A. Gopal Reddy, J.
1. The question referred to this Bench is a simple one, 'whether failure to comply with the statutory requirement of Section 220 of the Companies Act, 1956 (for short 'the Act') can be said to be a continuing offence or not'.
2. The facts giving rise to reference may be stated in a nutshell as follows:
The petitioner is a director of M/s. Palaypu Financial and Investment Services Ltd., (Al). He and another director were prosecuted along with the company for the offence under Section 220 of the Act for their failure to file the return, namely, the audited balance-sheet and profit and loss account required to be laid before the annual general meeting, i.e., September 30, 1999, as required under Section 210 of the Act within six months before the close of the financial year and three copies of the balance-sheet, etc., so laid shall be filed with the Registrar of Companies (hereinafter referred as 'complainant') on or before October 30, 1999, and in case the balance-sheet, etc., was not laid before the annual general meeting; three copies thereof shall be filed with the complainant on or before the date on which the annual general meeting should have been held as per the said Act. Accused No. 2 (petitioner) and accused No. 3 being the officers of the company have failed to comply with the above statutory requirements of Section 220 of the Act, in spite of the issuance of show-cause notice by the complainant in that behalf and therefore accused Nos. 2 and 3 are the officers in default within the meaning of Section 5 of the Act. The default commenced on October 31, 1999, and it is a continuing offence within the meaning of Section 472 of the Code of Criminal Procedure. The learned Magistrate took cognizance of the offence filed by the complainant in C.C. No. 387 of 2002 and issued process.
3. Therefore, the petitioner moved this Court under Section 482 of the Code of Criminal Procedure for quashing the proceedings contending that he conducted the annual general meeting by September 30,1996, September 30,1997, September 30,1998, September 30, 1999, September 30, 2000 and September 30, 2001, for the financial year ending March 31, 1996, March 31, 1997, March 31, 1998, March 31, 1999, March 31, 2000, and March 31, 2001, and the limitation period expired by March 31,1997, March 31, 1998, March 31, 1999, March 31, 2000, March 31, 2001 and March 31, 2002, respectively. The above complaints, which have been filed in September, 2002, are, therefore, barred by limitation.
4. At the time of hearing, various decisions have been cited on the question. The learned single judge observed that though the court specifically posed a question whether any view had been expressed in relation thereto by the apex court, both counsel are unable to place before the court any such decision. The question whether the offences of this nature would fall within the meaning of 'continuing offence' or not would be arising quite often in several matters, it would, be appropriate to refer the matter to an appropriate Division Bench to decide the question.
5. The reference of the aforesaid question to this Bench was necessitated on account of seeming conflict between the views expressed by two learned single judges of this Court in Crl. P. No. 5518 of 2002 See Dantuluri Ranga Devi v. Registrar of Companies [2007] 135 Comp cas 599 (AP) and Crl. P. No. 5538 of 2002 on one hand and the view expressed in Krebs Biochemicals Ltd. v. Registrar of Companies [2003] 116 Comp Cas 43, Smt. G. Vijayalakshmi v. Securities and Exchange Board of India [2000] 100 Comp Cas 726 : [2000] 1 ALT (Crl.) 549 (AP), the Division Bench of the Calcutta in National Cotton Mills v. Assistant Registrar of Companies [1984] 56 Comp Cas 222, and single judge judgment of the Karnataka High Court in Chandra Spinning and Weaving Mills P. Ltd. v. Registrar of Companies [1990] 69 Comp Cas 117, on the other.
6. We may vivify the discussion by quoting the provisions of direct concern in this case. They are Sections 162 and 220 of the Companies Act and Section 472 of the Code of Criminal Procedure, which read thus:
Section 162. Penalty and interpretation.--(1) If a company fails to comply with any of the provisions contained in Sections 159, 160 or 161, the company, and every officer of 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.
Section 220. Three copies of balance-sheet, etc., to be filed with Registrar.--(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, or where the annual general meeting of a company for any year has not been held, there shall 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 this Act,-
(a) three copies of the balance-sheet and the profit and loss account, signed by the managing director, 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:
Provided that in the case of a private company, copies of the balance-sheet and copies of the profit and loss account shall be filed with the Registrar separately:
Provided further that,-
(i) in the case of a 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 43A, 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 610.
(2) If the annual general meeting of a company before which a balance-sheet is laid as aforesaid does not adopt the balance-sheet, or is adjourned without adopting the balance-sheet or, if the annual general meeting of a company for any year has not been held, 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, Section 160 or Section 161.
Section 472. Continuing offence.--In the case of a continuing offence, a fresh period of limitation shall begin to run at every moment of the time during which the offence continues.
7. A reading of Section 162 of the Act makes it clear that if a company fails to comply with any of the provisions contained in Sections 159, 160 or 161, which enjoining of filing annual return and other documents within 60 days from the date on which the annual general meeting is held, the company, and every officer of 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.
