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The Andhra Provincia... v. The Registrar Of Com...
Structured Summary of the Provided Opinion
Factual and Procedural Background
The petitioners were directors of Andhra Provincial Potteries Ltd. and were prosecuted for contravening Section 220 of the Companies Act by not filing the balance-sheet and profit and loss account with the Registrar within the prescribed time. The Registrar issued a notice dated 14 December 1967 stating that the annual general meeting ought to have been held by 30-9-1967 and that the documents should have been filed by 30-10-1967; the Registrar asked the directors to remedy the default within one month. A reply (dated in the opinion as 17th February 1958) requested condonation and stated that the documents were being arranged. Ultimately, a complaint was lodged because no such documents were filed.
A preliminary objection was raised before the VI City Magistrate that prosecution under Section 220(3) could not lie because no annual general meeting (AGM) had been held and, therefore, the documents could not be laid before a meeting and filed. The Magistrate, applying the Supreme Court's decision in State of Bombay v. Bhandhan Ram, dismissed the objection. The case was referred to a bench because of the importance of the question of law, and thereafter to a full bench for an authoritative decision.
Counsel for petitioners: Mr. A.V. Koteswara Rao. The State was represented by the Public Prosecutor. The full bench ultimately heard the matter and delivered the judgment that is summarized here.
Legal Issues Presented
- Whether, under Section 220 of the Companies Act, 1956, the holding of an annual general meeting and laying the balance-sheet and profit and loss account before it are prerequisites (a condition precedent) to a prosecution under Section 220(3) for failing to file those documents with the Registrar.
Arguments of the Parties
Petitioners' Arguments
- The petitioners contended that because no annual general meeting was held, they were not in a position to place the balance-sheet and profit and loss account before the company, and consequently could not file them with the Registrar as required by Section 220.
- At the Magistrate's stage it was admitted that no general meeting had been held on the date of the complaint; later the petitioners' advocate stated that a meeting took place on 9 March 1968 and the documents were lodged on 19 March 1968 (as noted in the opinion).
- A prior reply to the Registrar indicated that the petitioners were arranging to send the documents and sought condonation of delay.
State's Position (as reflected in the record)
- The Public Prosecutor, and the Magistrate in his order, relied on the Supreme Court decision in State of Bombay v. Bhandhan Ram to the effect that a person charged with failure to comply with certain statutory provisions cannot plead his own default (i.e., cannot rely on the non-holding of an AGM when that non-holding is due to the officers' own default) as a defence. On that basis the Magistrate dismissed the preliminary objection that prosecution would not lie because no AGM had been held.
- Both prosecution and accused admitted that no general meeting had been held on the date when the complaint was filed.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Public Prosecutor v. H.B. Basavaraj (A.I.R. 1963 A.P. 389) / Public Prosecutor v. H.R. Basava Raj | Held that holding of the annual general meeting is a prerequisite for laying the balance-sheet and profit and loss accounts. | Cited as authority supporting the view that an AGM and laying before it are condition precedent to filing under provisions analogous to Section 220; the court noted this decision took the same view as the Bombay decision. |
| Emperor v. Pioneer Clay and Industrial Works (A.I.R. 1948 Bomb. 357) | Held that a general meeting is a pre-requisite for laying the balance-sheet and accounts and consequently for filing copies under the statute (section 134 of the old Act). | Regarded by the court as a clear authority that filing copies is conditional on the balance-sheet having been laid before an actual AGM; the full bench relied on this as supporting its conclusion for Section 220. |
| State of Bombay v. Bhandhan Ram (A.I.R. 1961 S.C. 186) | Applied the principle (derived from Park v. Lawton) that a person charged with an offence cannot rely on his own default (non-holding of meeting) as a defence; interpreted provisions such as section 32 and section 131 to that effect. | The court analyzed this Supreme Court decision and held that while its principle applies to sections like 32 and 131 (and analogous provisions), it does not, on the language, overrule decisions about section 134 (old Act) or, by analogy, section 220 (Act). The full bench distinguished the State of Bombay decision for the specific question under Section 220. |
| Lakshmana v. Emperor (A.I.R. 1982 Mad. 497) and In Re P. Narasimha Rao | Under Section 134 or analogous provisions, held that omission to file is not contravention where no general meeting was held or no general meeting was due to be held. | Cited as examples of High Court decisions that treated laying before an AGM as necessary for prosecution; the full bench grouped these with other similar decisions. |
| Park (Part) v. Lawton (1911 I K.B. 588) [English authority] | Principle that a person charged with an offence under the statutory provision cannot rely on the impossibility of compliance caused by his own default; the case concerned the analogous English Companies Act provision. | The full bench acknowledged the principle and recorded how several Indian courts applied it to provisions such as section 32 and section 131, but held that Park v. Lawton's principle is not applicable to section 134 (old Act) and therefore not to section 220 when the statutory language makes the holding of an AGM a condition precedent. |
| Gibson v. Barston (L.R. 10 Q.B. 329) and Edmonds v. Poster (45 L.J. M.C. 41) | English authorities cited as clear authorities supporting Park v. Lawton's principle. | Referred to in support of the Park v. Lawton principle; the full bench considered these but nevertheless distinguished the statutory language of Section 220. |
| Ballan Dass v. Mohan Lal Sadhu (Vol. 39 Calcutta Weekly Notes 1152) | Held that to sustain conviction the prosecution must prove that the officer knowingly and wilfully authorised or permitted defaults; an officer who knew and permitted defaults could be convicted. | Cited as authority where a conviction was sustained for defaults in preparing or placing accounts before a meeting; court noted this case did not consider differences in statutory language between sections. |
| Bhagibath v. Emperor (A.I.R. 1948 Cal. 42) | Confirmed that a director prosecuted for knowingly and wilfully permitting default cannot plead impossibility caused by his own default. | Cited as supporting the view that directors cannot plead their own default; the full bench observed that such decisions did not address the distinct language of sections like 134/220. |
