Sapra, J.
1. By the present application filed under Section 446 of the Companies Act, 1956 (hereinafter called 'the Act'), the petitioner prays that this court be pleased to call for the files of Cases Nos. 9459/ 5 of 1981, 9460/5 of 1981, 9460/5 of 1981, 9462/5 of 1981, and 8521/5 of 1981, titled Registrar of Companies v. Anand Finance (P.) Ltd., now pending in the court of the Additional Chief Metropolitan Magistrate, Delhi, and quash all the proceedings.
2. Briefly, the facts are that a creditor filed a petition, being Company Petition No. 34 of 1966, against Anand Finance Private Ltd., hereinafter referred to as 'the company', for its winding up, on the ground that it was unable to pay its debts.
3. During the pendency of the petition for winding up, a scheme of arrangement, between the creditors and the company, was approved by this court, vide order dated July 29, 1968, whereby 65 per cent. of the amount due to the creditors was to be paid within a period of two years and for the balance 35 per cent. shares of the company were to be allotted. The scheme also divested the shareholders of their right to vote etc. A new board of directors was appointed by the court to supervise the affairs of the company and make payment to the creditors.
4. In C. A. No. 516 of 1973, vide order dated February 7, 1974, the court superseded the previous board of directors, as was appointed under the scheme, and in its place, appointed the petitioner, as the chairman of the board of directors.
5. According to the petitioner, he continued to discharge the functions of the chairman till such time when the company was ordered to be wound up, vide order dated February 3, 1982, pursuant to the report of the chairman, as, the court was satisfied that the scheme, as sanctioned under Section 391 of the Act could not be worked out, with or without modification. The official liquidator attached to this court was appointed as the liquidator of the company.
6. It is further alleged that the Registrar of Companies was in full knowledge of all the proceedings. The scheme had also been filed with the respondent and he was aware that the rights of the shareholders of the company had been suspended. There was thus no question of holding an annual general meeting of the company, as the shareholders had been divested of their rights to vote. Notwithstanding this fact, the respondent launched five prosecutions against the petitioner for not holding the annual general meeting and laying the balance-sheet, etc., in the annual general meeting which are now pending in the Court of the Additional Chief Metropolitan Magistrate, Delhi.
7. Thus, the prosecutions launched against the petitioner are unwarranted and illegal. Moreover, the petitioner was appointed the chairman by the court. As such, no such prosecutions could be launched against him as he was functioning under the direct supervision of the company court as per the scheme of arrangement.
8. In its reply, the respondent has stated that the prosecutions have been launched for the year 1979-80, while the company went into liquidation by the order passed by the court on February 3, 1982. The prosecutions are for the period when the company was very much in existence and, moreover, the prosecutions were launched on September 17, 1981, for the offences committed under Sections 220 and 159 of the Act while, for the offence committed under Section 210 of the Act, the complaint was filed in the Court of the Additional Metropolitan Magistrate, Delhi, on July 29, 1981. As the prosecutions have since been launched against the company and its directors, prior to the going into liquidation of the company, the accused cannot claim any advantage whatsoever.
9. Thus, the Registrar of Companies has launched prosecutions against petitioner for the offences of not holding the annual general meeting and non-filing of the returns with the Registrar of Companies, in accordance with Section 159 of the Act, for not laying before the company, at its annual general meeting, the balance-sheet and profit and loss account, as per Section 210 of the Act, and for non-filing of the balance-sheet and profit and loss account with the Registrar of Companies.
10. Though the petition has been filed under Section 446 of the Act, yet, I will treat the same as one filed under Section 633(2) of the Act.
11. The following three questions arise, for decision in the present case :
(1) Whether, under Section 633(2) of the Act, this court has jurisdiction to relieve the petitioner from the liabilities relating to the aforesaid defaults, in view of the fact that the respondent had already filed complaints against the petitioner, prior to the filing of the present application ;
(2) Whether the offences for which the criminal complaints have been filed against the petitioner are continuing offences, and
(3) Whether, under the facts and circumstances of the present case, cognizance of the offences for which the complaints have been filed against the petitioner has been taken by the learned Additional Chief Metropolitan Magistrate, Delhi.
