SHINGHAL, J. - (1.) THESE appeals against three judgments of acquittal passed by City Magistrate, Jaipur, raise some common questions and can conveniently be disposed of by this judgment. The Mewar Mineral Company Private Limited, Udaipur, is admittedly a company of which the other three accused P. V. Chandra, K. L. Mehta and C. B. Damani were the directors while accused M. L. Mehta was the Managing Director. The last annual general meeting of the company was held on December 9, 1958, but no meeting was held thereafter during the years 1957 and 1958. Criminal appeal No. 296 of 1960 relates to the allegation that the accused did not lay, at the annual general meeting of the company in 1937, the balance-sheet and the profit and loss account for the period specified in sub-sec. (3) of sec. 210 of the Companies Act, 1956, hereinafter in this judgment referred to as the Act, and that they failed to take all reasonable steps to comply with that requirement of sec. 210 of the Act inspite of the issue of notices by the State Registrar of Companies. The two other appeals arise out of the allegation that the accused did not prepare and file with the Registrar the returns containing the particulars specified in Part I of Schedule V in accordance with the provisions of sec. 159 of the Act. Criminal Appeal No. 191 of 1960 relates to the default in that respect for the year 1957, while Criminal Appeal No. 190 relates to the default for 1958.
(2.) THE accused took almost similar pleas in the three cases. In Criminal Appeal No. 296, accused M. L. Mehta took the plea that the financial condition of the company deteriorated considerably so that all its work was stopped in 1953 and there was no staff to prepare the accounts. This was also given as the reason for not holding general meeting of the company. Accused K. L. Mehta pleaded that he had left the company in 1952 and that he could not compel the Managing Director to file the necessary returns and call a meeting of the company. He also pleaded that it was the duty of the Managing Director to take the necessary action in the matter. An almost similar plea was taken by P. V. Chandra except that he further pleaded that he did not know Hindi. In the other two appeals, written statements were filed by P. V. Chandra, K. L. Mehta and G. B. Damani stating that they had ceased to be directors of the company and that they could not possibly be convicted of offences under sec. 159 read with sec. 162 of the Act because no general meeting of the company was at all held, and also because they had already been prosecuted for their failure to hold the meetings. The learned trial Magistrate reached the conclusion that the accused had not committed any offence under sec. 210 or sec. 159/162 of the Act because the annual general meeting of the company was not held during the years 1957 and 1958 and there was no question of laying the balance-sheet and the profit and loss account and of filing the returns for those years. He, accordingly, acquitted the accused, and the State has now come up in appeal against his three judgments of acquittal. We shall first deal with Criminal Appeal No. 296 of 1960 as its subject-matter comes earliest in point of time. The fact that the accused failed to lay the balance sheet and the profit and loss account for the year 1957 at the annual general meeting of the company is not in dispute. It has, however, been strenuously argued by the learned counsel for the accused-respondents that there was no occasion to comply with the requirements of sec. 210 of the Act because, as a matter of fact, the annual general meeting of the company was not held during that year. It has further been urged that for the failure to hold the meeting in accordance with sec. 166 of the Act, the accused were prosecuted separately for an offence under sec. 166 read with sec. 168 and that the subsequent prosecution under sec. 210 exposes them to double jeopardy for the same default. He has placed reliance on Emperor Vs. Pioneer Clay and Industrial Works Ltd. (1) to support this contention. On the other hand, learned Assistant Government Advocate has argued that it was for the Directors of the company to take all reasonable steps to comply with the provisions of sec. 210 and that for their failure to hold the annual general meeting for the purpose of laying the balance-sheet and the profit and loss account, they are punishable under sub-sec. (5) of sec. 210 of the Act. He has also argued that since it was the responsibility of the Directors to hold the annual general meeting, they could not rely on their own default as an answer to the charge under sec. 210 of the Act. Reliance in this connection has been placed on In re Gangipati Appayya (2) B. N. Viswana-than Vs. The Assistant Registrar of joint Stock Companies Madras (3) Bhagirath Chandra Dad Vs. Emperor (4) and Park Vs. Laton (5 ). The first point for consideration therefore is whether there is force in the argument of the respondents' learned counsel that since no annual general meeting of the company was held in 1957, there was no occasion to file the balance sheet and the profit and loss account and the accused were relieved of their responsibility to lay the balance sheet and the profit and loss account before the company. This raises the ancillary question whether the failure to hold the annual general meeting amounts to failure under sub-sec. (5) of sec. 210 "to take all reasonable steps" to comply with the provisions of the section. In other words, the question is whether it would be correct to say that if