Registrar
of Companies Vs. Rajshree Sugar & Chemicals Ltd. & Ors [2000] INSC 323
(11 May 2000)
Ruma
Pal, D.P.Mohapatro, K.T.Thomas
RUMA
PAL, J Leave granted.
This
appeal has been preferred from the decision of the High Court of Madras dated 17th March, 1998. The appeal was filed on 26th July, 1999 after a delay of 406 days. The
application for condonation of delay filed by the appellant shows that the
Department of Legal Affairs took up the matter only on 16th December, 1998. No explanation whatsoever has been
given for the appellants inaction during this period of nine months. The
observation of this Court in State of U.P. versus Bahadur Singh and Others, AIR
1983 SC 845 regarding the latitude to be shown to the Government in deciding
questions of delay, does not give a licence to the Officers of the Government
to shirk their responsibility to act with reasonable expedition. However, since
the matter has been permitted to be argued on merits, it would not be
appropriate to dismiss the appeal on the ground of delay, but our disapproval
of the conduct of the appellant in this regard will be reflected in the costs
which we intend to award against the appellant in favour of the respondents,
irrespective of our decision on merits.
The
issue to be decided in this appeal relates to an offence allegedly committed by
the respondents under Section 113 of the Companies Act, 1956 ( referred to as
the Act). The complaint was filed by the appellant against the respondents on
28th August, 1992 alleging that the respondents had, in violation of Section
113 of the Act, defaulted in transfer of shares within the time specified in
that Section. The Chief Judicial Magistrate, Coimbatore by his order dated 30th March, 1993 dismissed the complaint on the
ground that it was barred by limitation under Section 468 of the Code of
Criminal Procedure ( for short the Code). The appellant filed a petition under
Sections 397 and 401 Cr.P.C. before the High Court of Madras praying for
revision of the order dated 30th March, 1993.
The High Court by the impugned judgment not only upheld the order of the trial
court but also held that the appellant was incompetent to file a complaint in
respect of an offence under Section 113 of the Act. Section 113 sub-Section (1)
of the Act requires a company to deliver the share certificates to the allottee
or transferee within three months after the allotment and within two months
after the application for registration of transfer of the shares. The period is
extendable in certain circumstances on an application by the company to the
Company Law Board subject to a maximum period of nine months. Sub Section (2)
of Section 113 provides that if default is made in compliance with sub Section
1 the company and every officer of the company who is in default shall be
punishable with fine which may extend to five hundred rupees for every day
during which the default continues. In addition to this criminal liability for
punishment, under Section 113 (3) a person entitled to have the shares
delivered to him, may apply to the Company Law Board for a directive on the
company to deliver the certificates or the debentures to the complainant. The
Company Law Board is authorised to pass an order directing the company and any
officer of the company to make good the default within such time as may be
specified and also provide for the costs of and incidental to the application
to be paid to the complainant by the company or any officer of the company who
may be responsible for the default. In this case, the complaint filed by the appellant
was under Section 113 (2). It was alleged in the complaint that the company was
sent share transfer certificates along with applications for transfer in two
batches; - on 23.11.1990 and 18.12.1990. The first batch of applications for
transfer was received by the company on 11.12.1990, approved on 29.3.1991 and
dispatched on 6.4.1991. The second batch of applications was received on
26.12.1990 approved by the company on 3.4.1991 and dispatched on 16.4.1991.
Apparently, Section 113 (1) was not complied with. This came to the knowledge
of the appellant only on 20.7.1992 when the appellant inspected the books of
account of the company under Section 209A (1) (i) of the Act. The complaint was
filed by the appellant on 20th August 1992
before the Chief Judicial Magistrate, Coimbatore. As already noted, the Chief Judicial Magistrate dismissed the
complaint relying on Section 468 of the Code, which provides: 468. Bar to
taking cognizance after lapse of the period of limitation: - (1) Except as
otherwise provided elsewhere in this Court, no Court shall take cognizance of
an offence of the category specified in sub-section (2), after the expiry of
the period of limitation.
(2)
The period of limitation shall be- (a) six months, if the offence is punishable
with fine only;
The
date on which period of limitation is to commence has been provided for in
Section 469 of the Code in the following manner: 469. Commencement of the
period of limitation. (1) The period of limitation, in relation to an offender,
shall commence, - (a) on the date of the offence; or (b) where the commission
of the offence was not known to the person aggrieved by the offence or to any
police officer, the first day on which such offence comes to the knowledge of
such person or to any police officer, whichever is earlier." It is
unnecessary to decide whether the offence under Section 113 of the Act is a
continuing one under Section 472 of the Code on the facts of this case. Even if
the offence were a continuing one, the offence, if any, continued upto the date
when the deliveries were in fact effected under Section 113 viz. on 6.4.91 and
16.4.91. As the offence of delayed delivery is punishable with a fine, the time
to initiate proceedings under Section 468 of the Code would expire at the
latest in October, 1991. The appellant, in fact, filed the complaint almost a
year later. According to the appellant, the Magistrate overlooked the
provisions of Section 469 (1) (b) of the Code which provides for the
computation of the period of limitation from the first day on which the offence
comes to the knowledge of the person aggrieved by the offence or to the police
officer. The High Court rejected the submission holding that the appellant was
neither the person aggrieved nor a police officer and that the prosecution
under Section 113 could be launched only on the application of an affected
shareholder.
