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TMI Blog1991 (9) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... years 31st March, 1976, to 31st March, 1982. There are complaints now pending against them. 3. Shri Satya Narain Prakash Punj has been acting as director in charge-managing director of the company, right since its incorporation. The petitioners, being ordinary directors, have never been in control of the affairs and day to day management of the company and were never apprised of the excess borrowings nor was any resolution passed to which they are parties that permitted the alleged borrowings, beyond limits, by the company. Shri Satya Narain Prakash Punj who is in possession of the books of account, minutes books, correspondence files and the statutory books has been managing the affairs of the company and did not take the petitioners into his confidence about the alleged excess borrowings by the company. 4. It is further alleged that petitioner No. 1 is aged about 70 years. Smt. Maya Rani Punj, petitioner No..2 herein, is a hoousewife, and so is petitioner No.3. Petitioner No.4 is a resident oof Bombay, and is suffering from severe diabetes mellitus and ischaemic heart disease. 5. From enquiries made and from a persual of the records in the office of the Registrar of Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has further urged that the complaints filed by the respondent under Rule 11 of the Rules in the Court of the Chief Metropolitan Magistrate, Delhi, are time barred as the same were filed after a period of 3 years, from the alleged deefaults, which were committed in the year 1982. The period of limitation is 6 months and the respondent has not filed any application under section 473 of the Criminal Procedure Code, for condensation of delay. In other words, no cognizance of thee offence could be taken by the court as the prosecutions were hopelessly time- barred. Cognizance of the offence in such cases is deemed to have been taken when the delay is condoned under section 473 of the Criminal Procedure Code. 10. Mr. Nayyar submits that, in view of the judgment of the Calcutta High Court in In re Hindustan Wire and Metal Products [1983] 54 Comp Case 104, the petitioners are entitled to be relieved of the liability, not only regarding the apprehended prosecution, but also for prosecutions which are pending before the Chief Metropolitan Magistrate, Delhi. 11. On the other hand, Mr. N.S.Gupta, Assistant Registrar of Companies, has submitted that the offence under rules 10 and 11 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s he then was) was considering the question with regard to the jurisdiction of the court under section 633(2) of the Act. In that case, the facts were that petitioners, who were directors of M/s Western U.P.Electric Power and Supply Co. Ltd., committed defaults in respect of holding the annual general meeting for the period ending March 31, 1976. It was held (at p. 400): I may also indicate that the other court covered by section 633(1) need not necessarily be a criminal court because there may very weel be a civil proceeding, criminal proceeding or even a revenue proceeding in respect of which section 633(1) may apply. In all such cases, if a proceeding is anticipated, the officer concerned can move the High Court at an early stage and get relief in a suitable case. This has the great advantage of avoiding that other proceeding if the High Court grants relief. If that other proceeding has commenced, then the officer concerned has no other course open but to apply to the relevant court under section 633(1) to say that whatever negligence, default, breach of trust, misfeasance, breach of duty or any other default complained of there may be, he in fact, acted reasonably and hones ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a continuing one, with a further fine which may extend to fifty rupees for every day after the first, during which the contravention continues. 21. In support of its contention that the offence under rule 11 of the Rules is a continuing one, the respondent has place reliance on the nature of fine which is to be extent of ₹ 500 and where, the contravention is continuing one with a further fine which may extend to ₹ 50 for every day after the first. 