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Judgment
Padmini Jesudurai, J.—The above criminal revisions are by the company, its Managing Director and its Directors respectively, who were
convicted by the Additional Chief Metropolitan Magistrate, Madras, in C.C. Nos. 436 to 440 of 1982 for offences under Sa. 220 and 159 read
with S.162 of the Companies Act (1 of 1956) and sentenced to pay a fine of Rs. 200 each for each offence; in default to undergo simple
imprisonment for a period of one month.
Facts briefly are:--The respondent filed, five different complaints, against the petitioners on the allegations that the first petitioner was
incorporated as a company on 13.3.1957 under the companies Act, 1956, and the second petitioner was its Managing Director and petitioners 3
and 4 its Directors and that the petitioners had failed to file before the Registrar of companies, the Balance sheet and profit and loss account as
required u/s 220 of the Act, as amended by the Companies Amendment Act 1977 (hereinafter referred to as the Act) and had failed to submit
before the Registrar the annual return as required under 8.159 of the Act, which offences are punishable under S.162 of the Act. C.C. No. 436 of
1982 related to the offence under S.220 read with S.162 of the Act and C.C.Nos.437 to 440 of 1982 related to the offence under S. 159 read
with S.162 of the Act, for four consecutive accounting years.
During trial, on behalf of the prosecution, the Assistant Registrar of Companies, Madras, was examined as P.W. 1 and Exts. PI to P23 were
marked. When questioned under S.313, Crl.P.C., the petitioners contended that they had sent a letter to the Assistant Registrar of Companies
under the original of Ex. D2 requiring him to strike off the name of the company from the Register and a paper publication to the above effect had
also been made under Ex. D1, that since the company had become defunct they were not required to sent either the returns under S.159 of the
Act or the balance sheet under S.220 of the Act and that, therefore they were not liable. On behalf of the petitioners, the second petitioner was
examined as D.W.1 and Exts. D1 and D2 were marked.
The trial Court found that so material had been placed to show that the company was not functioning, that until the name of the Company was
struck off under S.560 of the Act the annual returns and audited balance sheet had to be filed and that mere claim that the company bad become
defunct would not exonerate them of liability to file the above documents. The petitioners, therefore, were convicted in C.C. No. 436 of 1982 for
the offence under S.220 read with S.162 of the Act and sentenced to pay a fine of Rs. 200 each. In C.C. Nos. 437 to 440 of 1982 the petitioners
were convicted for the offence under S. 159 read with S.162 of the Act and sentenced to pay a fine of Rs 200 each in one of the cases in default
petitioners 2 to 4 to undergo simple imprisonment for a period of one month. Challenging the correctness and the legality of the conviction and
sentence the present revisions have been filed.
Thiru Arvind P. Datar, Learned Counsel for the petitioners, challenges the conviction on the following grounds:
(i) the prosecution in all the five cases was filed out of time and was, therefore, barred by limitation under S.468, Crl.P.C.
(ii) the company had become defunct given from 31.3.1972 and, therefore, the petitioners were not under any liability to file returns under S. 159
of the Act or to ale audited balance sheet under S.220 of the Act.
(iii) in view of the fact that the Registrar of Companies had already been requested to strike the name of the company of the list, there was no mens
tea on the part of the petitioners to commit any one of the above offences.
Per contra, Thiru R. Shanmugham, Learned Counsel for the respondent, contended:
(i) that the offence created under Ss. 159 and 220 of the Act were continuing offences and that, therefore, S.472, Crl.P.C. extending the period of
limitation during the continuance of the above offences, would apply.
(ii) That the liability of the petitioners to submit the returns under S.159 of the Act and to submit the audited balance sheet under S.220 of the Act
did not cease, even if the company was shown to be not functioning, and ''nil'' returns atleast had to be filed;
(iii) that S.159 and 220 of the Act punish failure to furnish the above documents to the Registrar and once the failure was proved the offence was
committed and mens rea as an additional ingredient to the offence was not required to be proved.
