Karnataka Theatres Ltd. vs Ratnavarma Padival

Kulkarni, J.—Sri B.V. Acharya for the petitioners and Sri Yadurayagowda for the respondent submitted that the matter itself may be heard finally on merits. Accordingly arguments on the final merits of the petition are heard and it is disposed of.

The complainant has filed the present complaint u/s 196(3) of the Indian Companies Act, alleging that the 39th Annual General Body Meeting of the first accused company known as ''Karnataka Theatres Limited'' was held on 23rd September, 1985, in Shri Ramakrishna Students Home, Bunts Hostel, Kadri Road, Karnagalpady, Mangalore -3. The complainant attended the said General Body Meeting as a shareholder of the accused No. 1 company. The. said Annual General Body Meeting was conducted by the accused in seriously suspicious manner. A lot of foul play had been practiced in conducting the meeting. The complainant suspected the foul play in the matter of recording of the minutes of the above meeting, that is, either in not recording the minutes at all or recording the same improperly according to the whims and fancies of the directors.

The complainant applied for the grant of a certified copy of the minutes of the 39th Annual Meeting of the 1st accused as per his letter dated 3-10-1985 seeking the copies of the minutes of the Annual General Body Meeting held on 23-9-1985. As per Section 196(2), any member shall be entitled to be furnished, within seven days after he has made a request in that behalf to the Company, with a copy of any minutes of the proceedings of any general body meeting of the Company. If any copy required is not furnished within the prescribed time, the company and every officer of the company who is in default shall be punishable with fine. The complainant though he had applied for copy on 3-10-1985 was supplied with a copy only on 17-10-1985. This is not within seven days from the date of request. Hence according to the complainant, the accused persons have committed the offence u/s 196(3).

The accused persons being aggrieved by the issue of the process for the offence u/s 196(3), have approached this Court with a request to quash the proceedings.

Learned Counsel Sri Acharya submitted that the 39th Annual General Body Meeting of the accused-Company was held on 23-9-1985. According to him, the complainant applied for the copy on 3-10-1985 and the copy has been supplied to him on 17-10-1985. Learned Counsel Sri Acharya for the revision-petitioners-accused drew my attention to Section 193 of the Companies Act, which reads as:

"Minutes of proceedings of general meetings and of Board and other meetings :-

(1) Every company shall cause minutes of all proceedings of every general meeting and of all proceedings of every meeting of its board of directors or of every committee of the Board, to be kept by making within 30 days of the conclusion of every such meeting concerned, entries thereof in books kept for that purpose with their pages consecutively numbered...."

The words ''thirty days'' have been substituted by the previous words ''fourteen days'' by Amending Act 31 of 1965. The period was enhanced from 14 to 30 days so as to make it possible for the Company to cause minutes of the proceedings to be written in a book. Thus, the Act has given statutory period of 30 days to cause minutes of all proceedings to be written down in a book. It is undisputed that Section 196(2) requires that any member shall be entitled to be furnished, within seven days after he has made a request in that behalf to the Company, with a copy of any minutes referred in Sub-section (1) etc. Therefore, the period of seven days that is laid down by Section 196(2) would come into picture only after the statutory period of 30 days prescribed by Section 193 of the Indian Companies Act is over. Section 196(2) would come into play only after the minutes are written and which could be written within a period of 30 days from the date of meeting. If any such application is filed then it will have to be supplied within seven days from the date of filing the application. Therefore, Sections 193 and 196 of the Indian Companies Act will have to be read together. If they are not read together, serious consequences are likely to arise. Therefore if anybody applies for a copy of the minutes after the expiry of 30 days then the copy will have to be supplied within seven days from the date of making such a request. Therefore, the Company has got a statutory period of 30 days plus 7 days to give the copy. In this case, the meeting was held on 23-9-1985. The application has been made by the complainant on 3-10-1985 and he has been supplied with the copy on 17-10-1985 i.e., within one month from the date of holding of the meeting itself. Therefore, it could be too much to say that Section 196(2) has been violated by the accused persons or by the Company in this case. The trial Court does not appear to have bestowed any thought on the implication of Section 193 read with Section 196 of the Indian Companies Act. Therefore, on this ground itself, the issue of the process needs to be quashed.

Section 196(3) reads as :

"If any inspection required under Sub-section (1) is refused, or if any copy required under Sub-section (2) is not furnished within the time specified therein, the Company, and every Officer of the Company who is in default, shall be punishable with fine which may extend to five hundred rupees in respect of each offence."

Section 2(30) of the Indian Companies Act reads as:

"Officer includes any director, managing agent, secretaries and treasurers, manager or secretary or any person in accordance with whose directions or instructions the Board of directors or any one or more of the directors is or are accustomed to act and also includes-

(a) where the managing agent, or the secretaries and treasurers is or are a firm, any partner in the firm;

(b) where the managing agent or the secretaries and treasurers is or are a body corporate, any director or manager of the body corporate."

But, save in Sections 477, 478, 539, 543, 545, 621 and 633 does not include an auditor.

Section 5 of the Companies Act reads as:

"Meaning of officer who is in default :-

For the purpose of any provision in this Act which enacts that an officer of the company who is in default shall be liable to any punishment or penalty, whether by way of imprisonment, fine or otherwise, the expression "officer who is in default" means any officer of the Company who is knowingly guilty of the default, non-compliance, failure, refusal or contravention mentioned in that provision, or who knowingly and wilfully authorises or permits such default, non-compliance, failure, refusal or contravention."

Section 196(3) says that every officer of the Company who is in default shall be punishable. Admittedly, there is a paid manager who is in charge of the affairs of the Company and it is the duty of such manager to supply the copy. It would be too much to read that it would be the duty of the directors to supply the copies to the persons who applied. If such affairs are required to be carried out by the directors then no company can function at all. In order to see that the company works smoothly, they have got their own officers. They have got their own paid managers who are in charge of the management of the Company. Therefore, it would be rather idle to contend that the word "every officer of the company who is in default" used in Section 196(3), would also include the directors. Therefore, under these circumstances, the present petitioners who appear to be the directors cannot be roped in for an omission made punishable u/s 196(3).

Therefore, under these circumstances, viewed from any angle, the issue of process against the present petitioners who are the company and the directors, is wholly unsustainable in law. Therefore, the order issuing the process passed by the Court below is set aside. The revision is allowed. The proceedings are quashed. The complaint is dismissed.

Sri Yadurayagowda submitted that his client, at least, would have a remedy against the manager of the accused No. 1 company. Sri Acharya submits that the then manager who was present at the time of the 39th Annual General Body Meeting, is no more in this world. He has passed away. Under these circumstances, the request of Sri Yadurayagowda that his client would have remedy at least against the then manager also does not survive.