According
to the High Court, this was clear from clause (3) of Section 113. It is
contended by learned counsel appearing for the respondents that the view of the
High Court has also been taken by a learned Single Judge of the Gujarat High
Court in Vasantlal Chandulal Majmudar V.
Navinchandra
Manilal & Anr. Guj. LR Vol. XXII 436; by a learned Single Judge of the
Delhi High Court in Nestle India Limited and Others V. State and Another
1994(4)Comp L.J.
446
(Del) as well as by a learned Single Judge of the Madras High Court in Sulochana
V. State of Registrar of Chits (Investigation and Prosecution), Madras 1978 Crl.L.J.
116.
A
contrary view has been expressed by two Division Bench judgments of the
Calcutta High Court in Bhagwati Prasad V.Assistant Registrar of Companies
(1983) 53 Company Cases 56;
Sushil
Kumar and Others V. Registrar of Companies (1983) 53 Comp. Cases P. 54 with
reference to Section 113 of the Act. As far as the decision of the Gujarat High
Court is concerned, it dealt with the provisions of the Gujarat Co- operative
Societies Act, 1967, the provisions of which are not before us. As far as the
decision of the High Court of Madras is concerned, the decision of the learned
Single Judge in Sulochana V. Registrar (Supra) has been expressly over-ruled by
the Division Bench of the Madras High Court in Abdul Rahim V. State represented
by the Chit Registrar Nagapattinam 1978 (1) L.W. Crl. 195. The Division Bench
has held that the Registrar of Chits was a person aggrieved within the meaning
of S.469 (1) (b) of the Code and was competent to initiate prosecution for an
offence under the Tamilnadu Chit Funds Act, 1961. Sulochanas case was also
distinguished in the two Calcutta High Courts decisions noted earlier. The only
decision cited by the respondents which is on Section 113 of the Act is the
decision in Nestle India Limited (supra). Neither the learned Judge in his
decision in Nestle India nor the High Court in the judgment
under appeal considered the provisions of Section 621 (1) of the Companies Act,
which provides:
621
(1) No Court shall take cognizance of any offence against this Act (other than
an offence with respect to which proceedings are instituted under Section 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.
Under
this Section therefore, the appellant is competent to file a written complaint
in respect of offences under, inter-alia, Section 113 of the Act. The phrase
person aggrieved has not been defined in the Code.
However,
as far as offences under the Companies Act are concerned, the words must be
understood and construed in the context of Section 621 of the Act. If the words
person aggrieved are read to mean only the person affected by the failure of
the Company to transfer the shares or allot the shares, then the only person
aggrieved would be the transferee or the allottee, as the case may be. Under
Section 621 of the Act, no Court can take cognizance of an offence against
Companies Act except on the complaint of a share-holder, the Registrar or the
person duly authorised by the Central Government. Where the transferee or allottee
is not an existing share-holder of the Company, if the words person aggrieved
is read in such a limited manner, it would mean that Section 469 (1) (b) of the
Code would be entirely inapplicable to offences under Section 113 of the Act.
There is, in any event, no justification to interpret the words person
aggrieved as used in Section 469 (1) (b) restrictively particularly when, as in
this case, the statute creating the offence provides for the initiation of the
prosecution only on the complaint of particular persons.
Having
regard to the clear language of Section 621 of the Act, we have no manner of
doubt that the appellant would be a person aggrieved within the meaning of
Section 469 (1) (b) of the Code in respect of offence (except those under
Section 545) against the Companies Act. Apart from overlooking the provisions
of Section 621 of the Act, the High Court erred in construing the provisions of
Section 113 (2) with reference to Section 113(3). The latter deals with the
civil liability of the Company and its officers for a breach of Section 113 (1)
at the instance of the transferee of the shares. Section 113 (2) deals with the
criminal liability arising out of a violation of Section 113 (1).
The
objects of the two sub-sections are disparate. Section 113 (3) is primarily
compensatory in nature whereas Section 113 (2) is punitive. An application
under Section 113 (3) can only be made by the transferee. And as already seen,
a transferee who is not an existing share-holder of the Company cannot file a
complaint under Section 113 (2) at all. For the reasons stated, we are of the
view that the appellant as a person aggrieved would be entitled to the benefit
of the provisions of Section 469 (1) (b) of the Code. It is not in dispute that
the appellant came to know of the offences on 20th July 1992. The commencement of the period of limitation of six months
for initiating the prosecution would have to be calculated from that date. The
complaint was filed on 20th
August 1992 well
within the period specified under Section 468 (2) of the Code. In the
circumstances, the decision of the High Court as well as the Chief Judicial
Magistrate, Coimbatore are set aside and the matter is remanded back to the Chief
Judicial Magistrate, Coimbatore for being decided on merits. Because of the
inordinate delay by the appellant in preferring this appeal, the appellant
shall pay the costs of the appeal to the respondents.
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