The questions that arise for consideration are:
(1) Whether the offences under Ss 159 and 220 made punishable under S.162 of the Act are continuing offences?
(2) Whether the liability to furnish returns under S.159 of the Act and furnish audited balance sheet under S.220 of the Act would continue even if
the company had become defunct?
(3) Whether violation of Ss. 159 and 220 of the Act require mens rea?
Taking the first of the questions for consideration we find that continuing offence as such has not been defind either in the Code or in any other
Statute. However, judicial pronouncements of the Supreme Court and the other High Courts under different statutes give us certain guidelines. The
Supreme Court in State of Bihar v. Deokaran 1973 Cri. L.J. 347 (S.C), while holding that the offence created under S.66 of the Mites Act, 1932,
in failing to furnish returns and notices within the prescribed time is not a continuing offence, observed as follows:--
Continuing offence is one which is susceptible of continuance and is distinguishable from the one which is committed once and for all. It is one of
those offences which arises out of failure to obey or comply with a rule or its requirement and which involves a penalty, the liability for which
continues until the rule or its requirement is obeyed or complied with. ""On every occasion that such disobedience or non-compliance occurs and
recurs there is offence committed.
Again in Bhagirath Kanoria and Others Vs. State of M. P., the Supreme Court, when considering the question whether the non-payment of the
employer''s contribution to the Provident Fund punishable under S. 14(2A) of the employees'' Provident Fund and Family Pension Fund Act, 19 of
1952, before the due date, is a continuing offence or not, made the following observations:--
The question whether a particular offence is a continuing offence must necessarily depend upon the language of the statute which creates that
offence, the nature of the offence and above all, the purpose which is intended to be achieved by constituting the particular act as an offence.
It was held that the above offence was a continuing offence, because though the contribution was required to be paid within the specified date, the
liability to pay the contribution continued despite the expiry of the date, so long as the contribution remained unpaid.
The Companies Act has been enacted in the interest of the general public, who would be contributing shares to the floating of a company and
who would, therefore be entitled to receive certain benefits therefrom. Safeguards therefore, have been provided in the Act, to prevent exploitation
of the share holders and to ensure a proper administration subject to certain checks and controls by statutorily constituted authorities. Elaborate
procedure, therefore, has been laid down with regard to formation of companies, its management and administration and finally, the winding up of
the companies. Certain violations of the provisions of the Act have been made penal. In the scheme of the Act, in the matter of awarding
punishments, we find three different categories of punishments provided under the Act. For certain offences, the punishment provided is a
maximum for every offence. In this category we find Ss.105, 108F, 166, 218, 232, 233, 248, 295(4) and other offences. In the second category,
under S.162 of the Act, we find:
...shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
In this category is included offences falling under Ss. 159, 160, 161, 220 and 142(1) and other offences. In the last category, under Ss.168 and
234 of the Act and other sections, we find:
...shall be punishable with fine which may extend to rupees...and in the case of a continuing default with a further fine which may extend to
rupees...for every day after the first during which such default continues.
In this category are included offences under Ss 166, 167, 234 and other offences. It is, therefore, clear that the Legislature intended certain
offences under the Act which were committed once and for all, to be non-continuing offence, while certain other offences, either because of their
gravity or because the default continued, were to be treated as a continuing offence, continuing so long as the default continued. Categories 2 and
3, therefore, inspite of the difference in the language, would fall within the category of continuing offences. Offences which fall under Ss.159, 160.
161 and 220 made punishable under S 162 of the Act relate to failure to file certain documents before the Registrar of Companies. Filing of the
above documents before the Registrar, is required in the interest of the welfare of the share-holders. While furnishing a false statement to the
Registrar, either in the annual returns or in the balance sheet, as made punishable under S 628 of the Act is punishable merely with a fine of
rupees....for the commission of the offence, thereby indicating that the offence is not a continuing offence, failure to furnish annual returns and
audited balance sheet to the Registrar under Ss.159 and 220 of the Act and made punish able under S.162 of the Act entails a fine of rupees....for
every day during which the default continues; thereby indicating the clear distinction between the two kinds of offences with reference to the same
documents. So long as the above documents are not filed with the Registrar, the default continues and the offence also continues, entailing a penalty
for every day during which the default continues. The offence, therefore, is a continuing offence. The mere fact that in the penal part of Ss.168 and
234 of the Act, a lump sum of fine is indicated for the first day and a lesser sum for every subsequent day during which such default continues,
would not indicate that the offences made punishable under S.162 of the Act are not continuing offences.
