Decided on August 16,1984

Dharam Pal Gupta Appellant

Referred Judgements :-



S.C.AGRAWAL,J. - (1.)THIS petition has been filed under Section 633(2) of the Companies Act, 1956 (here in after referred to as the 'Act',). The petitioners as will as the non -petitioner No. 2 were the Directors of Auto Electricals (India) Pvt. Ltd. a Company registered under the Ac' and non -petitioner No. 2 was it's Managing Director. The case of the petitioners is that the non -petitioner No. 2 did not call the Annual General Meeting of the Company and did not place the balance sheet and profits and loss accounts before the Annual General meeting as required under Section 210 of the Act. The petitioners apprehending that they would be prosecuted under Sections 159, 166, 210 and 220 of the Act, in respect of negligence, default, breach of duty, misfeasance or breach of trust, moved this petition on 23rd November, 1983 where in they have submitted that they have acted honestly and reasonably to comply with the formalities under Sections 159, 165, 210 and 220 of the Act and that they were not able to comply with the said formalities on account of the failure of non -petitioner No. 2 to comply with all the requirements of those Sections The petitioners have prayed that they may be relieved from being prosecuted under the aforesaid Sections
(2.)A notice was issued to the non -petitioners and in response to the same the replies have been filed by both the non -petitioners. In the reply filed on behalf of the Registrar of Companies, non -petitioner No. 1, an objection has been raised with regard to the maintainability of the petition on the ground that the petitioners are already being prosecuted and the cases are pending against them for trial before the Chief Judicial Magistrate (Economic Offences) Jaipur and that in view of the pending prosecution this petition cannot be maintained. In the said reply it has also been disputed that the petitioners have acted honestly and reasonably. In the reply that has been filed on behalf of non -petitioner No. 2 it has been stated that the said non -petitioner had submitted his resignation from the office of Managing Director on 20th October, 1982. In the said reply the said non -petitioner has also stated that he was responsible only for planning and execution of technical work of the company and it was not his duty to call the annual general meeting of the Company and that the said meeting could be called by any one of the petitioners.
Before I deal with the submissions that have been urged by the learned Counsel for the parties it would be appropriate to refer to Section 633 of the Act which reads as under:

(1) If in any proceeding for negligence, default, breach of duty, misfeasance or breach of trust against an officer of a company, it appears to the Court hearing the case that he is or may be liable in respect of the negligence, default, breach of duty, misfeasance or breach of trust, but that he has acted honestly and reasonably, and that having regard to all the circumstances of the case, including those connected with his appointment, he ought fairly to be excused, the Court may relieve him, either wholly or partly, from his liability on such terms as it may think fit: Provided that in a criminal proceeding under this sub -section, the Court shall have no power to grant relief from any civil liability which may attach to an officer in respect of such negligence, default, breach of duty misfeasance or breach of trust. (2) Whether any such officer has reason to apprehend that any proceeding will or might be brought against him in respect of any negligence, default, breach of duty, misfeasance or breach of trust he may apply to the High Court for relief and the High Court on such application shall have the same power to relieve him as it would have had if it had been a Court before which a proceeding against that officer for negligence, default, breach of duty, misfeasance or breach of trust had been brought under Sub -section (1). (3) No Court shall grant any relief to any officer under subSection (1) or Sub -section (2) unless it has, by notice served in the manner specified by it, required the Registrar and such other person, if any, as it thinks necessary, to show cause why such relief should not be granted.

(3.)IT may be mentioned that even though in the replies that have been filed on behalf of the non -petitioners the exact date on which the prosecution was instituted against the petitioners has not been mentioned but Shri Kuhad, the learned Counsel for non -petitioner No. 2, has stated at the bar that the said prosecution was instituted by filing a complaint in the Court of Chief Judicial Magistrate (Economic Offence) Jaipur, on 7th January, 1984 i.e., after the filing of this petition in this Court.

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