Nepc India Ltd. and ors. Vs. Registrar of Companies - Court Judgment

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criminal - unpaid dividend - section 468 of criminal procedure code, 1973 and sections 17, 207, 291 and 629a of companies act, 1956 - whether complaint filed by respondent barred by time - respondent filed complaint for non-payment of dividend by company within 42 days after declaration - under section 468 complaint should be filed within period of one year - show cause notice issued on 15.10.1996 - complaint filed on 10.03.1998 - when once show cause notice issued it can be concluded that respondent were aware of delay caused by company in payment of dividend - complaint filed after one year barred by time. - - gupta, through a letter dated may 10, 1996, complained to the office of the regional director, department of company affairs, madras, stating that the company had declared dividend in the annual general body meeting held on september 19, 1995, and he has received the dividend warrant on april 15, 1996, after five months. siva-subramanian, through a letter dated august 2, 1996, complained to the office of the regional director, department of company affairs, madras, stating that the company had declared dividend in the annual general body meeting held on april 30, 1996, and he has received the dividend warrant on august 28, 1996, after 119 days from the date of declaration instead of receiving the same on or before june 10, 1996. 5. the petitioners in crl. the prosecution has been launched within one year from the date of instruction given to the registrar of companies and, as such, the complaint is well within limitation. however, learned counsel for the respondent would contend that only from the date of the knowledge, the period of limitation will commence and, as such, all these complaints are well within time. the aforesaid documents would only indicate that the respondent is well aware of the business carried on by n. section 207 reads as follows :penalty for failure to distribute dividends within forty-two days. when once the show-cause notice has been issued, it can be easily concluded that the respondent is well aware of the delay caused by the said company in payment of the dividend within 42 days after the declaration. 3 of the complaint indicated that the inspection has been done and the same was completed on january 20, 1997. under the circumstances, even at the time of the inspection itself, the respondent could have been well aware of the commission of the offence by the said company.a. ramamurthi, j. 1. the petitioners in e. o. c. c. no. 9 of 1997 on the file of the additional chief metropolitan magistrate, economic offences, egmore, have filed crl. o. p. no. 1121 of 1999. the petitioners in e. o. c. c. no. 461 of 1998, the petitioners in e. o. c. c. no. 455 of 1998, the petitioners in e. o. c. c. no. 301 of 1998 and the petitioners in e. o. c. c. no. 167 of 1998 on the file of the same court have preferred the criminal original petitions nos. 1114, 1119, 1120 and 2220 of 1999 respectively under section 482 of the criminal procedure code for quashing the proceedings pending against them.2. the case in brief for disposal of all the petitions is as follows :the petitioners in crl. o. p. no. 1121 of 1999 are accused nos. 2, 3, 4, 6 and 8 in e. o. c. c, no. 9 of 1997. the respondent preferred a complaint against them under section 207 of the companies act, 1956, on the allegation that one s.r. gupta, through a letter dated may 10, 1996, complained to the office of the regional director, department of company affairs, madras, stating that the company had declared dividend in the annual general body meeting held on september 19, 1995, and he has received the dividend warrant on april 15, 1996, after five months. the company has become liable to pay the dividend to the shareholders whose names appear in the register of members on the date of the declaration of the dividend. the dividend warrants have to be despatched to the shareholders within 42 days from the date of declaration. it is further stated that they had not despatched the dividend warrants till april 25, 1996. the respondent issued a show-cause notice on september 17, 1996. the complaint so far as the petitioners are concerned is an abuse of the process of law and court, the petitioners have not adopted delaying tactics and it is only due to financial condition and for the reasons that the company has not received monies from its debtors, the company could not make any payments of the dividends within 42 days. the petitioners have despatched the entire dividends on march 18, 1996. the company had also approached the high court under section 391 of the companies act for a scheme for (arrangement ?) unpaid dividend and the same was approved by the company law board.3. the petitioners in crl. o. p. no. 1114 of 1999 are accused nos. 1 to 4 in c. c. no. 461 of 1998. the respondent preferred a complaint against them under section 17 read with section 291 of the companies act, on the allegation that the company cannot carry on any activities which are not covered under the objects of its memorandum of its association and that the company has carried on the business of air taxi operations without necessary