12. Identical questions arose in Company Petition No. 133 of 1989, S.P. Punj v. Registrar of Companies . In that case, the petitioners filed a petition under Section 633(2) of the Act for being relieved from prosecution for then alleged liability for non-filing of returns, under Rule 10 of the Companies (Acceptance of Deposits) Rules, 1975. The petition was filed after launching of the prosecutions by the Registrar of Companies. Vide my judgment dated September 11, 1990, I allowed that petition, and relieved the petitioners therein from their liabilities for not filing of the returns under Section 10 of the aforesaid Rules.
13. Admittedly, the petitioner has filed the present petition during the pendency of the prosecution in the Court of the Additional Chief Metropolitan Magistrate, Delhi, for the aforesaid offences.
14. In Sri Krishna Parshad v. Registrar of Companies , Mr. Justice D.K. Kapur (as he then was) was considering the question with regard to the jurisdiction of the court under Section 633(2) of the Act. In that case, the facts were that the petitioners who were directors of M/s. Western U.P. Electric Power and Supply Co. Ltd. committed defaults in respect of holding the annual general meeting, for the period ending March 31, 1976. It was held (at page 400) :
'I may also indicate that the other court covered by Section 633(1) need not necessarily be a criminal court because there may very well be a civil proceeding, criminal proceeding or even a revenue proceeding in respect of which Section 633(1) may apply. In all such cases if a proceeding is anticipated, the officer concerned can move the High Court at an early stage and get relief in a suitable case. This has the great advantage of avoiding that other proceeding if the High Court grants relief. If that other proceeding has commenced then the officer concerned has no other course open but to apply to the relevant court under Section 633(1) to say that whatever negligence, default, breach of trust, misfeasance, breach of duty or any other default complained of there may be, he in fact, acted reasonably and honestly keeping in view the circumstances of the case. The court can then grant relief. Thus, the section, as it were, operates in two stages. The High Court can grant anticipatory relief and if a case is actually initiated, only the court before which the complaint or trial is going on can grant relief. The preliminary objection has, thereforee, to be accepted.'
15. I am in respectful agreement with the view expressed above.
16. It may, however, be noted that in Sri Krishna Parshad [1978] 48 Comp Case 397 (Delhi), it appears that the prosecution had already been launched and the cognizance of the offence had already been taken by the learned Magistrate, and the question of limitation was not involved.
17. Now, it is to be seen whether, the offences/defaults, allegedly committed by the present petitioner, are continuing ones or not.
18. In CWT v. Suresh Seth : [1981]129ITR328(SC) , their Lordships of the Supreme Court were considering the question whether the default committed under Section 18(1)(a) of the Wealth-tax Act, 1957, was a single default or a continuing one. The facts, in that case, were that the assessed filed his wealth-tax returns for the assessment years 1964-65 and 1965-66, on March 18, 1971, while he was required, by Section 14(1) of the Wealth-tax Act, to file the same, for the year 1964-65, on or before June 30, 1964, and the return, for the assessment year 1965-66, on or before June 30, 1965. The Supreme Court held (at pages 338, 339) :
'Section 18 of the Act, with which we are concerned in this case, does not require the assessed to file a return during every month after the last day to file it is over. Non-performance of any of the acts mentioned in Section 18(1)(a) of the Act gives rise to a single default and to a single penalty, the measure of which, however, is geared up to the time lag between the last date on which the return has to be filed and the date on which it is filed. The default, if any committed, is committed on the last date allowed to file the return. The default cannot be one committed every month thereafter. The words 'for every' month during which the default continued' indicate only the multiplier to be adopted in determining the quantum of penalty and do not have the effect of making the default in question a continuing one. Nor do they make the amended provisions modifying the penalty applicable to earlier defaults in the absence of necessary provisions in the amending Acts. The principle underlying Section 6 of the General Clauses Act is clearly applicable to these cases. It may be stated here that the majority of the High Courts in India have also taken the same view.'