the Directors of a company have failed to take all reasonable steps to hold the annual meeting of the company for the purpose of laying the balance-sheet and the profit and loss account, they can be penalised under sub-sec. (5) of sec. 210. We have examined the scheme of the Act on the point in order to find an answer. Sec. 166 of the Act provides for the holding of an annual general meeting and, for default in holding the meeting, the company and its officers are punishable under sec. 168 with fine which may extend to Rs. 5,000/- and in case of a continuing default with a further fine which may extend to Rs. 250/- for every day after the first during which the default continues. Then comes sec. 210 which provides for the laying of the balance-sheet and the profit and loss account, and sub-sec. (5) of that section further provides that if all reasonable steps are not taken to comply with the provisions of the section, the Directors of the company shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to Rs. 1,000/-, or with both. Lastly, sec. 159 of the Act provides that every company shall prepare and file with the Registrar a return containing the specified particulars as on the date on which the annual general meeting of the company was held. Sec. 162 of the Act provides a penalty of a fine of Rs. 50/- for every day during which the default in filing the return continues. It would thus be seen that there are three penal clauses relating to these connected provisions of the law and the most severe penalty is that provided under sec. 210 (5 ). If it was the intention that the default in holding the annual general meeting should fall within the purview of that sub-section and be penalised thereunder, a separate lesser punishment would not have been specifically provided under sec. 168. We have therefore no hesitation in repelling the contention that the failure on the part of the accused to hold the annual general meeting amounted to a failure on their part to take all reasonable steps to comply with provisions of sub-sec. (5) of sec. 210. That default would be punishable only under sec. 168 of the Act. The accused having been challaned for failure to take all reasonable steps to lay the balance-sheet and the profit and loss account at the annual general meeting of the company, the prosecution was obviously for their failure to take a step other than that for the holding of the annual general meeting. The accused themselves admitted at the trial that the accounts had not been prepared for the reasons mentioned by them. Babulal P. W. , 1, who was the only prosecution witness examined in the case, could possibly have no knowledge in that regard and all that he could, therefore, state was that the accused had not complied with the requirement of filing the documents in question. The accused have not given any satisfactory reason for non preparing the Balance-sheet and the profit and loss account when the company continued to be in existence, and have not even pleaded that they took all reasonable steps for their preparation. On the other hand, as already stated, they have admitted that no action was taken to prepare the balance sheet and the profit and loss account. They are therefore obviously guilty under sec. 210 (5) of the Act. Their other plea that there was no occasion to lay the two documents as the annual general meeting of the company was not held in 1957, would have been worthy of consideration only if they had shown that the documents were ready but could not be laid as the meeting was not held. The fact, therefore, remains that the accused, on their own showing, failed to take all reasonable steps to comply with the provisions of sec. 210 and they are, therefore, liable to punishment on that account. The argument of double jeopardy which has been advanced in this connection is equally futile. There is nothing on the record to show that the accused were prosecuted for their failure to hold the annual general meeting in 1957, but even if it is assumed that this was so, the previous prosecution could only be for one offence under sec. 166 read with sec. 168 of the Act for not holding the annual general meeting; while in the present instance they have been prosecuted for not taking all the other reasonable steps to comply with the requirement of laying the balance-sheet and the profit and loss account at the annual general meeting. For the reasons mentioned above, it cannot be good defence for the accused to plead that they had no occasion to take all reasonable steps to comply with the provisions of sec. 210 and to lay the balance sheet and the profit and loss account at the annual general meeting as no such meeting was at all held. Emperor Vs. Pioneer Clay and Industrial Works Ltd. (1) cannot avail the accused because that case related to sec. 134 of the Indian Companies Act, 19133, of which the counterpart is sec. 220 of the Act. The present case, as has been mentioned earlier, relates to sec. 210 of the Act of which sec. 131 and 133 (3) were the corresponding provisions under the old Act. The decisions in In re Gangipati Appayya (2) and B. N. Viswanathan Vs. The Assistant Registrar of Joint Stock Companies Madras (3) cited by learned Assistant Government Advocate which take note of Bhagirath Chandra Das Vs. Emperor (4) and Park Vs. Laten (5) no doubt relate to secs. 131 and 133 (3) of the Indian Companies Act, 1913, but the reasoning advanced in those cases that since it was the responsibility of the accused to hold the general meeting he could not be allowed to rely on his own