provisions with effect in the memorandum of association. section 17 of the companies act deals with amendment of objects of a company, the petitioners have only carried on the business of air taxi operations pursuant to its objects and the petitioners have not committed any offence. in the complaint, it is alleged that they have carried on the business of air taxi operations without necessary provisions. section 629a of the companies act stipulates that in case of contravention under provisions of the act for which, no specific punishment is provided elsewhere in this act, the company and every officer of the company shall be punishable with fine which may extend upto rs. 500 and where the contravention is continuing with a further fine which may extend to rs. 50 for everyday. the complaint itself alleged that they came to know about the alleged default only on february 24, 1998, whereas the respondent has specifically stated that the show-cause notice was issued on april 17, 1997. they had obtained due permission from the respondent before approaching the public for funds for diversifying into this operation and the prospectus had been approved by the respondent. only subsequent to the due clearance by the respondent, the petitioners had diversified into this activity.4. the petitioners in crl. o. p. no. 1119 of 1999 are also accused in c. c. no. 455 of 1998. in this case also, the respondent preferred a complaint under section 207 of the companies act on the allegation that s. siva-subramanian, through a letter dated august 2, 1996, complained to the office of the regional director, department of company affairs, madras, stating that the company had declared dividend in the annual general body meeting held on april 30, 1996, and he has received the dividend warrant on august 28, 1996, after 119 days from the date of declaration instead of receiving the same on or before june 10, 1996.5. the petitioners in crl. o. p. no. 1120 of 1999 are accused nos. 1 to 3 in e. o. c. c. no. 301 of 1998. the respondent preferred a complaint under section 207 of the companies act on the allegation that the dividend declared on the annual general body meeting held on august 14, 1996, has not been received. even in the complaint, it is stated that the dividend warrants have to be despatched to the shareholders within 42 days from the date of declaration. it is further stated that they had not despatched the dividend warrant till september 26, 1996. the respondent issued a show-cause notice on september 9, 1997.6. the petitioners in crl. o. p. no. 2220 of 1999 are accused nos. 1 to 3 in e. o. c. c. no. 167 of 1998. the respondent preferred a complaint against them under section 209a of the companies act. according to the prosecution, the company has become liable to pay the dividend to the shareholders whose names appear in the register of members on the date of declaration of dividend and the dividend warrants have to be despatched to the shareholders within 42 days from the declaration. the complainant came to know about the default on september 8, 1997. on october 17, 1997, the accused filed a compounding application for violation of section 205a but, for the violation of section 207, they have not given any satisfactory reply. the complaint has been filed within the period of limitation on the ground that the instruction to launch prosecution was received only on september 8, 1997, from the regional director. on the other hand, the central government has approved a scheme of arrangement and this court had also sanctioned the scheme of arrangement. the petitioners have also clarified that the non-payment of the dividend was due to inadvertence and was not intentional.7. the respondent filed separate counters, alleging that the petitioners have carried out their air-taxi operations without suitably amending their articles of association and memorandum of association. the said default was noticed on february 24, 1998, and instruction to prosecute was given to the registrar of companies. the prosecution has been launched within one year from the date of instruction given to the registrar of companies and, as such, the complaint is well within limitation. they have also filed petition for compounding admitting their guilt and, as such, the present applications for quashing are not maintainable. the provisions of section 207 of the companies act are mandatory. once a dividend is declared, it has to be paid within 42 days from the date of declaration. the question is not whether the dividend warrants were despatched before the issue of show-cause notice. the question is whether the dividend warrants were despatched within 42 days from the date of declaration.8. heard learned counsel for both sides.9. learned counsel for the petitioners mainly contended that section 17 of the companies act deals with alteration of the memorandum of association of companies and this section does not provide any penalty. section 291 of the companies act deals with general powers of the board. the registrar of companies had knowledge of the business carried on by the petitioners when the prospectus of the company was filed with the registrar of companies and further the special resolution dated august 21, 1993, was filed with the registrar of