Useful reference could be made to the views of some of the High Courts on the above question. A Division Bench of the Calcutta High Court
in National Cotton Mills v. Asst. Registrar of Companies (1984) 56 CC 222 over-ruling the decision of a single Judge of the same Court in Ajit
Kumar Sarkar v. Asst. Registrar of Companies 1977 Tax L.R. (NOC) 45 page 28, held that the mere use of the words in S.162 of the Act,
prescribing the penalty of fine ""which may extend to fifty rupees for every day during which the default continues"" would not indicate that the
offence is continuing. According to the Bench the above penalty was made with the object of enforcing strict compliance with the requirement of
S.159, under the threat of enhanced penalty, by early submission of returns even after the default and that this would not render the initial default a
continuing one. It was held that on the failure to furnish returns in the manner or with the stipulated time, the offence had been committed once and
for all.
Contrary views, however, have been expressed by certain other High Courts. The Orissa High Court in Registrar of Companies, Orissa v.
Utkal Distributors (Pvt.) Ltd. and others 1977 Tax L.R. (NOC) 45 page 28, has held that, when the legislative policy provides for imposition of
recurring fine under S 162 of the Act for violation of S.159, it was intented that the statutory provision should be followed and the breach should
not be permitted to continue. The default continued so long as the returns were not filed. The offence was held to be a continuing one.
A single Judge of the Kerala High Court in Sudarsan Chits (India) Ltd. and others v. Registrar of Companies, Kerala (1986) 59 Comp. Cases
261 after, referring to certain other decisions on the subject, held that failure to file the Balance Sheet and Profit and Loss account under Ss. 159
and 220 of the Act is a continuing offence under S. 162 of the Act, notwithstanding the fact that a time limit has been prescribed for filing the same.
The court held that S 611 (2) of the Act enabling filing of documents with the Registrar, after the prescribed time on payment of additional fees,
also indicated that the offence should be construed as a continuing one.
Though the Division Bench of the Calcutta High Court in the decision referred to earlier viz., National Cotton Mills v. Asst. Registrar of
Companies (1984) 56 Cam Cases 222, had overruled the decision of the single Judge of that court in Ajit Kumar Sarkar v. Asst. Registrar of
Companies (1979) 49 Com. Cases 909 (Cal.), the view expressed by the learned single Judge in the latter case could also be usefully referred to.
There in, the single Judge has held that the offence under S.159 of the Act is a continuing one, since the liability to furnish return continued until it
was complied with and each day''s failure was visited with penalty. Similar view had been expressed by another single Judge of the same High
Court in Bhawant Sankar Sahay v. Asst. Registrar of Companies 1980 II Crl. L.J. N.O.C. 23 (Cal.), holding that the offence under S.551 (5) of
the Act penalising the Liquidator for failing to follow the procedure laid down in that section was a continuing offence. It is significant that the
language in the penal part of S.551 (5) is pari materia with the language in S.162 of the Act. Learned Judge held that the sub-section itself
indicated that the offence was a continuing one, the liability for which continued until the rule or its requirement was obeyed or complied with.
It therefore, follows that the language in S.162 of the Act, imposing a fine for every day during which the default continues, clearly indicates
that the offence is not committed once and for all, but that the offence continues so long as the default continues. Not only the language of the
section, but the nature of the offence and the purpose which is intended to be achieved by requiring the company to furnish the annual returns and
the balance sheet to the Registrar would indicate, that the offences under Ss. 159 and 220 of the Act, which are punishable under S. 162 of the
Act are continuing offences. I am therefore unable to accept the view of the Division Bench of the Calcutta High Court in National Cotton Mills v.
