proceedings should not be launched against it for the alleged violations of the said Act. The Company, vide its letter dated 25-9-2007 replied to all queries raised by the Regional Director where from contention of the petitioners, that they have acted honestly, reasonably, bona fide and diligently and had not violated any of the provisions of law. 3. It is also the case of the petitioners that since the Company had issued adequate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on required to be served upon any person shall be in Form No. 6, and shall, unless otherwise ordered by Court or provided by the Rules, be served not less than 14 days before the date of hearing. He has, therefore, submitted that having regard to the statutory intent and the mandatory intention manifested by the use of expression "no Court shall" no ex parte ad interim relief can be granted by this Court unless this Court by notice served in the manner prescribed under rule 27, grants opportunity to the Registrar of Companies to show cause as to why relief should not be granted. On this ground alone, ad interim relief deserves to be vacated forthwith. 7. Mr. Rawal in support of his submissions relied on the decision of the Apex Court in the case of Rabindra Chamaria v. Registrar of Companies AIR 1992 SC 398 wherein it is held that under section 633(3), the Court has to give notice to the Registrar of Companies or on such other person, if any, as it thinks necessary. He has, therefore, submitted that giving of notice is mandatory and since it has not been given, ad interim relief deserves to be vacated forthwith. 8. Mr. Rawal has further submitted that power to grant relief in cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and prima facie reason to believe that they have not acted honestly or reasonably and, therefore, the petitioners have disentitled themselves to grant of any discretionary relief under this particular provision. 9. While responding to the preliminary objections raised by Mr. Rawal, Mr. S.N. Soparkar, learned Senior Counsel appearing for the petitioners has submitted that there is no substance in any of these preliminary objections raised by Mr. Rawal. He has further submitted that reliance placed by Mr. Rawal on the provisions of section 633(3) of the Act as well as the judgment of the Apex Court in the case of Rabindra Chamaria (supra) for the purpose of opposing the grant of ad interim relief by this Court on 8-1-2008, is wholly unjustified and contrary to the very object of the provisions contained in section 633(2) of the Act as well as rules 6 & 9 of the Companies (Court) Rules, 1959. He has further submitted that the judgment rendered by the Apex Court in the case of Rabindra Chamaria (supra) is altogether in different context and it is not applicable to the facts of the present case. He has further submitted that the respondent has issued 15 show-cause notices for the alleg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rar himself and alleged offences are in respect of the Act. Section 633(2) of the Act provides that where any such Officer has reason to apprehend that any proceeding will or might be brought against him in respect of any negligence, default, breach of duty, misfeasance or breach of trust, he may apply to the High Court for relief and the High Court on such application shall have the same power to relieve him as it would have had if it had been a Court, before which a proceeding against that Officer for negligence, default, breach of duty, misfeasance or breach of trust had been brought under sub-section (1). On a petition being filed by invoking the jurisdiction of this Court under section 633(2) of the Act and in a deserving case, if notices issued to the Registrar without granting any ad interim relief and on service of the notice to the Registrar, during this interregnum period, the Registrar files the complaint against the petitioners prosecuting them for the alleged offence, there may be a possibility of challenge to the very jurisdiction of this Court under section 633(2) of the Act. To avoid such complexity and multiplicity of litigations and also to sub serve the real legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vinod Shekhar v. Registrar of Companies wherein the Court observed that it is true that section 633(2) of the Companies Act, 1956 empowers this court to consider the applications made by the applicants before any prosecution is launched against the applicants. However, in that case, the applicants have already given reply to the show-cause notice and the said reply was yet to be considered by the respondents-authorities. The Court was, therefore, of the view that it was rather premature to approach this Court at this stage. The apprehension shown by the applicants was without any foundation and, therefore, there was nothing on record to show that authorities were not considering their reply on merits. The Court was also of the view that it might happen that if the authorities were satisfied with the explanation tendered by the applicants, they might not launch any prosecution against the applicants. Under those circumstances, the Court directed the respondent-authority to consider the reply filed by the applicants, and/or additional reply or submissions which were to be made by the applicants, within one week from the date of the order and, thereafter, take appropriate decision in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w paragraph 4C emerges that the quantitative details of goods manufactured is required to be given where the company is engaged in the business of manufacture of goods requiring licence. In cases where Sr. N0. Section Comp.Peti. No. Allegations Petitioner's reply providing the li-censed/ installed capacity, the said Company had not complied with Schedule VI Part II requirements, for which prior ap-proval of the Cen-tral Government is required as per the said Act. No such approval has been taken from the Central Govern-ment. there are licensed capacities due to requirement of obtaining li- cence for producing goods re-quiring licence, the licensed and installed capacity becomes rel-evant and determinate in the context of the licence. In case of such industry where licence is not required, the licensed capa- city becomes irrelevant so also the installed capacity for another reason that in such industries the installed capacity in terms of quantity become indeterminate. The said Company and its Offic-ers have acted honestly and rea-sonably believing that the above interpretation of the relevant pro-visions of the Companies Act is correct. Even if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and subsequent period also and the said in-vestment register should in-clude the terms and purpose of in-vestments. The Register of Investments has been duly maintained in computerized form, being the popular and practice now a days and accordingly having suffi-ciently com-plied in spirit the pro-visions of section 372A(5) of the Act. 7. 