companies and has approved the same. mere non-compliance with a provision of the act such as the omission to apply to the central government does not constitute offence punishable under section 629a of the act. no case can be made out against the petitioners. the complaint is also barred by time. the prosecution has been launched after a period of three years from the date when the offences are alleged to have been committed. the dividend warrants were despatched before the show-cause notice was issued by the company. no offence under section 207 has been committed.10. learned counsel for the petitioners contended that the respondent, registrar of companies preferred complaints under section 207 of the companies act on the allegation that the dividend has not been paid within a period of 42 days from the date of declaration. the registrar of companies also filed another case under section 17 read with section 291 of the companies act, alleging air-taxi operation is not included in the memorandum or articles of association and without any amendment as they have committed an offence which is punishable under section 629a of the companies act.11. learned counsel further pointed out that for the offence under section 629a of the companies act the punishment is only fine and as such, the complaint, if any, ought to have been filed within a period of six months and if not the complaint would be barred by time. so far as the offence punishable under section 207 of the act, since imprisonment is also there, the complaint ought to have been filed within a period of one year and in the absence of the same, the complaint would be barred by time. however, learned counsel for the respondent would contend that only from the date of the knowledge, the period of limitation will commence and, as such, all these complaints are well within time.12. there are five complaints filed by the registrar of companies against the petitioners. crl. o. p. no. 1114 of 1999 relates to a complaint under section 17 read with section 291 of the companies act punishable under section 629a of the said act. in other cases, the complaints filed by the respondent under section 207 of the companies act. section 17 of the act relates to special resolution and confirmation by the company law board required for alteration of memorandum. section 291 of the act relates to the general powers of the board. section 629a of the act relates to penalty 'where no specific penalty is provided elsewhere in the act'. according to this section, the company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to five hundred rupees and where the contravention is a continuing one, with a further fine which may extend to fifty rupees for every day after the first during which the contravention continues.13. the memorandum and articles of association have also been filed in the case. the petitioners also relied upon the relevant clause under the memorandum of association of the companies, which reads as under :'to act as carriers, transporters, tours, travel agents and shipping clearing and forwarding agents.'14. learned counsel further pointed out that the prospectus have been already registered with the respondent and special resolutions have alsobeen filed with the registrar of companies. apart from that, an annual report is sent to the registrar every year disclosing the air-taxi operation carried on by the said company. the aforesaid documents would only indicate that the respondent is well aware of the business carried on by n. e. p. c. company. this being so, the present contention of the respondent that they came to know about it only very late, cannot be believed. it is admitted that even according to the complainant, the show-cause notice was issued on april 17, 1997. as adverted to, the complaint ought to be filed within a period of six months. but, however, the complaint has been filed only on june 23, 1998. prima facie it is clear that the complaint is barred by time and on this ground, the complaint relating to c. c. no. 461 of 1998 is liable to be quashed.15. as adverted to, the other complaints relate to under section 207 of the companies act. section 207 reads as follows :'penalty for failure to distribute dividends within forty-two days.--where a dividend has been declared by a company but it has not been paid, or the warrant in respect thereof has not been posted, within 42 days from the date of the declaration, to any shareholder entitled to the pay ment of the dividend, every director of the company ; its managing agent or secretaries and treasurers ; and where the managing agent is a firm or body corporate, every partner in the firm and every director of the body corporate ; and where the secretaries and treasurers are a firm, every partner in the firm and where they are a body corporate, every director thereof; shall, if he is knowingly a party to the default, be punishable with simple imprisonment for a term which may extend to seven days and shall also be liable to fine.'16. so far as the complaint in c. c. no. 455 of 1998 is concerned, according to the respondent, there is delay of 119 days in payment of the dividend. the show-cause notice was issued on october 15, 1996. however, the respondent would contend that they came to know about