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1997 DIGILAW 109 (PAT)

Swarmal Goenka And Another v. Registrar Of Companies

1997-02-07

S.N.JHA

body1997
Judgment S.N.Jha, J. 1. This company petition under Sec. 633(2) read with Secs. 159, 166, 210 and 220 of the Companies Act has been filed (i) seeking a restraint order against the Registrar of Companies, Bihar, from initiating any criminal proceeding against the petitioners as the directors of Bihar Cotton Mills Limited, Phulwarisharif, Patna, for having committed default in preparation and filing of the balance-sheet, profit and loss accounts of the company for the year ending on December 31, 1982, and onwards, (ii) extending the time for holding the annual general meeting and filing the balance-sheet and profit and loss accounts for the years in question and (iii) directing the Bihar State Financial Corporation, which has in the meantime taken over the assets of the company, to allow the petitioners access to the registers and books of account lying in their office so that the petitioners may get the balance-sheet and profit and loss accounts prepared and filed. 2. This petition, for the reasons mentioned hereinafter, is fit to be dismissed. Sub-section (1) of Sec. 633 of the Companies Act provides that in any proceeding for negligence, default, breach of duty, misfeasance or breach of trust against an officer of the company, if it appears to the court that the officer is or may be liable in respect of his acts of negligence, default, breach of duty, misfeasance or breach of trust, but that he has acted honestly and reasonably, the court may excuse him either wholly or partly from his liability on such terms as it thinks fit, Sub-sec. (2) of Sec. 633 of the Act provides that where the officer has reasons to apprehend that any proceeding will or might be brought against him in respect of any such alleged act, he may apply for being excused from the liability. This provision in other words contemplates, what may be called, an "anticipatory" order of the nature envisaged under Sec. 633(1). 3. The provision of Sec. 633(2) has to be read in the context of the proceeding contemplated under Sec. 633(1). This provision in other words contemplates, what may be called, an "anticipatory" order of the nature envisaged under Sec. 633(1). 3. The provision of Sec. 633(2) has to be read in the context of the proceeding contemplated under Sec. 633(1). There cannot be any doubt that such proceeding can be filed only where the act of negligence, default, breach of duty, misfeasance or breach of trust, as the case may be, has occasioned or resulted in any loss to the company, it is only in such a situation that the proceeding is to be filed for determining the liability of the officers. In terms of Sec. 633(1) it is open to the officer to plead bona fides and seek an excuse. 4. In the present case there is no allegation that the acts of non-preparation and non-submission of the balance-sheet, annual profit and loss accounts has resulted any loss to the company. Mr. K. K. Mandal, learned standing counsel for the Central Government appearing for the Registrar of Companies very fairly pointed out that the petitioners has merely been informed by the Registrar of Companies to submit the annual return, balance-sheet and annual statement of profit and loss accounts along with late fees as per the provision of the Companies Act against which no grievance should be made. 5. Another aspect of the matter is that as indicated above, the petitioners basically seek protection from anticipated prosecution. Sec. 633, however, envisages a proceeding in which the civil liability of the defaulting officer is to be determined. It does not refer to any criminal proceeding. The High Court under this provision has power to relieve the officer from his civil liability only. I may in this connection notice the other submission of Mr. Mandal to the effect that the impugned notice was issued to the petitioners more than 13 years ago in 1983 but till today no prosecution has been launched. He stated that the petitioners may even now submit the returns, etc., along with late fine as per the provisions of the Companies Act. 6. In the above premises, this petition is dismissed.