Harish Tandon, J. - (1.) THE petitioners being the officers and/or directors of Simplex Infrastructures Ltd., have taken out the instant application under section 633 of the Companies Act, 1956, for an excuse of any liability apprehended on the basis of the four show -cause notices issued by the Registrar of Companies, West Bengal, on the alleged violation of section 211 of the said Act. Although, the aforesaid show -cause notices contains various violations but the parties before this court have restricted their submissions on the alleged offence committed by the company for non -disclosing the fluctuation in the rates of the foreign currency in respect of the transaction in profit and loss account. The alleged violation has originated from the auditor's report appended to the annual report for the year 2009 -10 to the effect that the fluctuation of loss in the foreign exchange currency has not been provided as required under the Accounting Standard 11. In the directors' report, it is clarified that the exchange fluctuation pertaining to a foreign currency loan is fully hedged by derivative contracts and, therefore, the loss or gain because of the fluctuation in the exchange rates of the foreign currency is notional and, therefore, not provided in the profit and loss account.
(2.) SINCE , the argument is advanced on the sole offence as indicated above, I do not delve to go into the nitty -gritty and/or genuinity of the other offences indicated in the aforesaid show -cause notices as the same appears to have been waived and/or abandoned by the respondent. The first show -cause notice was issued alleging that the auditor's report points out that the exchange fluctuation loss pertaining to the foreign currency loan having not been provided in the profit and loss account contravenes the provision of section 211(3A) of the Companies Act. The other violation indicated therein relates to non -disclosure of the advances received for the work in progress have not been shown under the separate heads and non -disclosure of the cancelable and non -cancelable operating leases in the annual report for the said -year. The company duly replied the said show -cause notice and contended that the companies have entered into a derivative contract pertaining to the fluctuation in foreign currency rates and is, therefore, fully hedged. The loss or the profit is mere notional. The board of directors opined that the same could not be provided in the profit and loss account. So far as the other violation and/or contravention is concerned. The company took the stand that since no rent was received, therefore, the disclosure is not required to be made whereas the minimum lease payment, which the company received, has been duly reflected in Schedule 19 of the accounts.
(3.) THE second show -cause notice reiterates the first violation and/or contravention as contained in the first show -cause notice relating to a nondisclosure of the exchange rate fluctuation loss as reported in the auditor's report. The company in reply to the same took the same stand as it took in reply to a first show -cause notice and pleaded for an excuse of any criminal liability if there be any for alleged violation in this regard. The third and four show -cause notice is the repetition of the first violation as indicated in the first show -cause notice.;