| In-Re Narasimha Rao / Narasamaha Rao Pandurang Row | Considered applicability of sections analogous to laying balance-sheet before meeting; held that where no placing before meeting occurs, offence under the section requiring such placing cannot be committed. | Used by the bench to show prior reasoning that section contemplating filing only after placing before a meeting presupposes such placing; supports the condition precedent interpretation. |
| Viswananathan v. Assistant Registrar (A.I.R. 1953 Mad. 558) and Gangipati Appayya (reference) | Dealt with various sections (e.g., sections 76, 131) and applied Park v. Lawton principle in some contexts. | Noted by the court among decisions that applied the Park v. Lawton principle; the full bench remarked that these cases did not necessarily address the textual differences relevant to Section 220. |
| P.S.N.S.A. Chettiar v. Registrar of Companies / Neptune (A.I.R. 1955 Mad. 415) and Neptune Studios Ltd. v. State (1964 Mad. W.N. 108) | Applied the Supreme Court's principle to prosecutions under Section 220 in subsequent High Court decisions, treating the State of Bombay ruling as applicable. | The full bench surveyed these decisions and observed that several High Courts had taken the view that State of Bombay applied to Section 220; the bench distinguished that line of authority on statutory language grounds. |
| State v. T.C. Printers (A.I.R. 1963 Raj. 134) | Assumed the Supreme Court decision applied and treated non-holding of meetings as no defence to prosecution under certain sections. | Noted among cases that applied the State of Bombay principle to Section 220; the full bench analyzed and distinguished them. |
| Dulal Chandra Bhar v. State of West Bengal (1962, 32 Comp. Cas. 1143 Cal. H.C.) | Applied principles from State of Bombay to prosecutions under provisions like Section 220. | Referred to as a decision that did not note the linguistic distinction between Section 220 and other provisions; the full bench critiqued that approach. |
| Ramachandra & Sons (P) Ltd. v. State (1967 II Coml J. 92 Allahabad) | Considered Section 220 and held that, despite the opening words, the company/directors are still liable to perform statutory duty to file even if no AGM had been held. | The full bench expressly disagreed with this conclusion, finding that the clear words of Section 220 indicate that filing copies is conditional on an AGM and laying before it. |
Court's Reasoning and Analysis
The full bench proceeded by close textual and statutory comparison and by examination of authorities. The main steps of the court's analysis (as reflected in the opinion) were:
- Statutory comparison: The court compared provisions of the old Companies Act (1913) and the Companies Act, 1956 (the Act), including provisions that require holding annual general meetings, laying balance-sheets and profit and loss accounts before such meetings, and filing copies with the Registrar (sections such as 131/134 under the old Act and 210/220 under the Act, and sections 159–162 and 166 of the Act).
- Textual emphasis: The court emphasized the specific wording of Section 220(1) — "After the balance sheet and the profit and loss account have been laid before a company at an annual general meeting as aforesaid, there shall be filed with the Registrar..." — and concluded that the words "after" and "have been laid" make filing expressly conditional on the actual laying of the documents before an AGM.
- Distinction between sections: The bench distinguished sections whose language refers to "the day on which each of the annual general meetings ... is held" (for example sections 159–161) from Section 220 and its predecessor (section 134 of the old Act). The court noted that in the Act an explanatory provision defines "the day on which the annual general meeting for any year has been held" as the latest day on or before which that meeting should have been held — but that this explanatory machinery does not alter the clear condition precedent in Section 220's wording.
- Precedent analysis: The court reviewed an array of Indian and English authorities. It accepted that the general principle from Park (Part) v. Lawton — that one cannot rely on one's own default as a defence — applies to certain statutory provisions (e.g., section 32 and section 131) as the Supreme Court held in State of Bombay v. Bhandhan Ram. However, the court concluded that the Supreme Court had not overruled the Bombay High Court's decision in Emperor v. Pioneer Clay and Industrial Works with respect to the different statutory language applicable to section 134 (old Act) and, by close analogy, section 220 (Act).
- Application of principle to Section 220: Given the specific wording of Section 220 importing an actual laying before an AGM as a condition precedent, the full bench held that the Park v. Lawton principle could not be applied to erase that condition. In short: where the statute requires that the balance-sheet and account have been laid before a general meeting, filing copies with the Registrar is conditioned on that event having occurred; absent an AGM and actual laying, there are no such copies to file and therefore prosecution under Section 220 is premature.
- Preservation of alternative remedies: The court recognized that where officers wilfully fail to hold the AGM or otherwise default in duties under sections such as 159–162, 166 and 210, prosecutions or penalties under those provisions remain available to the Registrar or State (i.e., the inability to proceed under Section 220 does not immunize wilful default under other penal provisions).
Holding and Implications
Holding: The full bench allowed the criminal revision and quashed the prosecution. The opinion states: "the criminal revision case is allowed and the prosecution is quashed."
Implications (direct and as stated in the opinion):
- The court held that under Section 220 the filing requirement is conditional on the balance-sheet and profit and loss account having been actually laid before an annual general meeting — that is, an AGM and the laying of the documents are a sine qua non for prosecution under Section 220(3).
- Prosecution under Section 220 is therefore premature in cases where no AGM has in fact been held and the documents have not been laid before such a meeting.
- The decision does not prevent the Registrar or the State from prosecuting officers or companies under other provisions (e.g., sections 159–162, 166, 210) for wilful failure to hold meetings or wilful defaults, for which other penalties are provided.
- The court distinguished the Supreme Court's ruling in State of Bombay v. Bhandhan Ram as not displacing the condition precedent created by the specific language of Section 220 (and by analogy section 134 of the old Act), and thus limited the application of the "cannot rely on own default" principle where the statutory language makes actual laying before an AGM indispensable.