193(1) 10 of 2008 The Company has not page number the Minutes of the Meeting of the Board of Directors as well as share- The Company duly maintains the minute books of the meeting of the Board of Directors and share-holders as per the provisions of the said Act and the said minute book is kept date wise, duly Sr. No. Section Comp. Peti No. Allegations Petitioner's reply holders of the Company records the minutes of the mee-tings, is signed and placed chro-nologically with pages consecu-tively num-bered. A copy of the minutes book was also attached. 8. 217(2A) 11 of 2008 The names and other particulars of the employees were not fur-nished/annexed to the Directors re-port for the finan-cial years 2004-05, 2005-06, 2006-07. The names and other informa-tion of the employees of the Com-pany is under the he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omes irrel-evant so also the installed capac-ity for another reason that in such industries the installed capacity in terms of quantity become in-determinate. All relevant facts had been disclosed in the Annual Accounts and Directors' Report. The installed capacity varies de-pending upon orders, introduc-tion of new products and prod-uct mix and the time capacity is indeterminate. 12. 220(1) 15 of 2008 There was delay in filing the Balance sheet with the re-spondent for the years 2002, 2003 and 2004. The Company had duly filed the Balance sheet up to the year 2007 and the marginal delay in filing the balance sheet for the years 2002, 2003 and 2004 was made good by filing the same with addi-tional fees. 13. 147(1)(a) 16 of 2008 The name plate displaying the name and address of the Company has not been dis-played at the office of the Company at Pune. The name Suzlon is displayed at the conspicuous part of the office at Pune. The address of the Company is also being displayed at the office at Pune. 14. 192(1) & 4 (c) 17 of 2008 The Company had not filed Form No. 23 for appointment of the petitioner No. 1 as Managing Director of the Company within the stipulated time of 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s further submitted that the respondent appears to have taken a biased view against the Company and the petitioners for undisclosed reasons. Repeated notices have been issued in respect of matters of insignificance and in respect whereof opinion may differ. Sometimes there may be a minor technical mistake or omission by the Company for which criminal proceedings are neither generally instituted nor are threatened. Trivial and minor matters have been sought to be made into issues blown out of proportion by the respondent. Mr. Soparkar has further submitted that in any event, without going into any of the technicalities, the petitioners ought fairly to be excused for the acts of omission, if any, in respect of which the complaints are sought to be made. There has been no violation or the alleged violation is on the basis of a contrary subjective view taken by the respondent. 18. In support of his submissions, Mr. Soparkar relied on the decision of the Madras High Court in the case of M. Meyyappan v. Registrar of Companies [2002] 112 Comp. Cas. 450 1 wherein it is held that under section 633(2) if any notice is received for negligence, breach of duty, miscompliance or breach of trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d refused it), the default would stand proven on admission. If any officer of a Company petitions the High Court under sub-section (2) of section 633 of the Act to be relieved as there was no default committed by him, mere denial of the charge that may ultimately be brought against him, would not disentitle him to invoke sub-section (2) or force him to await the rigours of criminal proceedings before he could plead not guilty. The Court further held in that case that various charges levelled against the petitioners and in respect of which they apprehended institution of criminal proceedings against them were all matters of subjective assessment as to whether the provisions of the Accounting Standards were complied with. The Court took the view that the petitioners have acted reasonably in complying with the accepted norms. Even if there were any violation on the part of the petitioners, the petitioners ought fairly to be excused. The petitioners were relieved of all liabilities in respect of the 12 show-cause notices being the subject-matter of the said proceedings. 21. On the other hand, Mr. Rawal while opposing to confirm the ad interim relief or to grant any further relief in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a of the petitioners having acted bona fide and honestly. If the petitioners are allowed to flout the obligatory provisions of the Act, it would set at naught the very object for which the Parliament has enacted the law. Mr. Rawal has further submitted that the petitioners have alternative remedy in law available under section 621A to compound violations if compoundable in the manner prescribed by the statute and on the other hand, the petitioners, if are content with the reply of denying the violations, are free to contest prosecution, if any, launched. The very fact that the petitioners are issued show-cause notices is evident from the fact that the petitioners are acting in unreasonable manner. These show-cause notices are issued after due inspection of the records in accordance with the provisions of the Companies Act. He has further submitted that the petitions are premature as sub-section (2) can only be confined to apprehended prosecution, meaning thereby, it can only be applied to civil liability and not to criminal prosecution. There is no statutory intention which would manifestly contemplate inference of possible prosecution and the Legislature did not empower the Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m in their replies, the Court is of the prima facie view that the petitioners have taken all due care and caution in complying with the provisions of the Act and even if there may be minor lapses, those are required to be condoned. For such minor lapses and defaults of technical nature to prosecute the Company's highest ranking Officers is not just and proper. To prosecute a person is of a serious consequence. If there is no basic foundation, the person cannot be compelled to pass through the gamut of such turmoils. If at the initial stage, the Court is prima facie satisfied that the prosecution may not ultimately sustain, the Court would certainly show its indulgence so as to meet with the ends of justice or to prevent the abuse of the process of law. The Court, therefore, restrains the Registrar of Companies from launching prosecution for the alleged offences and further restrains him from proceeding further pursuant to the impugned notices challenged in all these petitions. 25. While continuing and/or confirming the ad interim relief, the Court also takes note of the averments made in paragraph 13 of the Affidavit-in-reply wherein it is stated that the inspection has been order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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