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TMI Blog2009 (1) TMI 488X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner in convening annual general meeting, the petitioner cannot be held to have acted honestly and reasonably, in the circumstances of the case, so as to enable him to be excused and consequently relieved of the responsibility. The company petition stands disposed of by relieving the petitioner from the obligations under section 159, read with section 162, of the Companies Act regarding non-filing of annual returns for the accounting years 2001-02, 2002-03 and 2003-04 and under section 220, read with section 220(3), of the Companies Act for non-filing of balance-sheet and profit and loss account for the said accounting years. However, the petitioner shall be liable to be proceeded with for the statutory obligation under section 166, read with section 168, of the Companies Act for not convening annual general meeting as per the show-cause notice issued by the respondent dated 23-7-2005. In view of disposal of the main company petition, connected company application is closed. - C.P. NO. 233 OF 2005 AND C.A. NO. 28 OF 2006 - - - Dated:- 23-1-2009 - P. JYOTHIMANI, J. P.H. Arvindh Pandian for the Petitioner. C. Gurulingam for the Respondent. JUDGMENT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner has informed the respondent that due to the abovesaid reason, the balance-sheet and annual returns could not be filed. Similarly, by letter dated 30-11-2000, the Assistant Director of Income-tax, Company Circle-I, Chennai, was informed of the reason for not filing income-tax return. 7. The respondent has issued a show-cause notice dated 23-7-2005, to the petitioner as to why action should not be taken for prosecuting him under sections 162, 168 and 220(3) of the Companies Act, 1956 (in short, "the Act"), for contravention of sections 159, 166 and 220, respectively, of the Act in respect of the financial years ended on 31-3-2002, 31-3-2003 and 31-3-2004. As the petitioner apprehends that he may be arrayed as accused, he has filed the present petition under section 633(2) of the Act to relieve him from the obligations as imposed in the show-cause notice. 8. The offences made out in the show-cause notice are compoundable under section 621A(1) of the Companies Act, provided the offences are brought to an end. Due to the reason that the petitioner has no control over any of the documents of the company, the offences under section 166 for non-holding of annual general mee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cords of the company including the accounts and other papers and various communications to the authorities and also letters by the petitioner to the said Mr. S. Venkataramanan which would show that the company s books of account were in the custody of Mr. S. Venkataramanan as admitted by the said Mr. S. Venkataramanan himself in the counter-affidavit filed by him before the Company Law Board in the petition filed under sections 397 and 398 of the Companies Act and, therefore, there is no dishonest intention on the part of the petitioner and, therefore, the petitioner is entitled to the relief under section 633(2) of the Companies Act. He would also insist that the petition under section 397 was filed even in the year 2002 specifically stating that the petitioner was denied access to the records including the accounts of the company, whereas the show-cause notice proceeds as if the petitioner is liable for 2001-02, 2002-03 and also for 2003-04. 12. On the other hand, it is the contention of the learned Central Government Standing Counsel, appearing for the Registrar of Companies that when, in the petition filed under section 397 of the Companies Act, the petitioner admitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return is to be filed in the form prescribed under Part I of Schedule V. For non-compliance of the said statutory obligation imposed under section 159, section 162 of the Act contemplates the punishment of fine on the company and every officer of the company who is in default. The said section 162 is as follows : " Penalty and interpretation. (1) If a company fails to comply with any of the provisions contained in section 159, 160 or 161, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues. (2) For the purposes of this section and sections 159, 160 and 161, the expressions officer and director shall include any person in accordance with whose directions or instructions the board of directors of the company is accustomed to act." 15. Likewise, section 166 of the Act contemplates the obligation that every company to hold its annual general meeting in each year in addition to any other meetings, with the procedure to be followed for the purpose of calling for such meetings. For non-compliance of the said statutory obligation under section 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed with the Registrar separately: Provided further that, ( i )in the case of a private company which is not a subsidiary of a public company, or ( ii )in the case of a private company of which the entire paid-up share capital is held by one or more bodies corporate incorporated outside India, or ( iii )in the case of a company which becomes a public company by virtue of section 43A, if the Central Government directs that it is not in the public interest that any person other than a member of the company shall be entitled to inspect, or obtain copies of, the profit and loss account of the company, no person other than a member of the company concerned shall be entitled to inspect, or obtain copies of the profit and loss account of that company under section 610. (2) If the annual general meeting of a company before which a balance-sheet is laid as aforesaid does not adopt the balance-sheet, or is adjourned without adopting the balance-sheet, or, if the annual general meeting of a company for any year has not been held, a statement of that fact and of the reasons therefor shall be annexed to the balance-sheet and to the copies thereof required to be filed with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elief under