Note: This summary is confined strictly to the statements and reasoning contained in the provided opinion. No facts, rulings, or implications have been added beyond what appears in the opinion itself.
1. In view of the importance of the question of law included in this revision case, I deem proper that it should be decided by a bench. The revision case is accordingly referred to a bench.
2. In pursuance of the above order this case next came on for hearing before the Hon'ble Mr. Justice Sharfuddin Ahmed and the Hon'ble Mr. Justice A.D.V Reddy. Mr. A.V Koteswara Rao, Advocate for the petitioners (Accused).
3. The Public Prosecutor on behalf of the State.
4. The Court made the following.
Judgment of the Court delivered by
Sharfuddin Ahmed, J.:— The petitioner directors of a company have been prosecuted for contravening the provisions of Section 220 of the Companies Act i.e for not filing the balance sheet and the profit and loss accounts with the Registrar as contemplated in that section within the prescribed time. The objection on behalf of the petitioner is that as no Annual General Meeting could be held, they were not in a position to file the balance sheet and profit and loss accounts with the Registrar as provided under section 220. The question is whether the holding of General Meeting is the prerequisite for sending the balance sheet and profit and loss accounts under Section 220. That section reads as under.
“After the balance sheet and the profit and loss account have been laid before a company at the annual general meeting as aforesaid there shall be filed with the Registrar at the same time as the copy of the annual return referred to in section 161”.
6. So, if for reasons beyond the control of the directors on annual general meeting was not held, the question of placing the balance sheet and profit and loss accounts and filing the same with the Registrar would not arise. The emphasis is, on the word “after” in the beginning of the section. In Public Prosecutor v. H.B Basavaraj . A.I.R 1963 A.P 389. it was held that the holding of annual general meeting is the pre-requisite for laying the balance sheet and profit and loss accounts. The same view has been taken by a Bench of the Bombay High Court in Emperor v. Pioneer Clay and Industrial Works . A.I.R 1948 Bomb. 357.. Some of the High Courts however in view of the decision of the Supreme Court in State of Bombay v. Bhandhan Ram . A.I.R 1961 S.C 186., have taken a different view though the Supreme Court has not not specifically over ruled the decision of the Bombay High Court. Having regard to the conflicting decisions of the various High Courts we think it is a matter that should be referred to a full bench for an authoritative pronouncement. The papers may be placed before the Honourable the Chief Justice for necessary orders.
7. Pursuant to the above order this case came on for final hearing before the Honourable Mr. P. Jaganmohan Reddy the Chief Justice, the Honourable Mr. Justice Venkatesam and the Honourable Mr. Justice Sambasiva Rao.
8. Mr. A.V Koteswara Rao, Advocate for the petitioners (Accused)
9. The Public Prosecutor on behalf of the State.
10. The court made the following:
(Judgment of the full bench delivered by the Hon'ble the Chief Justice.)
11. The question before us is whether, under section 220 of the Companies Act, 1956 (I of 1956)(hereinafter referred to as the ‘Act’) the holding of annual general meeting of a company and laying before it the balance sheet and the profit and loss account are prerequisites for a prosecution under section 220(3).
12. The High Court of Bombay in Emperor v. Pioneer Clay and Industrial Works and earlier, the Madras High Court in Lakshmana v. Emperor . A.I.R 1982 Mad. 497. and In Re P. Narasimha Rao5 had held under Section 134 and the analogous provisions of the Indian Companies Act, 1913 (hereinafter called the ‘Old Companies Act’) corresponding to section 220 of the Act that the omission to file with the Registrar the balance sheet and the profit and loss account of a company is not a contravention of those provisions in as much as either no general meeting was held at which the balance sheet was laid, or no general meeting was due to be held. After the decision of the Supreme Court in State of Bombay v. Bhandwan Ram some of the High Courts have taken the view that the decision of the Bombay High Court in Emperor v. Pioneer Clay and Industrial Works has been overruled and that therefore the Directors cannot take shelter in the defence that no general meeting was held, when the non-holding of the general meeting was due to their own default. It may be stated that even after the Supreme Court's decision, this court in Public Prosecutor v. H.R Basava Raj took a similar view to that taken by the Bombay High Court (No. 2, supra). But having regard to the decisions of several High Courts which have taken a contrary view, Sharfaddin Ahmed and A.D.V Reddy JJ. have referred this matter to a full bench.
13. The petitioners who are the Directors of the Andhra Provincial Potteries Ltd., have been prosecuted for contravention of the provisions of section 220(i) of the Act viz. for not filing the balance sheet and the profit and loss account with the Registrar of companies, as contemplated in that section within the prescribed time. On 14th December 1967, a notice was issued by the Registrar of Companies, informing the petitioners that the annual general meeting of the company ought to have been held at the latest on 30-9-1967, that the balance sheet and the profit and loss account ought to have been laid before the said annual general meeting and that they should have been filed before the Registrar on or before 30th October, 1967 in accordance with the provisions of section 220(i) of the Act. In as much as the said balance sheet and profit and loss account were not filed, they being the directors of the company, it would be presumed that they are the officers of the company in default within the meaning of section 5 and as such, are liable to be prosecuted. The Registrar therefore asked them to make good the default mentioned above within one month from the date of issue of the notice. To this, a reply was sent on 17th February 1958 by one of the petitioners, stating that they were arranging to send the concerned document immediately and requesting for condonation of delay. As no balance sheet and profit and loss account were filed a complaint was lodged.