8. Violation of Section 159 of the Act is also made liable under Section 162 and Section 159 of the Act makes it obligatory on the part of the company to prepare and file with the Registrar a return containing the particulars specified in Part I of Schedule V regarding the various items enumerated thereunder. The failure to comply with any of the provisions contained under the Act attracts penal provision.
9. Learned Counsel for the petitioner would contend that the offence for which the petitioner was charge sheeted is not a continuing offence; that the balance-sheet should be laid before the annual general meeting, if not laid before the meeting, the same has to be filed before the complainant within 30 days from the date on or before which the annual general meeting should have been held. The offence, if any, is complete on expiry of such date to be filed. The present complaint is filed nearly after three years, which is barred by limitation. To substantiate his submission he placed reliance on the judgments aforementioned, which were sought to be relied before the learned single judge.
10. It is appropriate to consider the submissions in the light of the judgments on which reliance is placed.
11. In Krebs Biochemicals Ltd. v. Registrar of Companies [2003] 116 Comp Cas 43 (AP), failure to transfer unpaid dividend to special account within time stipulated under Section 205A(1) of the Companies Act, which provides punishment of fine, was the subject-matter of the challenge. This Court quashed the proceedings on the ground that the complaint was filed beyond the period of limitation.
12. In the case of Smt. G. Vijayalakshmi v. Securities and Exchange Board of India [2000] 100 Comp Cas 726; [2000] 1 ALT (Crl.) 549 (AP), the directors were prosecuted for contravention of Sections 73(2)(b) and 113(2) of the Companies Act in which company was arrayed as Al and its managing director was arrayed as A2. This Court quashed the proceedings holding that a reading of the relevant provisions including the definition of the 'officer who is in default' as given in Section 5 would make it amply clear that the criminal liability of ordinary directors would arise only in respect of a company which has no managing director or a whole-time director or a manager and where particular directors are not specified to be liable by the company. Both the cases on which reliance is placed are not on the point.
13. In Chandra Spinning and Weaving Mills P. Ltd. v. Registrar of Companies [1990] 69 Comp Cas 117, a learned single judge of the Karnataka High Court after following the Division Bench judgment of the Calcutta High Court in National Cotton Mills v. Assistant Registrar of Companies [1984] 56 Comp Cas 222, and the language of Section 220(1), which creates an obligation and the purpose which is intended to be achieved by constituting the omission or default as an offence, held that the contravention of Section 220(1) made punishable under Section 220(3) of the Act is not a continuing contravention and accordingly allowed the criminal revision petition and set aside the order of convictions and sentences passed against the company (Al) and its directors (A2 to A4).
14. The Division Bench of the Calcutta High Court in National Cotton Mills v. Assistant Registrar of Companies [1984] 56 Comp Cas 222, held that an offence under Section 162 of the Act is not a continuing offence within the meaning of Section 472 of the Code of Criminal Procedure and, therefore, the complaint is barred by limitation under Section 468 of the Code of Criminal Procedure. The Division Bench appears to have mainly relied on the judgment of the Supreme Court in State of Bihar v. Deokaran Nenshi AIR 1973 SC 908, and also its two earlier decisions in Wire Machinery . v. State [1978] 2 Cal HN 293 (Cal) : [1979] 49 Comp Cas 197 and Krishna Kumar Dalmia v. State [1981] 2 Cal HN 301 (Cal). In both the cases offence was for failure to deposit the employer's contribution within the time prescribed under the Employees' Provident Funds and Miscellaneous Provisions Act.
15. In the case of Deokaran Nenshi AIR 1973 SC 908, the issue before the Supreme Court was whether failure to submit return within the prescribed time under the Mines Act is a continuing offence or not, The Supreme Court after considering the various judicial pronouncements including that of the Privy Council tried to summarise what a 'continuing offence' is (page 909):
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 a 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 noncompliance occurs and recurs, there is the offence committed. The distinction between the two kinds of offences is between an act or omission which constitutes an offence once and for all and an act or omission which continues and therefore, constitutes a fresh offence every time or occasioned on which it continues. In the case of a continuing offence, there is thus the ingredient of continuance of the offence which is absent in the case of an offence which takes place when an act or omission is committed once and for all.
16. The Supreme Court in Bhagirath Kanoria v. State of M.P. : [1985]1SCR626 , after referring the five precedents : three English and two Indian and also its earlier judgment in Deokaran Nenshi : 1973CriLJ347 , held that offence of non-payment of the employer's contribution to the provident fund before the due date is a continuing offence and, therefore, the period of limitation prescribed by Section 468 of the Code cannot have any application. The offence alleged, namely, non-payment of the employer's contribution to the Provident Fund Commissioner before the due date will be governed by Section 472 of the Code, according to which, a fresh period of limitation begins to run at every moment of the time during which the offence continues. It was further held that the decision in Deokaran Nenshi : 1973CriLJ347 , 'must be confined' to such cases only, that is, cases where such default in submitting the return has been made penal but the penal liability has not been continued so long as the default continues.