19. In Assistant Registrar of Companies v. R. Narayanaswamy [1985] 57 Comp Cas 787, the Madras High Court held (at pages 788 and 789) :
'It is not disputed before me by learned counsel for the petitioner that the respondents became directors of the first accused-company only from July, 1975, and they were not directors on April 1, 1975, when the excess deposits had to be returned as per Section 58A(3)(c) of the Act. It is, however, contended by him that the failure to repay the deposit on or before April 1, 1975, is a continuing offence and persons who became directors even subsequent to April 1, 1975, are liable for the default, so long as the excess deposits are not repaid. But, there is nothing in Section 58A(3Xc) or any other provision of the Act to hold that the non-repayment of the excess deposits on or before April 1, 1975, is a continuing offence. In CWT v. Suresh Seth : [1981]129ITR328(SC) , the question that came up before the Supreme Court was whether the failure to file a wealth-tax return by the assessed after the last date was over, was a continuing offence. It was held by the Supreme Court that such a failure gave rise to a single default and to a single penalty the measure of which, however, is geared up to the time lag between the last date on which the return has to be filed and the date on which it is actually filed. The default, if any, committed, is committed on the last date allowed to file the return ; the default cannot be one committed every month thereafter. The words in Section 18(1)(a) of the Act 'for every month during which the default continued' indicate only the multiplier to be adopted in determining the quantum of penalty and do not have the effect of making the default in question a continuing one. The principle enunciated therein applies on all fours to the case on hand. The failure to repay the excess deposits on or before April 1, 1975, is a single default, which gets completed on the expiry of the aforesaid period and cannot be said to be a continuing one.'
20. Following the dictum of the Supreme Court in CWT v. Suresh Seth : [1981]129ITR328(SC) , and relying upon the judgment in Asst. Registrar of Companies, Madras v. R. Narayanaswamy , I, in my judgment in S.P. Punj , held that the principles of law, enumerated above, apply on all fours to the default under Rule 11 of the Rules. The words in Rule 11 that the fine may extend to Rs. 50 for every day after the first indicate only the multiplier to be adopted in determining the quantity of penalty and did not have the effect of making the default in question a continuing one.
21. The principles of law enumerated above apply on all fours to the defaults/offences, allegedly committed by the petitioner in the present case. The provisions thereby extending the fine for every day after the first indicate only the multiplier to be adopted in determining the quantity of penalty, and do not have the effect of making the defaults in question continuing ones.
22. In the present case, the period of limitation for filing the complaints for the offences/defaults under Sections 159, 210 and 220 of the Act is six months because, under Section 467of the Criminal Procedure Code, these offences are punishable with fine only.
23. Sections 467, 468, 469 and 473 of the Criminal Procedure Code read as under :
'467. For the purposes of this Chapter, unless the context otherwise requires, 'period of limitation' means the period specified in Section 468 for taking cognizance of an offence.
468. (1) Except as otherwise provided elsewhere in this Code, 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 ;
(b) one year, if the offence is punishable with imprisonment for a term not exceeding one year ;
(c) three years, if the offence is punishable with imprisonment for a term exceeding one year but not exceeding three years,
(3) For the purposes of this section, the period of limitation, in relation to offences which may be tried together, shall be determined with reference to the offence which is punishable with the more severe punishment or, as the case may be, the most severe punishment.
469. (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 ; or
(c) where it is not known by whom the offence was committed, the first day on which the identity of the offender is known to the person aggrieved by the offence or to the police officer making investigation into the offence, whichever is earlier,
(2) In computing the said period, the day from which such period is to be computed shall be excluded.
