Assistant Registrar of Companies vs Sudarsan Liners Ltd.

Maheswaran, J.—This appeal is filed by the Assistant Registrar of Companies against the judgment of the learned Additional Chief Metropolitan Magistrate (Economic Offences) No. II, Madras, acquitting the company in C. C. No. 1739 of 1982 on his life. The Registrar of Companies laid a complaint u/s 220 of the Companies Act, 1956, against accused No. 1, Sudarsan Liners Ltd., accused No. 2, V. V. K. Raman, managing director, and accused Nos. 3 and 4, directors of the company. The gravamen of the charge is that the company did not file the balance-sheet and profit and loss account with the Registrar of Companies before the due date. The explanation of the company is that the books are kept in the Bombay office and that in a litigation, a court receiver was appointed and he has taken the books. The learned trial Magistrate found, as a fact, that there was default in filing the balance-sheet and profit and loss account, but so far as the company is concerned, it is due to certain reasons beyond its control and he acquitted the company. But, however he found that accused Nos. 2 to 4 are guilty of "technical offences" and sentenced each of them to pay a fine of Rs. 25, in default, to suffer simple imprisonment for one week. The Assistant Registrar challenges the order of acquittal in so far as accused No. 1 is concerned.

A reading of section 220(3) of the Companies Act shows that if default is made in complying with the requirements of sections 220(1) and 220(2), the company and every officer of the company who is in default shall be liable to like punishment as is provided in section 162. Even though the learned trial Magistrate found that there was default in complying with the provisions of section 220(2) of the Companies Act, the same was non-filing of the balance-sheet. Whatever reasons apply to the acquittal of accused No. 1, should also apply to accused Nos. 2 to 4, the directors who have become final so far as they are concerned. But, it should be noted that sections 220(1), (2) and (3) do not provide for exempting any one from punishment, the company or its directors, even if sufficient reasons are given for their non-filing of the balance-sheet and profit and loss account in time. As pointed out by learned counsel for there appellant, mere default in complying with the requirements of section 220(1) and (2) is sufficient to make the company and the officers of the company liable to punishment. While so, the order of the learned trial Magistrate acquitting the company, accused No. 1, for the reasons stated by him is not correct and has to be set aside. Accordingly the order acquitting accused No. 1, company, is set aside and the matter is remitted to the trial court for a de novo trial only in so far as accused No. 1 is concerned and the judgment in other respects is confirmed. The appeal is allowed to the extent indicated above and is dismissed in other respects.