Madras Cricket Club vs M. Subbiah

C.T. Selvam, J.—The petitioners herein number 16, the first petitioner being a company registered u/s 25 of the Companies Act, 1956 and die others being the office bearers thereof. The petitioners are facing prosecution in CC No. 762 of 2002 wherein, the Respondent herein has preferred a complaint informing that as a member of the first accused club he was entitled to have true copies of the minutes of die general meetings thereof held from time to time that he had sought from the first accused by his letter dated 19 June, 2002, a copy of the memorandum and articles of association and the minutes of the general meetings for appointment of captains of cricket and tennis teams, respectively, and the circular sent for these appointments for the year 2001-02 and that as the petitioners herein had failed to furnish the same in keeping with Section 196(2) of the Companies Act, 1956, which required the same to be furnished within a period of 7 days, an offence stood committed by the petitioners which entails a fine of Rs. 5,000 in respect of each offence u/s 196(3). Section 196(3) of the Companies Act, 1956, provides that if any copy required by a member which he may duly seek u/s 196(2) is not furnished within the time specified, the company and every officer of the company who is in default shall be punishable with fine which may extend to Rs. 5,000 in respect of each offence. It is on the strength of the provisions of Section 196 of the Companies Act, 1956, that the Respondent has filed the complaint before the Additional Chief Metropolitan Magistrate, E.O.I., Egmore, Chennai.

Learned senior counsel for the petitioners informs that the first petitioner club had time and again requested die Respondent/complainant to inspect the records in the office premises and that in any event the complainant had obtained copies of the papers required by him through the Company Law Board.

In such circumstances, the offence, even if made out, would be so trivial that no reasonable person would complain of it. Though learned senior counsel raises such submission touching upon Section 95 of the Indian Penal Code, 1860, which provides that ''nothing is an offence by reason that it causes, or that it is intended to cause, or that it is known to be likely to cause, any harm, if that harm is so slight that no person of ordinary sense and temper would complain of such harm'', the main thrust of learned senior counsel is u/s 621 of the Companies Act, 1956. To appreciate such contention, the relevant section may be reproduced (Section 621):

"621(1) No court shall take cognizance of any offence against this Act other than an offence with respect to which proceedings are instituted u/s 545, which is alleged to have been committed by any company or any officer thereof, except on the complaint in writing of the Registrar, or of a shareholder of the company, or of a person authorised by the Central Government in that behalf:

Provided that nothing in this Sub-section shall apply to a prosecution by a company or any of its officers." (Rest of the section: Otiose)

Learned senior counsel submitted that as the offence is said to have been committed by the first petitioner/accused-company and its officers and the Respondent/complainant was not a person who fell within the category of persons entitled to file a complaint, the complaint case in EO CC No. 762 of 2002 on the file of the Additional Chief Metropolitan Magistrate, EOI, Egmore, Chennai, ought to be quashed on this ground alone. Learned Counsel for the Respondent sought to sustain the maintainability of the complaint on the strength of Section 41 of the Companies Act, 1956, which reads as follows:

(1) The subscribers of the memorandum of a company shall be deemed to have agreed to become members of the company, and on its registration, shall be entered as members in its register of members.

(2) Every other person who agrees in writing to become a member of a company and whose name is entered in its register of members, shall be a member of the company.

(3) Every person holding equity share capital of company and whose name is entered as beneficial owner in the records of the depository shall be deemed to be a member of the concerned company.

The submission of learned Counsel for the Respondent is that the Respondent/complainant was a member of the first accused club, there was no distinction between a member and a shareholder and as such he would fall within the meaning of the term shareholder u/s 621. 1 have considered the rival submissions. Even if the submissions of learned Counsel for the Respondent are considered for the purpose of appreciation it would be seen that the Respondent/ complainant would not fall within the three categories of persons envisaged in Section 41 of the Companies Act, 1956. The Respondent is neither a subscriber of the memorandum of the company who has agreed to become a member thereof nor is a person who has agreed in writing to become a member of the company. The first accused is a company registered u/s 25 of the Companies Act, 1956, which has no equity shareholding, holding whereof would have constituted the Respondent/ complainant a shareholder. Learned senior counsel for the petitioner would refer to the commentaries on Section 621 of the Companies Act, 1956, in the celebrated work A. Ramaiya''s Guide to the Companies Act wherein it is stated as follows:

It may be noted that only in the case of a company having share capital divided into shares, a ''shareholder'' can prefer a complaint under this section. In the case of any other company such as a company limited by guarantee (for instance, a club or a charitable society), no complaint can be made by a ''member''. Only the Registrar or a person authorised by the Central Government can make the complaint.

In view of the clear and unambiguous position that a complaint alleging offence under the Companies Act, 1956, only can be maintained in strict keeping with the provisions of Section 621 of the Companies Act, 1956 and that the present complaint which is sought to be quashed would not fall there under, this Court would allow the quash petition. Accordingly, the proceedings in E.O.C.C. No. 762 of 2002 on the file of the Additional Chief Metropolitan Magistrate, E.O.I., Egmore, Chennai, shall stand quashed. Consequently, the connected miscellaneous petition is closed.