section 633 of the Act only relates to exonerating from any action of negligence or breach of duty, misfeasance against an officer of a company when it appears that such officer has acted honestly and reasonably and such officer can be relieved from his liabilities either in whole or in part or on such terms as the Court thinks fit. The section also makes it clear that such officer cannot be relieved from any civil liability which may attach in respect of negligence, default, breach of duty, etc., section 633 which gives the power to the court is as follows : " Power of court to grant relief in certain cases. (1) If in any proceeding for negligence, default, breach of duty, misfeasance or breach of trust against an officer of a company, it appears to the Court hearing the case that he is or may be liable in respect of the negligence, default, breach of duty, misfeasance or breach of trust, but that he has acted honestly and reasonably, and that having regard to all the circumstances of the case, including those connected with his appointment, he ought fairly to be excused, the Court may relieve him, either wholly or partly, from his liability on such terms as it may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 159 of the Act and not filing copies of balance-sheet and profit and loss account for the years 2001-02, 2002-03 and 2003-04 under section 220 of the Act, on the facts of the case, it has to be considered as to whether the petitioner was in fact having possession or access to the said returns, balance-sheet and profit and loss account. If the petitioner has been prevented to have access to the said records and there has been no possibility for him to obtain the said documents, viz., returns, balance-sheet and profit and loss account in spite of the efforts taken by him to secure the same, certainly it can be construed as an honest and reasonable conduct on the part of the pensioner to be excused from the allegation of negligence, default, breach of duty or misfeasance. In the present case, as it is seen in the show-cause notice, the allegation can at the most be negligence or breach of duty. 23. It is not in dispute that the petitioner has in fact filed a petition against the other director Mr. S. Venkataramanan under sections 397 and 398 of the Companies Act, 1956, for oppression and mismanagement. As it is seen from the petition filed against the said Mr. S. Venk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cks, the first respondent and the staff members became cautious and hence they did not permit the petitioner to take the books. Permission was not denied to him to inspect the books of account but permission was denied only for removal of the books of account from the office premises. As a matter of tact, the petitioner wanted to remove the books of account with a view to tamper with them. Fortunately, the staff members were vigilant and the petitioner could not do what he wanted to do. The first respondent is always prepared to produce the available books of account, wherever, this Hon ble Board wants him to." 25. In the letter dated 5-9-2002, addressed to the respondent, the petitioner has also enclosed the petition filed before the Company Law Board and requested not to proceed further since he has no access to the records. The Company Law Board in its order has no doubt dismissed the application filed under sections 397 and 398 of the Act, but the dismissal was not on the ground of any misfeasance on the part of the petitioner herein, but it was on the basis of delay in filing such application. The Company Law Board has taken note of the claim and counter-claim made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisputably with Mr. S. Venkataramanan and the documents were kept in the registered office of the company which happens to be the residence of the said Mr. S. Venkataramanan. Even in respect of taking away of the stocks and assets of the company, there has been some dispute, as was found by the Company Law Board and I am of the considered view that in such circumstances, it should be construed that the petitioner has acted honestly and reasonably and the petitioner ought to be excused in respect of statutory obligations relating to filing of annual returns under section 159 resulting in penalty under section 162 and filing of balance-sheet under section 220 resulting in penalty under section 220(3) of the Act. 27. The Calcutta High Court in Tapan Kumar Chowdhury v. Registrar of Companies [2003] 114 Comp. Cas. 631 1 , has laid down the principles governing the exercise of powers of the Court under section 633 of the Companies Act, as follows (headnote) : "Some of the principles governing the exercise of power by the court under section 633(2) of the Companies Act, 1956, are as follows : (1) If there is any statutory default on the part of an individual while acting on be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the calling, holding and conducting of the meeting. Explanation. The directions that may be given under this sub-section may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting. (2) A general meeting held in pursuance of sub-section (1) shall, subject to any directions of the Central Government, be deemed to be an annual general meeting of the company : Provided that in the case of revival and rehabilitation of sick industrial companies under Chapter VI-A, the provisions of this section shall have effect as if for the words Central Government , the word Tribunal had been substituted." 30. On facts, it is seen that the petitioner and his wife jointly hold 50 per cent of shares and the petitioner admittedly being one of the directors of the company has not taken any steps for the purpose of convening the annual general meeting. The non-availability of various documents like returns, profit and loss account, balance-sheet, etc., would not in any way prevent the petitioner from approaching the appropriate authority com- plaining the same as contemplated under section 167 of the Companies Act. Even und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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