14. A preliminary objection was raised before the VI City Magistrate that prosecution will not lie under section 220(3) of the Act, in as much as no annual general meeting as required under section 166 of the Act was held, without which the question of filing copies of the balance sheet and the profit and loss account would not arise. In a considered order, the Magistrate applying the principles laid down by the Supreme Court in State of Bombay v. Bhandhan Ram and taking the view that decision had over ruled the Bombay High Court's decision in Emperor v. Pioneer Clay and Industrial Works dismissed the objection. It was through out admitted both by the prosecution and the accused that no general meeting was held on the date when the complaint was filed, namely the 4th March 1968. The learned advocate for the petitioners, however, states that the meeting was held on the 9th March 1968 and the documents lodged on 19th March 1968.
15. In as much as several decisions dealing with the provisions of the old Companies Act 1913 and the Act have been cited before us, we give below the relevant provisions of the old Companies Act and the Act as they would assist in the understanding of the question before us.
Indian Companies Act (VII of 1913) Companies Act 1956 (I of 1966) 23(1) “Every company having a share capital shall within eighteen months from its incorporation and thereafter once atleast in every year make a list of all persons who, on the day of the first or only ordinary general meeting in the year, are members of the company and of all persons who have ceased to be members since the date of the last return of (in the case of the first return) of the incorporation of the company). 159(1) “Every company having a share capital shall, within sixty days from the day on which each of the annual general meetings referred to in section 166 is held, prepare and file with the Registrar a return containing the particulars specified in part I of schedule V, as they stood on the day regarding. (2) … a … (3) … b … (4) … c … d … e … f … g … … Proviso … … (5) If a company makes default in complying with the requirements of this section, it shall be liable to a fine not exceeding fifty rupees for every day during which the default continues and every officer of the company who knowingly and wilfully authorises or permits the default shall be liable to the like penalty.” Explanation: Any reference in this section or in section 160 or 161 or in any other section or in schedule V to the day on which the annual general meeting for any year has been held, be construed as a reference to the latest day on or before which that meeting should have been held in accordance with the provisions of this Act. (2) … … 160(1) “Every company not having a share capital shall, within sixty days from the day on which each of the annual general meetings referred to in section 166 is held, prepare and file with the Registrar a return stating the following particulars as they stood on that day”. a …… b …… (2) ……”. 161(2) “The copy of the annual return filed with the Registrar under sec. 159 or 160, as the case may be, shall be signed both by a director and by the managing agent, secretaries and treasurer 2 ……” 162(1) “If a company fails to comply with any of the provisions contained in sec. 159, 160, or 161, the company who is in default, shall be punishable with fine which may extend to fifty rupees for every day during which the default continues. (2) For the purposes of this section and sections 159, 160 and 161, the expressions “officer” and “director” shall include any person in accordance with whose directions or instructions the Board of directors of the company is accustomed to act.
76(1) “A general meeting of every company shall be held within eighteen months from the date of its incorporation thereafter once at least in every calender year and not more than fifteen months after the holding of the last preceding general meeting. 166(1) “Every company shall in each year hold in addition and to any other meetings a general meeting as its annual general meeting and shall specify the meeting as such in the notices calling it; and not more than fifteen months shall elapse between the date of one annual general meeting of a company and that of the next.
(2) If default is made in holding a meeting in accordance with the provisions of this section, the company and every director or Manager of the company who is knowingly and wilfully a party to the default shall be liable to a fine not exceeding five hundred rupees. provided that a company may hold its first annual general meeting within a period of not more than eighteen months from the date of its incorporation; and if such general meeting is held with in that period, it shall not be necessary for the company to hold any annual general meeting in the year of its incorporation or in the following year: (3) If default is made as aforesaid, the court may, on the application of any member of the company, call or direct the calling of a general meeting of the company”. Provided further that the Registrar may, for any special reason, extend time within which any annual general meeting (not being the first annual general meeting) shall be held, by a period not exceeding three months”. 131.(1) “The Directors of every company shall at some date not later than eighteen months after the incorporation of the company and subsequently once at least in every calender year lay before the company in general meeting a balance sheet and profit and loss account or in the case of a company not trading for profit an income and expenditure account for the period in the case of the first account since the incorporation of the company and in any other case since the proceeding account, made up to a date not earlier than the date of the meeting by more than nine months or in the case of (the) a company carrying on business or having interests outside British India by more than twelve months.
210(1) “At every annual general meeting of a company held in pursuance of section 166, the Board of directors of the company shall lay before the company— — (a) a balance sheet as at the end of the period specified in sub-sec. (3): and (b) a profit and loss account for that period 2 … … … 3 … … … 4 … … … Provided that the Registrar may for any special reason extend the period by a period not exceeding three months. (5) If any person, being a director of a company fails to take all reasonable steps to comply with the provisions of this section he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both: (2) The balance-sheet and the profit and loss account or income and expenditure account shall be audited by the auditor of the company as hereinafter provided and the auditor's report shall be attached thereto, or there shall be inserted at the foot thereof a reference to the report and the report shall be read before the company in general meeting and shall be open to inspection by any member of the company. Provided that in any proceedings against (the) a person in respect of an offence under this section, it shall be a defence to prove **** that a competent and reliable person was charged with the duty of seeing that the provisions of this section were complied with and was in a position to discharge that duty: Provided further that no person shall be sentenced to imprisonment for any such offence unless it was committed wilfully.
