Assistant Registrar of Companies, Madras 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 (Economics offences) No. II, Madras, acquitting the compay, in C.C. 1739 of 1982 on his file. The Registrar of Companies laid a complaint under S. 220 of the Companies Act, 1956 against accused 1 Sudarsan Liners Ltd., Madras 2, V.V.K. Raman, Managing Director, and accused 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 2 to 4 are guilty of'' technical offences and sentenced each of them to pay a line 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-1 is concerned.

A reading of S. 220(3) of the Companies Act shows that if a default is made in complying with the requirements of Ss. 220(1) and 220(2), the company and every officer of the company who is in default shall be liable to punishment as is provided in S. 162. Even though the learned trial Magistrate finds that there is default in complying with the provisions of S. 220(1) and S. 220(2) of the Companies Act, the same was not wilful and was beyond the control of the company. If the non-filing of the balance sheet was beyond the control of the company, it is net quite clear as to how the Directors of the company could file the balance sheet. Whatever reasons that apply to the acquittal of accused 1, should also apply to accused 2 to 4, the Directors who have been found guilty of violation of S. 220(1) and (2) of the Companies Act. But the Directors and the Managing Director are not before Court. The convictions and the sentences imposed on them have become final so far as they are concerned. But, it should be noted here that S.220(1)(2) and (3) do not provide for exempting any one from punishment, the company or its members, if sufficient reasons are not given for their nonfiling of the balance-sheet and profit and loss account in time. As pointed by the learned counsel for the appellant, mere default in complying with the requirements of S. 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 1, for the reasons stated by him is not correct and has to be set aside. Accordingly, the order acquitting accused 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 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.