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Facts of the Case
This is an appeal in case under section 374 of the code of Criminal procedure 1973[1], against a judgment made prior which acquitted the respondents of the charge[2]. The respondents failed to comply with the Act[3]in not filing before the registrar of companies, the annual return for the year which ended in September 30, 1969 and were liable[4]. The Directors[5] pleaded not guilty positing that no annual general meeting was held. Hence, the annual return could not be filed with the registrar of Companies. After examination, it was found that the respondents failed to submit the annual return for the year, ending on the 30th of September, 1969, and that they did not respond to the notices issued to them. It was held that no general meeting of the company had been held during the relevant period. The respondents were acquitted on the grounds that failure to comply with the provisions of Section 159 of the Act is punishable only when it is willful. The learned S.D.M[6] have been viewed to have wrongly applied its decision in accordance with the Act.
Issues In The Case for Court’s Determination and Analysis
Issues in case are as follows:
- Whether annual returns have to be filed all the time by the Registrar of Companies.
- Whether absence of a general meeting could serveas a defense in not filing before the Registrar.
The Duty of the Registrar of Companies
According to Section 2(75) of the Companies Act 2013;
“Registrar means a Registrar, an additional Registrar, a joint Registrar, a Deputy Registrar or an Assistant Registrar, having the duty of registering companies and discharging various functions under this Act”.
The Registrar of Companies also called the ROC is an office under the Ministry of Corporate Affairs[7]. The registrars are crucial in ensuring that companies’ and businesses’ mode of operation are in tandem with the Companies Acts. Having said that, it is impossible for companies to conduct their businesses if it has not been issued a certificate by the Registrar. The Registrars regulate company’s activities which also includes, inter alia, filing of their annual reports and other documentary requirement.
Filing of annual returns by the Registrar of Companies. The law requires that every company file annual return for their businesses as a mandatory requirement. However, the recipient differs in various countries as it is dependent on the body and office commissioned for such purpose.
However, in India, it is a mandatory requirement that Companies’ annual returns have to be filed by the Registrar of Companies who are vested with such power by an existing legislation[8].This applies to whether it is a public or a private company.
The Position of the Act (Section 159 of the Companies Act, 1956
According to Section 159 of the Act;
Every company having a share capital shall, within sixty days from the day on which each of the annual general meetings referred to in Section 166 is held, prepare and file with the Registrar a return containing the particulars specified in Part 1 of Schedule V, as they stood on that day, regarding-
- Its registered office,
- The register of its members,
- The register of its debenture holders,
- Its shares and debentures,
- Its indebtedness,
- Its members anddebenture holders, past and present, and
- Its directors, managing Directors, managers and Secretaries, past and present:
Provided that if any of the five immediately preceding returns has given as at the date of the annual general meeting with references to which it was submitted, the full particulars required as to past and present members and the shares held and transferred by them, the return in question may contain only such of the particulars as relate to persons ceasing to be or becoming members since that date and to shares and to shares transferred since that date or to changes as compared with that date in the number of shares held by a member.
The said return shall be in the form set out in Part II of Schedule V or as near thereto as circumstances admit and where the return is filed even though the annual general meeting has not been held on or before the latest day by which it should have been held in accordance with the provisions of this Act: the company shall file with the return a statement specifying the reasons for not holding the annual general meeting……………”
From the above, particularly subsection 2 which allows a company to file annual return for their businesses without necessarily holding a general meeting, can it be said that the provisions of the Act was thoroughly followed in making a judgment which acquitted the company?
Conclusion Of The Case
According to the judgment which allowed for acquittal, it was said amongst others that the filing of annual returns to the registrar of Companies is dependent upon the annual holding of the annual general meeting. Thus, the company cannot be prosecuted under Section 162(1) for not filing the annual return with the Registrar of companies. While this seems excusable, it should be emphasized that prior notice had already been issued to the company in order to ensure that the company in fact comply with both the annual returns filing and the annual general meeting. Whether or not such notice was required by the Act, but the company in question defaulted, after which frivolous defenses were brought up is what is pertinent to note. The law should not be too quick to acquit faulting persons. Rather than acquit, it would be in the interest of the law and court to impose sanctions for failure to acknowledge notice served on the Company during the time frame of 30th of November, 1971 and 30th of May, 1972.
References:
[1] This section allows for one convicted on a trial whether by the high court or a Metropolitan Magistrate to appeal to either the supreme court or the Court of Session as the case may be.
[2] Under S162 of the Companies Act 1956 (Act No. 1 of 1956)
[3] Section 159 of the Companies Act 1956
[4] Under S162 (1) of the Companies Act
[5] Respondent two(2) and four(4).
[6]Sub-divisional Magistrate.
[7] They are vested with the administration of the Companies Act 1956 as well as the Companies Act 2013https://thecorporate.ninja/wp-admin/post.php?post=2019&action=edit
[8]Section 159 of the Companies Act 1956.https://thecorporate.ninja/wp-admin/post.php?post=2019&action=edit