(3) “Every company other than a private company shall send a copy of such balance sheet and profit and loss account or income and expenditure account so audited together with a copy of the auditor's report to the registered address of every member of the company at least fourteen days before the meeting at which it is to be laid before the members of the company, shall deposit a copy at the registered office of the company for the inspection of the members of the company during a period of atleast fourteen days before that meeting”. (6) If any person, not being a director of the company, having been charged by the Board of Directors with the duty of seeing that the provisions of this section are complied with, makes default in doing so, he shall in respect of each offence, be punishable with imprisonment for term which may extend to six months, or with fine which may extend to one thousand rupees or both; Provided that no person shall be sentenced to imprisonment for any such offence unless it was committed wilfully”. 134(1) “After the balance sheet and profit and loss account (or the income and expenditure account as the case may be) have been laid before the company at the general meeting three copies thereof signed by the Manager or Secretary of the company shall be filed with the Registrar at the same time as the copy of the annual list of members and summary prepared in accordance with the requirements of section 32. 220(1) “After the balance sheet and the profit and loss account have been laid before a company at an annual general meeting as aforesaid, there shall be filed with the Registrar, (within thirty days from the date on which the balance sheet and the profit and loss account were so laid) (2) If the general meeting before which a balance-sheet is laid does not adopt the balance sheet, a statement of that fact and of the reasons therefor shall be annexed to the balance-sheet and to the copies thereof required to be filed with the registrar. (a) ……….three copies of the of the balance sheet and the profit and loss account, signed by the managing director, managing agent, secretaries and treasurers, manager or secretary of the company, or if there be none of these by a director of the company, together with three copies of all documents which are required by this Act to be annexed or attached to such balance sheet or profit and loss account…
(3) This section shall not apply Provided further that to a private company. Provided further that— (4) If a company makes default in complying with the requirements of this section, the company and every officer of the company who knowingly and wilfully authorises or permits the default shall be liable to the like penalty as is provided by section 32 for a default in complying with the provisions of that section. (i) in the case of private company which is not a subsidiary of a public company, or (ii) in the case of a private company of which the entire paid up share capital is held by one or more bodies corporate incorporated outside India, or (iii) in the case of a company which becomes a public company by virtue of section 43-A if the Central Government directs that it is not in the public interest that any person other than a member of the company shall be entitled to inspect, or obtain copies, of the profit and loss account of the company, no person other than a member of the company concerned shall be entitled to inspect or obtain copies of the profit and loss account of that company under section 160. (2) If the annual general meeting of a…………before which a balance sheet is laid as aforesaid does not adopt the balance sheet, a statement of that fact and of the reasons therefor shall be annexed to the balance sheet and to the copies thereof required to be filed with the Registrar. (3) If default is made in complying with the requirements of sub-sections (1) and (2), the company and every officer of the company who is in default, shall be liable to the like punishment as is provided by section 162 for a default in complying with the provisions of section 159, 160 or 161”.
16. A comparison of the conspectus of the sections under old companies Act and the Act would show that section 12 of the old companies Act has been replaced by sections 159, 160, 161 and 162 of the Act with this difference that under the old companies Act, there was nothing to indicate as to what was meant by “the day of the first or only ordinary general meeting in the year”, while under the Act, the explanation to section 159 clearly indicates that a reference to “the day on which an annual general meeting” in that section or sections 160 or 161 or in any other section or schedule shall be construed as a reference to “the latest day on or before that meeting should have been held in accordance with the provisions of the Act”. It is apparent under section 166(1) of the Act that the company has to hold in each year, a general meeting as its annual general meeting not more than fifteen months from the date of the previous general meeting, unless of course the Registrar, for any special reason, extends the time within which any annual general meeting, not being the first annual general meeting, shall be held, by a period not exceeding three months. It is clear from these provisions that an annual general meeting, not being the first annual general meeting, has to be held within fifteen months or eighteen months, where it is extended, from the date of the last general meeting. At such an annual general meeting, both under old companies Act and the Act the balance sheet and the profit and loss account etc., have to be laid in default of which punishment has been provided therefor. It is also apparent, at any rate from the specific provision of the Act, that this punishment is attracted even in cases where no meeting has been held due to wilful default of those on whom the duty was cast to call the meeting and lay the specified documents before it. That this was also the position under the old Companies Act, has been the view taken by the highest court. Now the question is whether the company or its directors, agents and servants can be held liable on the analogy of the same principle on applicable in the case of non-holding of the annual general meeting or the omission to lay before that general meeting the documents specified in the earlier provisions for not fulfilling the requirements of section 220 of the Act, notwithstanding the fact that no annual general meeting was held and no balance sheet or profit and loss account laid before that annual general meeting. Both section 134 of the old companies Act and section 220 of the Act provide that, after these documents viz. the balance sheet and the profit and loss account have been laid before a general meeting, three copies of the balance sheet and profit and loss account should be filed before the Registrar of companies. It is also necessary, where the balance sheet is not adopted by the general body, a statement to that effect and all the reasons therefor shall be annexed to the balance sheet and to the copies thereof required to be filed before the Registrar. In default of these two requirements viz., of filing the balance sheet and the statement of the balance sheet not being adopted were it is not so adopted, the company and every officer of the company who is in default shall be liable to like punishment as provided in section 32 of the old companies Act or section 162 of the Act, for not complying with the provisions of sections 159, 160 or 161.