default and plead his innocence, need not be considered to decide the present case. The decision of this appeal turns on its own admitted facts and as has already been shown, the learned Magistrate was seriously in error in interpreting the provisions of sec. 210, and since he misdirected himself in ordering the acquittal of the accused for that reason, we feel compelled to set it aside. The plea of the accused that the balance sheet and the profit and loss account could not be prepared because of deterioration in the financial condition of the company, is not at all relevant. The company having remained in existence, it was their duty to prepare those documents. The other plea of the accused K. L. Mehta and P. V. Chandra that they had left the company in 1952, has not been proved, and since Babulal P. W. 1 has stated that all the accused continued to be Directors of the company, that plea must also be rejected. We therefore convict the accused M. L. Mehta, P. W. Chandra, K. L. Mehta and G. B. Damani of the offence under sec. 210 (5) of the Act. The company could not be held liable for that offence because the law fastens the liability only on the defaulting Directors. Looking, however, to the fact that almost five years have gone by, we think that a nominal sentence of a fine of Rs. 50/- each will meet the ends of justice. In default of payment of fine, the accused will undergo simple imprisonment for a week each. We shall now deal with the other two appeals (Nos. 190 and 191 of 1960) which relate to the offences under sec. 159 read with sec. 162 of the Act. The accused admittedly did not prepare and file the returns with the Registrar containing the particulars specified in Part 1 of Schedule V of the Act, for the years 1957 and 1958, and their learned counsel has argued that since the returns had to be prepared with reference to the dates on which the annual general meetings of the company were held, there could be no question of preparing them as the meetings of the company were not held during those years. On a plain reading of sec. 159 of the Act, it appears that the annual return referred to in it had to be filed (i) "within 48 days from the day on which each of the annual general meetings referred to in sec. . 166 is held" and (ii) the return had to contain "the particulars specified in Part 1 of Schedule V as they stood on that day". The starting point for calculating the time limit for the filing of the return could not therefore be ascertained in a case in which no annual general meeting had been held at all, and it was also not possible to prepare the return when the date with reference to which it had to be prepared was not known. It is true that the Directors of the Company might themselves be to blame for not holding the annual general meeting, but we are unable to think that a distinct offence could be said to have been committed in not preparing and filing the return when even the annual general meeting had not been held. For not holding the annual general meeting, the Directors were liable to punishment under sec. 166/168 of the Act, but they could not be penalised again under sec. 159/162 for not filing the return for, as we have already pointed out, it could not have been prepared when the annual general meeting had not been held. Besides, the offence could be said to be committed only at the expiry of the period of 42 days from the date of the annual general meeting, and when no such meeting was held] it was not possible to say that the offence had at all been committed. Thus the scheme of the Act, as we understand it, was that a distinct offence under sec. 159/162 could be said to be committed only after the holding of the meeting and not otherwise. It seems that this defect in the provisions of sec. 159 of the Act was noticed by the Legislature so that it amended sec. 159 by adding the following proviso to it by the Companies (Amendment) Act. 1960 (LXV) of 1960: - "explanation - Any reference in this section or in sec. 160 or 161 or in any other section or in Schedule V to the day on which an annual general meeting is held or the date of the annual general meeting shall, where the general meeting for any year has not been held beconstrued as a reference to the latest day on or before which that meeting should have been held in accor dance with the provisions of this Act. " The explanation has now created a distinct offence for breach of the provisions of sec. 159 of the Act also, even when the annual general meeting has not been held, but it has no application to the two appeals under consideration as they relate to the defaults made in 1957 and 1958. As it is, the defaults alleged in the two cases properly fell within the purview of sec. 166 read with sec. 168 of the Act and could appropriately be dealt with thereunder. Such an offence is punishable with fine extending upto Rs. 5,000/- and also with a fine of Rs. 50/- for every day during which the default continues, whereas for the offence under sec. 159 read with sec. 162 the accused can be fined only Rs. 50/-for each day of the default. At any rate, since the annual general meetings were not held at all, there is little justification for convicting the accused for not filing the returns with reference to a date which was not known. Their acquittal in the two cases in question appears to be justified.
(3.) IN the result, we dismiss appeals Nos. 190 and 191. We have already made the order partially allowing appeal No. 296 of 1960 and direct the District Magistrate, Udaipur to carry out the sentence awarded by us. .;