HARRISONS AND CROSFIELD (INDIA) LIMITED Vs. REGISTRAR OF COMPANIES

JUDGEMENT

(1.) These petitions filed under section 633(2) of the companies act, 1956, raise a common question. Harrisons & crosfield (india) ltd., an indian company incorporated on november 1, 1977, is the first petitioner in c. P. No. 45. The 2nd petitioner is one of its directors. The petitioners in c.ps. Nos. 46 and 99 are two other directors of the company. They are threatened with prosecution for alleged contravention of section 210.

(2.) The indian company was formed with the object of taking over the indian business of harrisons & crosfield ltd., a foreign company. A scheme was drawn up for this purpose providing for the vesting of the assets and liabilities of the indian business of the latter, in the indian company, with effect from november 1, 1977. The scheme is pending approval before this court. In the meanwhile, the annual general meeting of the company (petitioner) had to be held within the time fixed under section 166 and such a meeting was, therefore, called on april 20, 1979. But the balance-sheet and profit and loss account for the period ended december 31, 1978, were not laid before it, as envisaged in section 210. The directors apparently thought that " a true and fair view of the assets and liabilities position " could be obtained only after the approval of the scheme. Therefore, the meeting was adjourned after transacting other business. But on september 15, 1979, the registrar of companies issued a notice threatening prosecution under section 210(5) for non-compliance with the requirements of sub-section (1). According to him, the balance-sheet and profit and loss account should have been laid at the meeting held on april 20, 1979, and three copies of the same should have been filed within 30 days, in accordance with section 220.

(3.) The petitioners' case is that there has been no contravention of section 210(1), and that even assuming there be any, they had acted honestly and reasonably so that their neglect, default or breach of duty could be condoned under section 633(2). They were under the bona fide belief that the balance-sheet and profit and loss account could reflect the true financial position of the company only when the scheme was approved, as such approval would have the effect of substantially altering the assets and liabilities position, retrospectively from november 1, 1977.