RUZEBH J S MISTRY Vs. REGISTRAR OF COMPANIES

JUDGEMENT

(1.) THE petitioner is an Advocate and a Solicitor and is a partner in a firm of Solicitors & Advocates at Mumbai. From 5th February 1992 until 23rd December 1996 the petitioner was a non-executive Director of a Company known by the name and style of Lan Eseda Steels Ltd. , a company incorporated under the provisions of the Companies Act, 1956 with a registered office at Gondia in the district of Bhandara. The petitioner tendered his resignation with effect from 23rd December 1996. By a letter dated 23rd December 1996, the petitioner informed the Registrar of Companies of his having ceased to be a Director of the company. On 27th November 1995, which was prior to the resignation tendered by the petitioner, a notice was addressed by the Assistant Inspecting Officer in the office of the Regional Director, Western Region of the Department of the Company Affairs, to the company that certain "contraventions/ irregularities" had been noticed in the course of an inspection under Section 209A of the Companies Act, 1956. At this stage, it would not be quite material to refer to each of those individual contraventions or irregularities, as the case may be, since the subsequent correspondence between the parties narrowed down the alleged violations to a few, to which a reference will have to be made during the course of the narration of facts. The company responded by its letter dated 18th December 1995. The petitioner on his part addressed a letter dated 30th December 1995 to the Assistant Inspecting Officer stating that he was not a Managing Director or full time Director, or for that matter, a Manager or Secretary of the Company. The petitioner stated that he was not a person in accordance with whose directions or instructions the Board of Directors of the Company was accustomed to act and he was not charged by the Board with any responsibility for complying with formalities required or duties to be performed under any legislation. The petitioner stated that he was neither a shareholder nor an employee of the company and was not in the day to day management of its affairs. According to the Petitioner, none of the books, registers, records or files were in his charge, custody or control. The petitioner then stated that he was a Director of the company only in his capacity as a legal advisor and being an Advocate and Solicitor by profession, he had extended his professional services only when they were sought by the company on specific legal disputes. The case of the petitioner was that he was not an officer in default, as that expression is defined in the Companies Act, 1956.

(2.) THREE show cause notices were thereupon issued to the company and to its Officers allegedly in default, or as the case may be, to its Officers and Directors on 22. 8. 1997, 1. 9. 1997 and 1. 1. 1998. The first notice dated 22nd August 1997 alleges a contravention of the provisions of Sections 269(1) and 309 of the Companies Act, 1956, in that, (i) the Company had not appointed a full time Director/Managing Director/Manager, (ii) the company had paid remuneration to its Directors which had not been approved by the Central Government or by the members of the Company in a general meeting. The second notice dated 1st September 1997 alleges that the Minute books of the company were not paged right from the first meeting dated 21st August 1991 until the meeting held on 20th March 1995. The notice also states that the Minute book had been typed but was not kept bounded; and, though one of the Directors, Mr. R. K. Ramchandran, was appointed as additional Director from 28th February 1992, the Minutes of the Meeting of the Board of Directors held on 8th February 1992 showed that the company had approved his foreign tour to West Germany. Therefore, according to the notice, no meeting had actually been held on 8th February 1992. The third notice dated 1st January 1998 alleges that whereas the Balance Sheet of the company as on 28. 2. 1993 showed that the company had issued 4,75,000/- shares between the period 1. 12. 1991 to 28. 2. 1993, the company had filed a return of allotment in Form 2 for all the aforesaid shares save and except for 21 shares, thereby violating the provisions of Section 75(1) of the Companies Act, 1956.

(3.) AN affidavit in reply has been filed in these proceedings on behalf of the Registrar of Companies. There is no denial of the factual averments which have been contained in paragraphs 3 and 4 of the company petition. Similarly, there is no denial of the averments contained in paragraph 19 of the company petition that the petitioner has acted bonafide, honestly, reasonably and in good faith. The case of the respondent is that the petitioner is an officer in default and, as such, is liable to be proceeded for a breach on the part of the company.