this omission only on december 18, 1997. the complaint was filed into the court on march 10, 1998. as adverted to, in view of section 468 of the criminal procedure code, the complaint ought to be filed within a period of one year, considering the fact that the show-cause notice was issued as early as october 15, 1996, and the complaint having been filed on march 10, 1998, prima facie it is clear that the complaint is barred by time. when once the show-cause notice has been issued, it can be easily concluded that the respondent is well aware of the delay caused by the said company in payment of the dividend within 42 days after the declaration. under the circumstance, so far as the case, viz., c. c. no. 455 of 1998 is concerned, the complaint is also barred by time.17. c. c. no. 301 of 1998 also relates to the complaint under section 207 of the act. so far as this case is concerned, the show-cause notice was issuedby the respondent on september 9, 1997. a perusal of the complaint indicated that the respondent came to know about the omission only on january 2, 1998. however it may, as the show-cause notice was issued on september 9, 1997, and the complaint was filed on august 20, 1998, it can be said that it is filed within the period allowed under law. no doubt, learned counsel for the petitioners attempted to explain that the delay had been caused due to financial constraints and there was also framing of the scheme later approved by the company law board. these are matters to be considered only at the time of the trial and they are not matters relevant to be considered for quashing the proceedings. considering the fact that this complaint is filed within the period allowed under law, 1 am of the view that the proceedings cannot be quashed.18. the complaint in c.c. no. 9 of 1997 also relates to section 207 of the said act. the dividend has not been paid within 42 days after the declaration. the show-cause notice was issued on september 17, 1996. learned counsel for the petitioners contended that the scheme was approved by the company law board and furthermore, the respondent came to know about this only on august 30, 1996. the complaint was filed before the trial court on january 17, 1997. considering the fact that as the complaint has been filed within a period of one year from the issuance of show-cause notice, it cannot be said that the complaint is barred by time. in respect of other defences, it is open to the petitioners to agitate the same before the trial court.19. c. c. no. 167 of 1998 also relates to an offence under section 207 of the said act. it is seen from the complaint itself, the respondent came to know about the default on september 8, 1997. however, para. 3 of the complaint indicated that the inspection has been done and the same was completed on january 20, 1997. under the circumstances, even at the time of the inspection itself, the respondent could have been well aware of the commission of the offence by the said company. they have caused a delay of nearly eight months in sending the show-cause notice. the delay caused by the respondent cannot be made use of to save their complaint. the complaint was filed in the court on august 31, 1998. taking into consideration the fact that even according to the averments in the complaint, the respondent had completed the inspection on january 20, 1997, naturally the complaint ought to have been filed within a period of one year, but according to the complaint itself, it was filed on august 31, 1998, and, as such, it is beyond the time.20. learned counsel for the petitioners contended that when once the court comes to the conclusion that there is prima facie material to infer that the claim is barred by time, no useful purpose would be served in allowing the case to be prosecuted. the respondent is not in a position to point out that the claim is in time. hence, i am of the view that the proceedings inc. c. no. 461 of 1998, c. c. no. 455 of 1998 and c. c. no. 167 of 1998 are barred by time and, as such, the proceedings are liable to be quashed. in respect of the other two cases, viz., c. c. no. 9 of 1997 and c. c. no. 301 of 1998, the complaints have been filed in time and, hence, the proceedings cannot be quashed. the other contentions that there was financial constraint and the amount could not be realised by the company and, as such, the delay has occurred, are matters to be considered by the trial court. similarly, the other contentions that the scheme was approved by the company law board and, as such, the delay has been caused, are matters to he considered only by the trial court.21. for the reasons stated above, crl. o. ps. nos. 1114, 1119 and 2220 of 1999 are allowed and the proceedings in c. c. no. 461 of 1998, 455 of 1988 and 167 of 1998, pending on the file of learned additional chief metropolitan magistrate, economic offences, egmore, madras, are liable to be quashed and, accordingly they are quashed. crl. o. ps. no. 1121 of 1999 and 1120 of 1999 are dismissed. it is, however, open to the petitioners to agitate the very same points before the trial court and the trial court is directed to consider the same and dispose of the case as expeditiously as possible. consequently, connected criminal miscellaneous petitions are closed.