17. Before the explanation to section 159 of the Act was added defining the day on which the annual general meeting is to be held as the latest day on or before which that meeting should have been held under the provision of section 166 of the Act, courts had been called upon to interpret that expression under sections 32, 76 and 77 of the old companies Act. It would appear that in some cases no difference was noticed between these sections and section 134. It may be stated that both section 134 of the old companies Act and section 220 of the Act do not use the words “on the day” or “from the day on which”, which are used in section 32 of the old companies Act and in sections 159 and 160 of the Act. An examination of the language of these sections significantly demonstrates the conclusion when it is stated that after the balance-sheet and the profit and loss account have been so laid before the company at the general meeting, three copies of the same should be filed with the Registrar, that they should be the copies of the very same balance sheet and profit and loss account which are in fact laid before the annual general meeting and not those which would have been laid before an annual general meeting had such a meeting been called. Under section 134(1) of the old Companies Act, the time within which these documents should be filed is the same as for filing copies of the annual list of members and summary prepared in accordance with section 32. Section 220(1) of the Act varies the language by specifying the time viz. that after the balance-sheet and the profit and loss account had been laid before a company at an annual general meeting as aforesaid that is to say, as required under section 210, they shall be filed with the Registrar within thirty days on which the balance sheet and the profit and loss account were so laid. The reference to section 210 by the use of the word “aforesaid” and the emphasis indicated by the words “were so laid” make the filing of copies of those balance-sheets and the profit's and loss accounts which are laid before the general body meeting an essential prerequisite. If no general body meeting is held, it is obvious that no copies of the balance sheet and profit and loss accounts can be filed even though the default may be wilful. Both under section 134 of the old Companies Act and section 220 of the Act, the laying of the balance sheet and the profit and loss account before an annual general meeting is a condition precedent to the requirement that copies of such documents so laid should be filed before the Registrar. This intention is made further clear by the provision under Sub-section (2) of the respective sections of both the Acts that, if the balance sheet is not adopted nor of complying with the requirements of sub-section (2) of section 134 of the old Companies Act or section 220 of the Act as the case may be while wilful omission to call a general body meeting or omit to lay the balance sheet and profit and loss account before it may expose the person responsible to punishment under the aforesaid provisions. The punishment under these sections is for default in filing copies of the balance sheet or the profit and loss account which are laid before a general body and for not sending a statement of the fact that the balance sheet was not adopted. It may be that copies of the balance sheet so laid before the general body may have been forwarded under sub-section (1) of the Section 134 of the old Companies Act or sub-section (1) of section 220 of the Act; but nonetheless, if the requirement of sub-section (2) of the respective, sections have not been complied with, even then, the persons concerned would be liable for punishment for that default. In our view, these provisions unmistakably indicate, as we said earlier, that the holding of the annual general meeting and the laying before it of the balance sheet and the profit and loss account is a sine qua non for filing of the copies thereof before the Registrar. If no general body meeting is held, the persons concerned cannot be said to have committed, a default in complying with these provisions.
18. An examination of the case law would, in our view, show that the difference in the language on the one hand of section 134 of the old companies Act and sec. 220 of the Act and on the other of the provisions of sections 32, 76 and 77 of the old companies Act and analogous provisions of the Act has not been taken note of in most of the cases. Their Lordships of the Supreme Court in State of Bombay v. Bhandhan Ram pointed out this difference. Notwithstanding this, cases decided subsequently in the several High Courts, in our view, with great respect failed to appreciate the significant difference.
19. In Part v. Lawton . 1911 I K.B 588. a similar question arose for consideration under section 26 of the English Companies (Consolidation) Act 1908 which is analogous to section 32 of the old Companies Act. In that case, information was laid against the respondents by the appellant, who was a staff officer of the companies Registration Department of somerset house, alleging that the respondents knowingly and willingly permitted default to be made by the English Traders limited in forwarding to the Registrar of companies at Somerset house a copy of its list of members, with summary as to capital and shares etc. for the year 1909 as required under section 25 of the Companies (consolidation) Act, 1908 and that the said default had since continued for the space of sixty seven days thereafter and still continued. Though the General meetings of the company were duly held on November 15, 1907 and on December 7, 1908 and the annual list of members and summary for those years were duly forwarded to and filed by the Registrar at Somerest house the Justice convicted the respondents of the offence charged in the first information. It was contended that the words “on the fourteenth day after the first or only ordinary general meeting in the year” were words directory as to time only; and that the company was in default in not forwarding the annual list of members and summary. The respondents, however, contended that no general meeting having been held in ??? it was impossible to make up the list required by section 26 and that the respondents could not, therefore be convicted of a default for omitting to do that which, in fact, was impossible for them to do; and further, that the time did not being to run until after the date of the meeting mentioned in section 26. This contention was negatived by Lord Alverstone C.J with whom Hamilton and Avory JJ. concurred said at page 592 “the cases of Gibson v. Barston . L.R 10 Q.B 329. and Edmonds v. Poster . 45, L.J M.C 41. are clear authorities that a person charged with an offence under s. 26 is not entitled by way of defence to plead the impossibility of complying with s. 26 by reason of no general meeting. In other words, a person charged with an offence cannot rely on his own default as answer to the charge”.
20. Nearer home Mitter J. in Ballan Dass v. Mohan Lal Sadhu . Vol. 39 Calcutta Weekly Notes 1152. was considering the case of the petitioner-directors of the Cash Insurance Bank Ltd., who had been convicted under cl. (4) of Sec. 32 cl. (6) of sec. 77 and cl. (4) of section 134 of the Old Companies Act and sentenced to pay a fine. The statutory meeting of the company had not been held within the time mentioned in section 77. The statutory report required to be forwarded under cl. (2) of sec. 77 was not forwarded to any member of the petitioner company and there could be no doubt that the petitioner knew of the said fact. Even after the prosecution was started on the 14th, April 1935, the register of share-holders was not prepared in accordance with the provisions of section 32 and there was no doubt that the petitioner also knew the fact. The balance sheet of the company was not prepared and placed at a general meeting, nor filed with the Registrar of the Joint Stick companies. In fact the general meeting was never held aid the petitioner also knew of the fact. According to the learned Judge, the provisions of section 134, were therefore not complied with and in his view, in order to sustain a conviction under those sections, the only thing the prosecution had to prove was that a particular officer knowingly and wilfully authorised or permitted these defaults. It was further held that the offence was also complete, if the officer of the company knew of the defaults and permitted the defaults.
21. In Bhagibath v. Emperor . A.I.R 1948 Calcutta 42. Lodge, J. was also dealing with sections 32 and 134 of the Old companies Act and while observing that he was supported by the decision Ballav Das's Case said at page 45. “In England it has been consistently held that a director who is prosecuted, for knowingly and wilfully permitting a company to default in respect of filing the balance sheet and profit and loss account with the Registrar, cannot plead the impossibility of doing so when that impossibility is due to his own previous default. The same view has been taken in India………” Both these decisions in our view, did not consider the difference in the language of the several sections under which the petitioners were convicted, particularly, the difference between the requirements of section 134 and other sections of the old companies Act.
