CHANDMANI TEA COMPANY LTD v. REGISTRAR OF COMPANIES, WEST BENGAL
2003-04-24
ASHIM KUMAR BANERJEE
body2003
DigiLaw.ai
A. K. BANERJEE, J. ( 1 ) -CHANDMANI Tea Company Limited (hereinafter referred to as the 'said company') is having its principal undertaking being Chandmani Tea Estate situated in the District of Jalpaiguri. The registered office of the said company is also situated within the tea estate. The said company entered into a Memorandum of Understanding with the Government of West Bengal by which a portion of the tea estate was transferred to a new company namely Lakshmi Township Limited which was incorporated for the purpose of building a satellite township in joint venture with the Government of West Bengal. By virtue of such Memorandum of Understanding a portion of the tea estate was converted in a vacant land for the purpose of building such township. Such decision of the company as well as the Government of West Bengal gave rise to an industrial dispute and labour unrest. There had been intensive agitations by the workers of the said estate causing casualty to one of the workmen in a police firing. The situation was so grave that the directors and the other executives of the company were prevented from entering into the said tea estate as well as the registered office. ( 2 ) IN view of such unfortunate incidents the said company could not hold its Annual General Meeting for the year 2001-02 within the stipulated date. The company duly applied to the Registrar of companies for extension of time to hold the Annual General Meeting. The Registrar of Companies considering the facts and circumstances extended the time till 31st December, 2002. Even then the company could not hold such Annual General Meeting by 31st December, 2002. ( 3 ) THE present application had been made by one of the directors of the said company asking for condonation of delay in holding the Annual General Meeting as well as for an order of restraint against the Registrar of Companies from drawing up any criminal proceedings on account of such default. ( 4 ) DURING the pendency of the application the company held its Annual General Meeting for the year 2001-02 on 31st January, 2003 and filed appropriate return and documents with the Registrar of Companies on 19th February, 2003. Xerox copy of the receipt of such filing was filed in Court in course of hearing. ( 5 ) MR.
( 4 ) DURING the pendency of the application the company held its Annual General Meeting for the year 2001-02 on 31st January, 2003 and filed appropriate return and documents with the Registrar of Companies on 19th February, 2003. Xerox copy of the receipt of such filing was filed in Court in course of hearing. ( 5 ) MR. D. Basak, learned counsel appearing for the applicant submitted that in view of the facts and circumstances as explained in details in the petition it would exfacie show that the reason for not holding the Annual General Meeting within the stipulated date was beyond the control of the directors of the said company including the applicant. Mr. Basak further submitted that the said meeting could not be held despite bonafide attempts on the part of the directors of the company including the applicant. Hence, the applicant should be relieved of such responsibility under section 633 of the Companies Act, 1996. ( 6 ) IN support of his contention Mr. Basak relied on the following decisions: (I)50 Company Cases, page-381 (In the matter of: East India Hotels Limited) (ii)56 Company Cases, page-265 (G. A. Mohan and Ors. v. Registrar of Companies, Karnataka) (iii)93 Company Cases, page-486 (P. Venu Rao v. Secretary to Government and Anr.) (iv)air 1959, Bombay 245 (In re: Tolaram Jalan and Ors.) (v) 112 Company Cases, page-450 (N. Meyyappan v. Registrar of Companies) (vi)1964 (1), Comapny Law Journal, page-211 (S. L. Kapur v. Registrar of Companies, Orissa) ( 7 ) RELYING upon the aforesaid decisions Mr. Basak submitted that since the applicant acted honestly and reasonably the applicant should be excused for such default and/or breach of duty by not holding the Annual General Meeting within the time so stipulated. ( 8 ) OPPOSING the application Mr. S. S. Sarkar, learned counsel appearing for the respondent, submitted that the reason for not holding the Annual General Meeting with the time so stipulated in the statute was considered by the Registrar of Companies and the Registrar of Companies duly extended the time till 31st December, 2002. Hence, the company ought to have held the Annual General Meeting within the time so extended by the Registrar of Companies. He further submitted that this Court had no power to extend the time to convene the Annual General Meeting, as prayed for, by the applicant. Mr.
Hence, the company ought to have held the Annual General Meeting within the time so extended by the Registrar of Companies. He further submitted that this Court had no power to extend the time to convene the Annual General Meeting, as prayed for, by the applicant. Mr. Sarkar lastly contended that the circumstances explained in the petition were not sufficient enough to condone the delay and excuse the applicant for such default. Mr. Sarkar relied on two decisions reported in 37 Company Cases, page 720 (In the matter of: Coal Marketing of India Ltd.) and 56 Company Cases, page 93 (Sanatan Ganguly v. State and Ors. ). Relying on the aforesaid two decisions Mr. Sarkar submitted that this Court should dismiss the petition for want of adequate explanation. ( 9 ) TO decide the issue may I first deal with the cases cited by the parties. (I) 37, Company Cases, page 720: in the said case the company did not hold any Annual General Meeting for six years. Initially on an earlier application for the default committed by the company for two years for non-filing of balance sheet, profit and loss account as well as for not holding the Annual General Meeting this Court condoned the delay on an undertaking given by the directions that they hold the Annual General Meeting and comply with the statutory requirements within six months. Such undertaking was violated by the directors. This Court on a second application being made condoned the delay on a similar undertaking. The directors violated the undertaking for the second time. Similarly, on a third application the delay was condoned by this Court. When 4th attempt was made before this Court by the said judgment this Court dismissed the petition. While dismissing the petition P. B. Mukherjee, J. held that the Court had no power to relieve the directors from liability for the default or to extend the time for holding the Annual General Meeting or to file statutory requirement or balance sheet and/or profit and loss account. His Lordship was further pleased to observe that the default could be excused under section 167 of the Companies Act and the Central Government had power to permit calling of such a meeting on an extended date.