22. In CWT v. Suresh Seth [1981] 129 ITR 328, their Lordships of the Supreme Court were considering the question whether the default committed under section 18(1)(a) of the Wealth-tax Act, 1957, was a single default or a continuing one. The facts in that case were that the assessed filed his wealth-tax returns, for the assessment years 1964-65 and 1965-66, on March 18, 1971, while he was required, by section 14(1) of the Wealth-tax Act, to file the same, for the year 1964-65, on or before June 30, 1965. The following two questions were referred, under section 27(1) of the Wealth-tax Act, to the Punjab and Haryana High Court which answered the same in favor of the assessed : 1. Whether, on the facts and in the cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... became directors of the first accused company only from July, 1975, and they were not directors on April 1, 1975, when the excess deposits had to be returned as per section 58A(3)(c) of the Act. It, is however, contented by him that the failure to repay the deposits on or before April 1, 1975, is a continuing offence and persons who became directors even subsequent to April 1, 1975, are liable for the default, so long as the excess deposits are not repaid. But, there is nothing in section 58A(3)(c) or any other provision of the Act to hold that the non-repayment of the excess deposits on or before April 1, 1975, is continuing offence. In CWT v. Suresh Seth , the question came up before the Supreme Court whether the failure to file a wealth-tax return by the assessed after the last date was over, was a continuing offence. It was held by the Supreme Court that such a failure gave rise to a single default and to a single penalty the measure of which, however, is geared up to the time large between the last date on which the return has to be filed and the date on which it is actually filed. The default, if any committed every month thereafter. The words in section 18(1)(a) of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is punishable with the more severe punishment or, as the case may be, the most severe punishment. 469 (1) THe period of limitation, in relation to an offender, shall commence- (a) on the date of the offence; or (b) where the commission of the offence was not known to the person aggrieved bu the offence or to any police oofficer, the first day on which such offence comes to the knowledge of such person or to any police officer, whichever is earlier; or (c) where it is not known by whom the offence was committed, the first day on which the identity of the offender is known to the person aggrieved by the offence or to the police officer making investigation into the offence, whichever is earlier. (2) In computing the said period, the day from which such period is yo be computed shall be executed. 473. Nothwithstanding anything contained in the foregoing provisions of this Chapter, any court may take cognizance of an offence after the expiry of the period of limitation, if it is satisfied on the facts and in the circumstances of the case that the delay has been properly explained or that it is necessary si to do in the interests of justice. 29. In Hindustan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... step in the matter. 30. I am in respectful agreement whit the view expressed by the Calcutta High Court in the said judgment. 31. The offence under rule 11 of the Rules is punishable with fine as such; the period of limitation is six months subject to other exceptions as provided in Chapter xxxvI. It is not disputed that the respondent has not filed any application under section 473 of the Criminal Procedure Code for condensation of delay inf filing the complaint for which the period of limitation is six months. 32. Section 468 of the Criminal Procedure Code lays down thay, except as otherwise provided elsewhere in the Code, no court shall take cognization of an offence oof the category specified in sub- section 2 after the expiry of the period of limitation. 33. It means that, in facts and circumstances of the present case, unless the bar of limitation was lifted by condensation of delay, by an order of Magistrate made under section 473 of the Criminal Procedure Code, it cannot be said that the cognizance of an offence has been taken on the mere filing of the complaint against the accused. 34. The contention oof Mr. Nayyar is that none of the petitioners os an off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot concerned with the day to day working of the company. 37. The next contention of Mr. Nayyar is that various circulars have been issued by the Department of Company Affairs, Government of India, from time to time, for the guidance of the Registrars of Companies, and for following up of the policy regarding institution of prosecution for defaults of non filing of returns under rule 10 of the rules. He has placed reliance upon the judgment in H. Nanjundiah v. Govindnan, Registrar of Companies, Maharashtra [19860 59 Comp Case 356 (Bom). 38. In H. Nanjudiah's case [1986] 59 Comp Case 356 (Bom), by a resolution of the board of directors, the company was allowed to make borrowings in excess of the limits. The Registrar of Companies issued notice, to show cause as to why action be not taken against the directors for accepting deposits exceeding the limits prescribed by rule 3(2)(i) and (ii) of thee Companies (Acceptance oof Deposits) Rules, 1975. While interpreting the meaning officer who is in default, under section 5 of the Act, the High Court of Bombay held (at page 358): In view of this, I had asked Mrs. Bbulchandani, learned counsel for the respondent to point out a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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