22. In Lakshmana v. Emperor Walsh, J. took a different view, though in fact the time for holding the general meeting had not yet come and therefore it may possibly be contended that what he said was obiter. In-Re Narasamaha Rao Pandurang Row, J. considered the applicability of sections 131 and 134 and held that “the same persons cannot be charged in respect of the same years with offences punishable both under sections 131 and 134 of companies Act, because s. 134 clearly contemplates the sending of a copy of the balance-sheet only after it has been placed before the company at a general meeting under s. 131. Where in a case there is no such placing of the balance-sheet before the Company at a general meeting, the offence under S. 134 cannot be committed”. Some of the cases cited before him dealt with the non-sending of a copy of the balance-sheet after it had been laid before a general meeting of the company. The prosecution against the persons was for default made in preparing a balance-sheet or placing it before a general meeting of the company, which took place long before they ever became directors or officers of the company and indeed even before they were share-holders.
23. As against this Ramaswami, J. in ??? Gangipati Appayya11 and Viswananathan v. Assistant Registrar . A.I.R 1953 Madras 558. dealing in the former case with section 133(3) and in the latter with sections 76 and 131 did not refer to the previous decisions of the Madras High Court. However, reliance was placed on Park v. Lawton and Bhagirath v. Emperior. While these cases may be an authority for the proposition that under the provisions of sections 76 and 131, the wilful non-holding of an annual general meeting or the non-laying before such a meeting of the balance-sheet and the profit and loss account amounts to a default of the provisions, there is nothing in these decisions which throws any light on the interpretation of section 134.
24. A Bench of the Bombay High Court consisting of Chagla, Ag.C.J and Gajendhragadhkar, J. (as he then was) in Emperor v. Pioneer Clay Industrial Works did consider the question which is now before us viz. whether default was committed under section 134(4). The facts on which the prosecution was founded alleged that the accused had failed, as required by S. 134(4) of the old companies Act, to file with the Registrar of companies three copies of the balance sheet and accounts of the company for the year 1944. It was common ground that no general meeting of the company had been called at which the balance-sheet and the profit and loss account for the year 1944 had been laid. After referring to sub-sections (1) and (4) of the section 134, the learned Acting Chief Justice observed at page 357. “It is to be noted that what is made penal is default in complying with the requirements of the section and the requirements of S. 134(1) are that there is an obligation cast upon the company to file three copies of the balance sheet and the profit and loss account after they have been laid before the company at the general meeting. There is no obligation cast upon the company to file any such copies if no general meeting has been called. It was contended by the Government Pleader in that case that the directors are themselves in default in not calling a general meeting and it is not open to them to plead in their own defence, their own fault. Dealing with this contention the Bench pointed out that under section 76(1) there is an obligation to hold a general meeting within eighteen months from the date of the company's incorporation, in default of which a penalty was prescribed under sub-section (2) of section 76 Again section 131 provides that the directors of every company must lay before the company in general meeting a balance-sheet and profit and loss account at the time stated in that section and the failure to do so is made penal by section 133(3). Therefore, it was observed at page 358, “on the facts which are not disputed it is clear that the directors have failed to comply with their requirements both of S. 75(1) and also of s. 131(1). The Government, instead of prosecuting them for what they have failed to do as required by the law and in respect of which they seem to have no defence whatever, have thought fit to launch a prosecution under s. 134(4) when the obvious defence which is put forward by the accused is that the stage has not arrived when they can be called upon to send copies of the balance-sheet and the profits and loss account because that stage can only be reached after a general meeting has been called and balance-sheet and profit and loss account have been placed before that meeting”.
25. This decision is on all fours with the one we are considering. But as we noted earlier, the impression has gained ground that their Lordships of the Supreme Court in State of Bombay v. Bhandhan Ram have overruled the decision of the Bombay High Court in Emperior v. Pioneer Clay and Industrial Works. We do not think this is a valid assumption. Their Lordships, after referring to the Bombay decision, pointed out at page 189. “The language of that section is to a certain extent different from the language used in sec. 32 and 131”. After examining the language of section 134(1) Sarker J. (as he then was) speaking for the court observed. “If the language of S. 134(1) makes any difference as to the principle to be applied in ascertaining whether a breach of it has occurred or not as to which we say nothing in this case-then that case can be of no assistance to the respondents. If however no such difference can be made, then we think that it was not correctly decided”: Perhaps, that last sentence has given rise to the impression that their Lordships have overruled the decision in Emperor v. Pioneer Clay and Industrial Works. But that is not so, because the subsequent observations clearly indicate that while Chagla C.J did not question the correctness of the decision in Park v. Lawton (1911) I K.B 588) which he was asked to follow all that he said with regard to that case was that the scheme and the terms of the section on which it turned were different from s. 134 of the Companies Act, 1913. While saying “that mayor may not be so” Sarker J. observed at page 189. “There is however no difference between S. 26 of the English Companies Act, 1908, on which Parker's case 1911 I K.B 588 turned and which apparently through some mistake Chagla C.J cited S. 36 and S. 32 of the Indian Companies Act of 1913, except that the English section required the summary to include a statement in the form of a balance sheet containing certain particulars mentioned, whereas our section does not require that Section 131 of our Act contains some provision about the laying of the balance sheet before the general meeting. This provision was inserted in the Act by the Amending Act of 1936. The fact, that one of the requirements of the English S. 26 is not present in S. 32 of our Act cannot create any material difference between section 32 of our Act and S. 26 of the English Act. If the principle that a person charged with an offence cannot rely on his own default as an answer to the charge is correct, as we think it is and which we do no find Chagla C.J saying it is not, then that principle would clearly apply when a person is charged with a breach of S. 32 of our Act”. The decision of the Supreme Court is only an authority in respect of sections 131 and 132 of the old companies Act and not for section 134. In so far as section 32 is concerned, the Supreme Court decided (i) that the fact that no general meeting of the company was, in the circumstances, no defence to the charge of not complying with the requirements of section 31. A person charged with an offence could not rely on his own default, as an answer to the charge and (ii) as in the case of section 32 and for the same reason, it was no defence to the charge under Section 131 to say that a general meeting was not called. Subsequent to Supreme Court's decision Kaliasam J. in Nepthene Studios Ltd. v. State Anantanarayan J. (as he then was) in P.S.N.S.A Chettiar v. Registrar of Companies . A.I.R 1955 Madras 415. and a bench of the Rajasthan High Court consisting of J.S Ranawat, C.J and P.N Shinghal, J. in State v. T.C Printers . A.I.R 1963 Rajasthan 134. and Amarash Roy, J. in Dulal Chandra Bhar v. State of West Bengal . 