Balakrishna M. Kathare and Others vs Assistant Registrar of Companies, Tamil Nadu Madras 6

M.N. Moorthy, J.—This is a petition filed under S. 482, Crl.P.C., to quash the proceedings pending against the petitioners in C.C. No. 245

of 1962 on the file of the Additional Chief Metropolitan Magistrate (E.O.I.) Egmore, Madras.

The facts leading to the present petition are as follows�A complaint was filed by the Assistant Registrar of Companies, Tamil Nadu, against

the three petitioners for offences under S. 209-A(5) and (8) of the Companies Act, 1956 arraying the petitioners as accused 1 to 3. A1 is the

Managing Director of Messrs. Indira Chemical Agency Pvt. Ltd., and A2 and A3 are the directors of the said company.

Invoking the powers vested under S. 209-A of the Companies Act, the complainant addressed a letter to the said company on 2nd February,

1979 stating that they had decided to carry oat an inspection of the books and records of the company from 15th February, 1979 under the

provisions of S. 209-A of the Companies Act. The company was requested to keep all the books and records ready on 15th February, 1979, 11

a.m. at the registered office. By a letter, dated 14th February, 1979, the company requested a month''s time to furnish the necessary records for

inspection and the same was granted by a letter, dated 22nd February, 1979. The Company was then requested to keep the books ready for

inspection on 15th March, 1979, at 11 a.m. By a letter, dated 14th March, 1979 the company wanted time till the end of 1979. As the company

has not kept the books, records, etc., ready for inspection in spite of extension of time, under the powers vested under S. 209-A(5) of the

Companies Act, the complainant issued summons on 16th March, 1979 to the accused requiring each of them to attend personally before the

complainant on 29th March, 1979 to give evidence and to produce the books of account, etc., mentioned therein. Summons was duly

acknowledged by the accused. As 29th March, 1979 was likely to be a public holiday, the accused were informed separately to appear before the

complainant on 30th March, 1979. By a letter, dated 20th March, the complainant was informed by the company that they would produce the

books by 15th April, 1979. The accused neither appeared for the purpose of giving evidence nor did they produce the books, records, etc., till

25th September, 1980. A show cause notice was issued to the accused on 26th February, 1980 requesting them to show cause why action should

not be taken against them under S. 209-A(8) of the Companies Act. By their letter, dated 4th March, 1980, the accused once again wanted time.

As the accused had failed to appear before the complainant personally to give evidence and produce the books of accounts mentioned in the

summons received by them, a complaint was preferred against them which was taken on file and summons were issued to the accused.

Mr. P.B. Menon, appearing on behalf of the petitioners supported by an affidavit, contended that the company affairs were dislodged due to

income tax raids and the affairs of the company were being set right and due to pre-occupation of the directors in attending to such matters, the

company law matters could not be properly attended to. He argued invoking the powers under S. 209-A(5) by the complainant in order to

exercise the powers of a civil Court was without justification and bad in law and as such no default had been committed by the petitioner. He

further submitted, the learned Magistrate should have on the facts disclosed in the complaint found that there was no prima facie case against the

petitioners and ought/not to have taken the case on file. As the legal requirements of issuing summons to the accused were illegal, the proceedings

pending against the petitioners are liable to be quashed. The complaint taken cognizance of by the Magistrate does not disclose any prima facie

case and it would be an abuse of process of court to allow the proceedings to continue against the petitioners. In support of his contention he relied

on a decision of mine reported in K.S. Narayanan and Others Vs. S. Gopinathan,

In view of the course which I propose to adopt, it is desirable that as little as possible should be said about this case at this stage. Regarding the

decision of mine cited by the learned counsel for the petitioners, it should be noted that I quashed the proceedings pending against the petitioner in

that case on the ground that the prosecution was groundless and vexatious. The facts in that case are different from the facts of the present case.

The said decision has no application to the case on hand.

It is not disputed that the summons received from the complainant by the accused had not been complied with. The summons is to the effect that

the accused had to appear before the complainant personally and to give evidence and produce the books of accounts mentioned in the summons.

It is the primary duty of each of the accused to comply with the summons. They are bound to appear before the complainant in accordance with

the terms of the summons. By not producing any books of accounts and by not appearing as required in the summons, each of the petitioners has

committed default within the meaning of S. 209-A(5) of the Companies Act. It is clear the department has been more than fair to the petitioners in

granting extension of time. Prima facie, the petitioners are liable for non-compliance of the requirements of the summons issued under S. 209-A(5)

of the Companies Act, punishable under S. 209-A(8) of the said Act. The Magistrate and not this Court should adjudicate on the materials

produced and find whether or not an offence is made out. Applying the principles laid down by their Lordships of the Supreme Court in B.P.

Kapoor v. State of Punjab 1960 M.W.N. Crl. 177. I do not think this is a case, where my interference by quashing the proceedings pending

against the petitioners is warranted. The petition stands dismissed.