Asst. Registrar of Companies (1984) 56 CC 222, to the contrary.
In view of my finding that the offences under Ss.159 and 220 of the Act are continuing offences, S.472, Crl.P.C., would rule out limitation, so
long as the offence continued. In the instant case, it is not disputed that even at the time of trial neither the balance sheet nor annual returns had
been filed. The offence, therefore, continued and the bar under S.465, Crl.P.C., would not apply. The complaints were within time by virtue of
S.472, Crl. P.C.
Regarding the next submission of the Learned Counsel for the petitioner that the company had become defunct and that, therefore, there was
no liability on its part to submit the returns and the annual balance sheet, reference may be made to the decision in Madan Gopal v. State 1568
Cal. 79, wherein it was held that the fact that the company did not function would not exonerate the company from filing the returns or from filing
atleast a nil balance sheet, though it might be an extenuating circumstance to some extent. Similar view had been taken by the Delhi High Court in
Sukhbir Saran v. Registrar of Companies 1973 Tax L.R. 2196. Learned Judge held that the fact that the Company itself did not function could not
be a ground by itself for the Registrar not to enforce submission of the returns and documents as prescribed by the Act. It is significant that under
S.220(1) of the Act, even if no annual general meeting of the company is held, the balance sheet has to be filed with the Registrar within thirty days
from the latest day on or before which that meeting should have been held in accordance with the provisions of the Act. It is clear that even holding
an annual general meeting and placing the balance sheet before the same, is not a condition precedent for the offence contemplated under S.220 of
the Act. The contention of the Learned Counsel for the petitioners that because the company was not functioning, it was under no liability to furnish
returns is contrary to the very provisions of the Act. The above contention, therefore, cannot be accepted.
In support of the final submission of the Learned Counsel for the petitioner, that in view or the fact that the petitioners under Ex. D2 had
informed the Registrar about the company not functioning and had the same published under Ex. D1, mens rea could not be attributed to the
petitioners, reliance was placed upon a decision of the Patna High Court in Calculating & Business Machines v. State of Bihar 1983 54 CC 100,
wherein a single Judge of the above Court, on slightly different facts, held that there was no mens rea on the part of the company and its Directors
in not submitting the annual returns as required under S.159 of the Act. The facts, however, were different in the sense, that in the above case the
company had requested the Registrar to strike the name of the company off the Register under S.50 of the Act and the Registrar of Companies, on
receipt of the above communication, had declined to concede to the above request of the company on certain grounds. The Court held that, in the
peculiar facts and circumstances of that case, mens rea could not be attributed to the accused and set aside the conviction for the offence under
S.159 r/w 162 of the Act. In the instant case, however, it is not admitted by the respondent that any communication under the original of Ex. D2
was received by them. A single Judge of the Delhi High Court in the case already referred to earlier, viz., Sukhbir Saran v. Registrar of Companies
1973 Tax L.R. 2196, held that the Companies Act specifically excludes mens rea as a constituent element of the offence. S.162 of the Act
punished a company which ""fails to comply with any of the provisions contained in Ss. 159, 160 and 161"" and, where there is a failure to comply
with the statutory provisions concerned and where mere failure is made punishable, it is a clear indication that mens rea is ruled out. It is significant
that whenever mens rea was necessary, the legislature had incorporated the required state of mind in the provision itself. Thus we find ""willingly"" in
S. 233, ""knowingly"" in Ss.59, 105, 207, 420, 538(g), ""fraudulently"" in Ss.538(e) and (k), �with intent to defraud or deceive"" in Ss.539, 540(b)
and (c) and ""intentionally"" in S.62 of the Act, and so on Ss.159 and 220 do not require any mens rea. Courts in interpreting, cannot import an
ingredient into the offence, which the statute by implication, has ruled out. Once failure to furnish returns or audited Balance Sheet is proved, the
offence is proved. That is what has happened in the instant case. I am unable to accept any of the contentions of the Learned Counsel for the
petitioners.
The revisions fail and are, therefore, dismissed.