473. Notwithstanding anything contained in the foregoing provisions of this Chapter, any court may take cognizance of an offence after the expiry of the period of limitation, if it is satisfied on the facts and in the circumstances of the case that the delay has been properly explained or that it is necessary so to do in the interests of justice,'
24. In Hindustan Wire and Metal Products , the facts were that a petition under Section 633 of the Act for relieving the petitioner as a consequence of default and violation of Section 295 of the Act in granting a loan to another company was filed on June 28, 1980. The Registrar of Companies filed a complaint before the Chief Metropolitan Magistrate, Calcutta, on June 12, 1980. An interim stay was granted by the court, on July 2, 1980, whereby the Registrar of Companies was personally restrained from commencing any prosecution against the petitioners for the default and the delay was condoned by the Chief Metropolitan Magistrate, on November 4, 1980, ex parte. The fact remains that the complaint was filed on June 12, 1980, i.e., 16 days prior to the filing of the petition under Section 633 of the Act. The following points arose (1) whether the application under Section 633 of the Act was maintainable after the complaint had been filed and cognizance of the same having been taken by the Magistrate, and (2) whether filing the complaint and making an application for condoning the delay could be said to be the initiation of a criminal proceeding or initiation of proceedings, before the delay was condoned and the offence was taken cognizance of by the criminal court where the proceedings had been filed. The Calcutta High Court held (at pages 112, 113) :
'I am of the view that there is no substance or merit in the contention raised on behalf of the respondent as the said criminal proceeding is clearly in violation of the order of injunction passed by this court and it is strange enough that before the criminal court the respondent has not brought to the notice of the court the order of this court dated 2nd July, 1980, by which the respondent was restrained from proceeding or taking any step against the petitioners pursuant to the letter dated 12th May, 1980, by way of initiating any criminal proceeding. It must be held, according to the provisions of the Criminal Procedure Code, which I have set out before, that there was no pending criminal proceeding or initiation of any criminal proceeding against the petitioners before the present application was made. It is only after the present application was made and an ad interim order was issued, as hereinbefore stated, that the said order condoning the delay was passed ex parte without any notice to the accused and cognizance of the offence was taken at the instance of the respondent who was restrained by an injunction of this court from taking any steps in the matter.'
25. I am in respectful agreement with the view expressed by the Calcutta High Court in the said judgment.
26. Relying upon the said judgment, I, in S.P. Punj , held that as the complaints were filed after the period of limitation and no application for condensation of delay was filed, it could not be said that the cognizance of the offence had been taken merely on the filing of the complaint.
27. In the present case, the complaints against the petitioner have been filed after the period of six months and it appears that no steps have been taken for condensation of delay in filing the complaints.
28. Section 468 of the Criminal Procedure Code lays down that, except as otherwise provided elsewhere in the Code, no court shall take cognizance of an offence of the category specified in Sub-section (2) after the expiry of the period of limitation.
29. It means that, in the facts and circumstances of the present case, unless the bar of limitation was lifted by condensation of delay by an order of the Magistrate made under Section 473 of the Criminal Procedure Code, it cannot be said that cognizance of an offence has been taken on the mere filing of the complaint against the accused.
30. Coming to the merits of the present case, it is not disputed that the petitioner was appointed chairman by this court, under a scheme of arrangement.
31. Vide order dated July 29, 1968, in C.A. No. 128 of 1968, it was directed that the shareholders of the company would not exercise any voting and any other right until and unless unsecured creditors had been paid 65% of their dues in accordance with the terms of the aforesaid scheme of arrangement, and then until the shares have been allotted to the creditors under the scheme. It is also not disputed that before 60 per cent. could be paid to the creditors as per the scheme of arrangement, the company went into liquidation.
32. The company was wound up on the basis of the report submitted by the chairman. Thus, by the order of the court, the rights of the shareholders of the company with regard to the voting were suspended. Thus, there is force in the arguments of the petitioner that the question of holding an annual general meeting of the company did not arise, as the shareholders had been divested of their rights. Similarly, for this reason, the balance-sheets and profit and loss accounts could not be laid before the annual general meeting.
33. Taking into consideration the totality of the circumstances, I am of the view that the petitioner has been able to establish that he is entitled to be relieved of the alleged liabilities and defaults for which the prosecutions have been launched against him under Sections 159, 210 and 220 of the Act.
34. Under the facts and circumstances of the case, the petitioner is hereby relieved from the aforesaid liabilities/defaults for which the complaints have been filed under the aforesaid provisions and also from the consequences of the said defaults.
35. C.A. No. 827 of 1987 stands disposed of. No order as to costs.