1962 Vol. 32 Company Cases 1143, Cal. H.C apart from other sections, have dealt with prosecutions under section 220 of the Act. In all these cases, it was assumed that the Supreme Court in State of Bombay v. Bhandha Ram applied the principle in Park v. Lawton to cases under section 134 of the Act which, as we have pointed out with great respect, is not the case. Kailasam, J. in Neptune Studios Ltd. v. State . 1964 Mad. W.N 108. however did not say that the Supreme Court has in terms overruled the decision in Emperor v. Pioneer Clay and Industrial works but nonetheless thought that the Bombay decision can not be of much guidance. According to him, the effect of the Supreme Court's decision is that a person charged with failure to carry out the requirements of the section cannot take advantage of his own default. Applying the principles laid down therein it was held that the appellants cannot be heard to plead their own default in not covening the general meeting for the submission that they are not guilty of an offence under section 220(3) of the Act. Anantanarayan, J. (as he then was) in P.S.N.S.A Chettiar v. Registrar of Companies and Ranawat C.J and Shinghal, J. in State v. T.C Printers held that the principles enunciated by the Supreme Court in State of Bombay v. Bhandhan Ram apply to cases under Section 220: D.P Uniyal, J. in Ramachandra & Sons (P) Ltd. v. State . 1967 II Coml J. 92 Allahabad. did consider the contention that section 220 was differently worded. In his view that section was not very happily worded in that, the opening words of the section indicate that the balance sheet and the profit and loss account required to be filed with the Registrar must be such as have been laid before the annual general meeting. But in his view that does not and cannot absolve the company or its directors from performing their statutory duty in filing the balance-sheet and the profit and loss account before the Registrar within the stated time. With great respect, we are unable to agree with his conclusion particularly when the learned judge had held that the effect of the opening words would indicate that the balance sheet and the profit and loss account required to be before the Registrar, must be such as have been laid before the annual general meeting. Where there are clear words which justify a certain conclusion, in our view, that conclusion must be reached. Amarash Roy, J. in Dulal Chandra Bhar v. State of West Bengal expressed the view at page 1149 that in State of Bombay v. Bhandhan Ram their Lordships of the Supreme Court stated that the principle enunicated in Park v. Lawton would apply, when a person is charged with breach of the Indian Companies Act. While applying the principle to the case before him which was under section 220 the learned Judge, however did not refer to the passages of Sarkar, J. in the Supreme Court decision in which the learned Judge distinguished the Bombay case. These decisions in terms do not notice the difference in the language and the requirements of section 220 on the one hand and sections 159 to 162, 166 and 210 of the Act on the other. It appears to us, on a consideration of the relevant provisions of the Act, that the wilful failure to hold a general meeting cannot be pleaded as a defence for default committed in preparing the statement of members of the company as required under section 32, or for failure to lay before the general meeting, the balance-sheet and profit and loss account, or in the case of a company not trading for profit an income and expenditure account. One cannot plead one's own default in defence. The principle of Park v. Lawton however cannot be held to be applicable to the requirements of section 134, because the actual holding of an annual general meeting is a condition precedent or a sine qua non for the filing of the copies of the balance sheet and profit and loss account, which are so laid before an annual general meeting with the Registrar within thirty days from the day when they are so laid. We have already noticed that the language of section 134(1) and (2) requires only copies of that balance-sheet and profit and loss account or a statement that the balance sheet has not been adopted with full reasons therefor should be filed before the Registrar which have been, laid at an annual general meeting, which in fact and in reality have been held and not copies of those documents which would have been filed, had such a meeting been held, if the persons concerned had not wilfully defaulted in calling the meeting. As already pointed out, the language of the relevant provisions of the present Companies Act (the Act) is somewhat different and if anything, lends further weight to this conclusion; It is clear that the default in not holding an annual general meeting and preparing statements or returns and filing them before the Registrar, or is not laying of the balance sheet and the profit and loss account before that meeting as required under sections 166, 159 to 161 and 210 cannot be pleaded in defence of a prosecution. The contrary view taken in Public Prosecutor v. H.R Basava Raj that the holding of an annual general meeting would be necessary for the prosecution under section 166 and 210 of the Act is, in our view, with respect no longer good law, having regard to the decision of the Supreme Court on the analogous provisions of the Old Companies Act. While this is so, the defence that no general meeting was in fact held for the non-filing of the copies of the balance sheet or profit and loss account or the non-attachment of the statement that the balance sheet has not been adopted with the explanation therefor before the Registrar within the time specified, will however be open to the persons prosecuted under section 220(3). While it is open to the Registrar to prosecute the persons who have committed default under sections 165, 159 to 162 and 210 by wilfully not holding a meeting and not fulfilling the requirements of these provisions for which no period of limitation is prescribed under the Act, any prosecution under section 220 would be premature with out such a meeting being in fact held.
26. In the view we have taken, the criminal revision case is allowed and the prosecution is quashed.
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