His Lordship was further pleased to observe that the default could be excused under section 167 of the Companies Act and the Central Government had power to permit calling of such a meeting on an extended date. His Lordship further held that under section 633 the Court could relieve officers of the company from fines and penalties and not the company from calling or holding or conducting the Annual General Meeting. (II) AIR 1959 Bombay, page 245: in this case there had been a default in submitting the balance sheet and profit and loss account. Bombay High Court held that the Court had power to condone the delay on an appropriate explanation given by the applicants. The Court considering the facts and circumstances condoned the delay and directed Registrar of Companies not to initiate any proceeding for such default. (III) 1964 (1) Company Law Journal, page 211: the Orissa High Court considering the facts and circumstances held that delay in holding the Annual General Meeting and placing the balance sheet before the said meeting and forwarding copies thereof to the members was due to unavoidable reasons and caused by circumstances beyond their control. Hence, the default should be excused under section 633 (2) ( 10 ) CONSIDERING the aforesaid cases cited by the parties my understanding of the section being section 633 (2) is as follows: (I) If there is any statutory default on the part of an individual while acting on behalf of the company the Court is empowered to consider the application for excusing the said person from such responsibility and/or liability. (II) While considering the application made under section 633 (2) the Court will have to come to a conclusion that the applicant had acted honestly and fairly and even after his honest and fair act the default act the default was committed for some unavoidable circumstances. (III) Non-compliance of such statutory requirements by the applicant was caused due to incident beyond his control. (IV) The Court is neither empowered to extend the time to hold Annual General Meeting or to comply with the statutory requirements nor empowered to relieve the company from such responsibility and/or liability.
(III) Non-compliance of such statutory requirements by the applicant was caused due to incident beyond his control. (IV) The Court is neither empowered to extend the time to hold Annual General Meeting or to comply with the statutory requirements nor empowered to relieve the company from such responsibility and/or liability. ( 11 ) THE facts and circumstances as explained by the petitioner in the instant application as briefly recorded by me hereinbefore would show that there had been bonafide reason for not holding the Annual General Meeting as well as for complying with the statutory requirement by the company and/or its directors within the extended period. The newspaper reporting annexed to the petition would show that the situation prevalent at the said tea estate at the relevant point of time was too grave. The Registrar of Companies considered all those aspects and extended the time till 31st December, 2002. The company and/or its directors even then could not hold the said meeting by 31st December, 2002 and ultimately held the meeting on 31st January, 2003. From the aforesaid facts I am convinced that the company and/or directors could not have held the meeting and complied with the statutory requirement within the stipulated period as also within the extended period. Hence, for such default the petitioner being a director of the said company, in my view, should be excused. I was told by the learned counsel appearing for the company who had drawn my attention to the xerox copy of the receipt granted by the Registrar of Companies that all the statutory requirements were complied with by the company and its directors on 19th February, 2003 by filing necessary annual report, balance sheet and other related documents required in law with the Registrar of Companies on the said date. ( 12 ) IN the case of Coal Marketing Company of India (P) Limited (supra) the Court dismissed the application on the fourth attempt as the Court was not satisfied with the explanation given by the directors of the said company. Moreover, in the said case there had been continuous defaults despite repeated undertakings given before this Court. Considering such facts and circumstances of the case P. B. Mukherjee, J. dismissed the application. I do not find any scope to apply the said decision in the instant case.
Moreover, in the said case there had been continuous defaults despite repeated undertakings given before this Court. Considering such facts and circumstances of the case P. B. Mukherjee, J. dismissed the application. I do not find any scope to apply the said decision in the instant case. ( 13 ) SIMILARLY, in the case Sanatan Ganguly (supra) this Court observed that the Magistrate while considering the application under section 633 (1) ought to have come to a finding that the petitioner acted honestly and fairly and without coming to a finding the learned Magistrate should not have granted relief under section 633 (1 ). I am unable to find any scope of application of the ratio decided in this case. ( 14 ) THE petitioner herein prayed for relief on his behalf as well as on behalf of the other directors. In my view, the statute requires application to be made by the person seeking relief under this section. For the defaults committed by the directors of the company the directors are individually responsible and are liable for conviction and hence the petitioner is not entitled to make this application in representative capacity. ( 15 ) HENCE, the application succeeds in part. The Registrar of Companies, West Bengal is directed not to take any punitive step against the applicant for non compliance of the provision of section 166 of the Companies Act for not holding the Annual General Meeting within the stipulated date and also for non filing of the statutory documents with the Registrar of Companies within the stipulated period for the year ended 31st March, 2002. The application being C. P. No. 76 of 2003 is disposed of accordingly. The Registrar of Companies, West Bengal would, however, be entitled to cost of this application assessed at Rs. 1700. 00 to be paid by the petitioner within a week from the date. Urgent xerox certified copy would be given to the parties, if applied for. Application succeeds in part.