17. The learned single judge while referring the matter to the Division, Bench referred to the orders passed in Crl. P. Nos. 55181 and 5538 of 2002, on which reliance is placed by the respondent-counsel for the proposition that the offence alleged is a continuing offence and question of bar of limitation is not applicable.
18. In Crl. P.No. 5518 of 2002 dated March 8, 2006 See Dantuluri Ranga Devi v. Registrar of Companies [2007] 135 Comp Cas 599 (AP) the question was whether the director who has resigned can be prosecuted for the offence alleged under the Companies Act and this Court felt that the offence said to have been committed prior to the alleged resignation and, therefore, the petitioner cannot take defence of the so-called resignation as director and refused to quash the proceedings against him. Similarly, in Crl. P. No. 5538 of 2002 dated March 17, 2006, this Court refused to quash the proceedings initiated at the instance of A3 (director) for the offence punishable under Sections 162, 168 and 220 of the Companies Act on the ground that whether the complaint is barred by limitation, since the offence alleged against the petitioner is punishable with fine only, can be decided by the trial court on the evidence let in by the parties. But there is no indication of holding by this Court that it is a continuing offence and proceedings cannot be quashed.
19. It is appropriate to notice another Division Bench of the Calcutta High Court in Luxmi Printing Works Ltd. v. Assistant Registrar of Companies [1990] 69 Comp Cas 442, had an occasion to consider whether the prosecution launched and process issued for the offences punishable under Sections 162(1) and 220(3) of the Companies Act are 'continuing offences' within the meaning of Section 472 of the Code of Criminal Procedure.
20. The Division Bench after considering the judgments of the Supreme Court in Deokaran Nenshi AIR 1973 SC 908 and in Bhagirath Kanoria AIR 1984 SC 1688 : [1986] 68 FJR 98, held that the offence punishable under Section 162(1) is a continuing offence and further held that the decision of the Division Bench in National Cotton Mills [1984] 56 Comp Cas 222 (Cal), can no longer be taken as good law particularly, in view of the earlier Division Bench decisions in Wire Machinery . v. State [1978] 2 Cal HN 293 (Cal) : [1979] 49 Comp Cas 197 and Krishna Kumar Dalmia v. State [1981] 2 Cal HN 301 (Cal), relied on in National Cotton Mills [1984] 56 Comp Cas 222 (Cal), having been overturned by the Supreme Court, and the earlier decision of the Supreme Court in Deokaran Nenshi AIR 1973 SC 908, referred to therein having been duly explained and distinguished by the Supreme Court in Bhagirath Kanoria's case : [1985]1SCR626 .
21. Further, a Division Bench of the Kerala High Court in Rani Joseph v. Registrar of Companies [2001] 103 Comp Cas 928, after referring to the judgments in Chandra Spinning and Weaving Mills P. Ltd. [1990] 69 Comp Cas 117 and National Cotton Mills [1984] 56 Comp Cas 222 (Cal), affirmed the view taken by the same court in Sudarsan Chits v. Registrar of Companies [1986] 59 Comp Cas 261, wherein it was held that the offence for violating the provisions of Section 220 of the Act can be treated as a continuing offence and so provisions of Section 468 of the Code has no application and on that basis refused to quash a complaint pending before the trial court.
22. We have gone through the judgments on which reliance is placed by learned Counsel for the petitioner. In view of subsequent judgment of the Supreme Court in Bhagirath Kanoria : [1985]1SCR626 , we cannot agree with the view expressed by the Calcutta, and Karnataka High Courts in National Cotton Mills [1984] 56 Comp Cas 222 and Chandra Spinning and Weaving Mills P. Ltd. [1990] 69 Comp Cas 117, respectively, and we fully agree with the view taken by the latter Division Bench of the Calcutta High Court in Luxmi Printing Works Ltd. v. Assistant Registrar of Companies [1990] 69 Comp Cas 442 and the Kerala High Court in Rani Joseph [2001] 103 Comp Cas 928. Once Section 162(1) of the Act imposed penalty at the rate of Rs. 50 for every day till the default continues, it must be held default in complying with the provisions of Section 220(1) of the Act is a continuing default covered by Section 472 of the Code of Criminal Procedure.
23. Accordingly, we answer the reference as under:
The contravention of Section 220(1) of the Act made punishable under Section 220(3) is a continuing offence and the period of limitation prescribed under Section 468 of the Code of Criminal Procedure does not attract the prosecution launched against the company for the offence alleged and is governed by Section 472 of the Code of Criminal Procedure.