V.K.SINGHAL,J. - (1.) THIS petition under Section 482 of the CriminalProcedure Code has been submitted to quash the proceedings of CriminalCase No. 164 of 1994 - -Renu Jain v. Herdilia Unimers pending before theSpecial Court of Judicial Magistrate (Economic Offences), Rajasthan, Jaipur,and to discharge the accused petitioners.
(2.) THE brief facts of the case are that Mrs. Renu Jain had applied for allotment of 100 shares of the petitioner -company on the basis of its prospectus dated April 30, 1992, vide Application Nos. 2533789, dated June 1. 1992 The cheque was also given along with the application form for the requisite amount and the same was encashed on or about June 18, 1992. The complainant came to know of the allotment through her broker, Shri S. C. Jain, who received the brokerage amount in respect of the application made by the complainant. The shares were required to be sent by the petitioner -company on or before November 1, 1992, but the shares were not sent. According to the conditions incorporated in the prospectus, the company had undertaken to allot the shares within 10 weeks of the close of the public issue and the shares were required to be sent by registered post to the address given in the application form itself. Since the shares were not sent within the stipulated time; violation of provisions of sections 61, 73 and 113 of the Companies Act was alleged. For the alleged contravention of the provisions of Section 61 it was prayed that an enquiry be made into the conduct of the accused and the accused be punished under Section 63 of the Companies Act. And that for the breach of Section 73 the punishment as provided under Section 73(2B) of the Companies Act was prayed for. In respect of contravention of the provisions of section 113 it was stated that the punishment of fine upto Rs. 500 per day during the period of default be awarded and the amount so received be directed to be given under Section 626 of the Companies Act by way of award. The submission of learned counsel for the petitioner is that the complaint could be filed against the officer who is in default. The words 'officer who is in default' has been defined under Section 5 of the Act, which are managing director, whole -time director, manager, secretary or any person in accordance with whose directions or instructions the board of directors is accustomed to act and any person charged by the board with the responsibility of complying with the provisions. It is provided in Clause (g) that where any company does not have any of the officers specified in Clauses (a) to (c) any director or directors who may be specified by the board in this behalf or where no director is so specified, all the directors are considered within the meaning of 'officer who is in default'.
(3.) IT is submitted that the company is having the managing director and manager as well and, as such, the chairman or the directors cannot be held responsible and the proceedings against them should not beallowed to be continued. The provisions of Section 5 have contemplated the managing director, whole -time director and the manager responsible and it is only in a situation where the persons specified in Clauses (a), (b) and (c) are not existing in a company, that the director or the directors can be made responsible. This by itself is a question of fact as to whether the managing director or the whole -time director or the manager exists so as to exclude the directors of the company from being considered 'as officer who is in default'. It may also be observed that, under the Companies Act, 1956, section 175 has contemplated the chairman of a meeting and it may be by virtue of the articles of association that a chairman is being appointed. The definition of managing director have been given under Clause (26) of section 2, which is as under : ' 'Managing director' means a director who, by virtue of an agreement with the company or of a resolution passed by the company in general meeting or hy its board of directors or by virtue of its memorandum or articles of association, is entrusted with (substantial powers of management) which would not otherwise be exercisable by him, and includes a director occupying the position of a managing director, by whatever name called.' ;