Ramesan Mathiyeri v. Assistant Registrar of Companies, Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR. JUSTICE A.M.BABU** **WEDNESDAY, THE 20TH DAY OF DECEMBER 2017/29TH AGRAHAYANA, 1939** **Crl.MC.No. 3731 of 2013 ()** **---------------------------** **AGAINST THE ORDER/JUDGMENT IN ST 1573/2011 OF THE ADDITIONAL CHIEF JUDICIAL MAGISTRATE COURT (ECONOMIC OFFENCES),ERNAKULAM** ## **PETITIONER(S)/PETITIONER/1ST ACCUSED:** **------------------------------------** **RAMESAN MATHIYERI, AGED 46 S/O.GOVINDAN M, MATHIYERI HOUSE, KUNNIMANGALAM P.O, KANNUR PIN 670 309** **BY ADVS.SRI.K.S.MADHUSOODANAN SRI.THOMAS CHAZHUKKARAN SRI.M.M.VINOD KUMAR SRI.P.K.RAKESH KUMAR SRI.K.S.MIZVER** ## **RESPONDENT(S)/RESPONDENTS/FORMAL PARTY/COMPLAINANT:** **---------------------------------------------------** **1. THE ASST REGISTRAR OF COMPANIES, KERALA COMPANY LAW BHAVAN,BMC ROAD,THRIKKAKARA P.O,KAKKANAD,KOCHIN 21** **2. STATE OF KERALA TO BE** - **REP. BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA,ERNAKULAM** **R1 BY ADV. SRI.P.MURALEEDHARAN, CGC R1 BY ADV. SRI.N.NAGARESH, ASSISTANT SOLICITOR GENERAL R2 BY ADV.C.N.PRABHAKARAN, PUBLIC PROSECUTOR** **THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 24.10.2017 ALONG WITH CRMC. 3732/2013, THE COURT ON 20.12.2017 PASSED THE FOLLOWING:** **Crl.MC.No. 3731 of 2013 ()** ## **---------------------------** ## **APPENDIX** **PETITIONER(S)' EXHIBITS** **-----------------------** **ANNEXURE 1 PHOTOCOPY OF THE COMPLAINT IN ST NO 1573/2011** **ANNEXURE II PHOTOCOPY OF THE ARTICLES OF ASSOCIATION OF THE COMPANY** **ANNEXURE III PHOTOCOPY OF THE ANNUAL RETURN FOR THE YEAR 2008** **ANNEXURE IV PHOTOCOPY OF THE LETTER NO EST/GF.162/15383/2009 DATED 7-09-2009 ISSUED BY THE 1ST RESPONDENT/COMPLAINANT** **RESPONDENT(S)' EXHIBITS** **-----------------------** **NIL** **TRUE COPY** **SKS** **P.A TO JUDGE** ## **A.M.BABU, J.** **.......................................... Crl M.C Nos 3731 & 3732 of 2013** **........................................... Dated : 20[th] December, 2017** ## **ORDER** The criminal miscellaneous cases are filed by one and the same person. He is an accused in ST 1573/2011 and ST 1574/2011 on the file of the court of the additional chief judicial magistrate (economic offences), Ernakulam. The petitioner seeks to quash the criminal proceedings against him. The relief is sought under Sec.482 of Cr.P.C. 2. The assistant registrar of companies who is the first respondent in both the criminal miscellaneous cases filed two complaints before the additional chief judicial magistrate (economic offences), Ernakulam. Those complaints were filed against a company by name M/s Business India Shares and Insurance Services Private Limited and seven persons alleging them to be the directors of the company. In one of the complaints it was alleged that the company did not file the annual return for the year 2008 within time. That complaint was taken on file as ST 849/2009. The allegation in the other complaint was that the company did not file its duly audited balance-sheet for the same 2 ## **Crl M.C Nos 3731 & 3732 of 2013** year within thirty days of the date of the annual general meeting. The said complaint was taken on file as ST 850/2009. It is stated in the memoranda of Crl.M.Cs that some of the accused persons pleaded guilty and paid fine. Thereafter ST 849/2009 and ST 850/2009 were refiled as ST 1573/2011 and ST 1574/2011 respectively. The petitioner contends that he is not liable to be prosecuted. 3. Heard. 4. The relevant enactment is the Companies Act, 1956 (for short 'the Act'). The relevant provisions in the Act to be read are Secs 5, 159, 162 and 220. Sec.159 (1) states that every company having a share capital shall prepare and file with the registrar of companies a return containing the particulars specified in part I of schedule V of the Act within sixty days from the day on which the annual general meeting is held. Sec. 162 provides that if a company fails to comply with any of the provisions contained in Sec. 159, 160 or 161, the company and every officer of the company who is in default shall be punishable with fine. Sec.220 (1) insists on filing of the balance-sheet and the profit and loss account with the registrar within thirty days from the day on which the same were laid before the annual 3 ## **Crl M.C Nos 3731 & 3732 of 2013** general meeting. It is also provided therein that if the general meeting has not been held for any year, the balance-sheet and the profit and loss account shall be filed with the registrar within thirty days from the latest day on or before which the annual meeting should have been held. The punishment for the failure to comply with the aforesaid requirement is provided by Sec.220 (3). It is provided therein that the company and every officer of the company who is in default shall be liable to the like punishment as is provided by Sec.162. 5. The petitioner contends that for two reasons he is not liable to be prosecuted under Secs 162 and 220 (3) of the Act. He concedes that he has been designated as one of the directors of the company with effect from 10.4.2005. But he disputes his eligibility for directorship. He contends that as per article 13 of the articles of association of the company, only a person who acquires 100 shares within two months from the date of election shall be eligible for directorship. According to the petitioner, although he is designated as a director, he is not eligible to be a director as he has no share in the company. In order to establish his such contention he produced a copy of the articles of association of the company as annex-II. But the said contention is 4 ## **Crl M.C Nos 3731 & 3732 of 2013** in the realm of his defence and it is a matter for evidence. Evidence cannot be appreciated in a proceedings under Sec.482 of Cr.P.C and therefore the said contention of the petitioner cannot be considered in the present proceedings. 6. It seems Sec.5 of the Act comes to the rescue of the petitioner. Sec.5 reads thus: **Meaning of “officer who is in default”** .- For the purpose of any provision in this Act which enacts that an officer of the company who is in default shall be liable to any punishment or penalty, whether by way of imprisonment, fine or otherwise, the expression “officer who is in default” means all the following officers of the company, namely:- - (a) the managing director or managing directors; - (b) the whole-time director or whole-time directors; - (c ) the manager; - (d) the secretary; - (e) any person in accordance with whose directions or instructions the board of directors of the company is accustomed to act; - (f) any person charged by the board with the responsibility of complying with that provision: Provided that the person so charged has given his consent in this behalf to the board; - (g) 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: Provided that where the board exercises any power - under clause (f) or clause (g), it shall, within thirty days of the exercise of such powers, file with the registrar a 5 **Crl M.C Nos 3731 & 3732 of 2013** return in the prescribed form. 7. Clause (g) of Sec.5 of the Act makes it clear that the directors of a company can be prosecuted under any of the penal provisions of the Act as an officer who is in default only if the company does not have a managing director or a whole-time director or a manager and in the absence of a director who is specified by the board of directors in this behalf. Annex-I in Crl.M.C 3731/2013 is the copy of the complaint in ST 1573/2011 (originally ST 849/2009). Annex-I in Crl.M.C 3732/2013 is the copy of the complaint in ST 1574/2011 (ST 850/2009 originally). In those complaints there is no whisper that the petitioner was the managing director or the whole-time director or the manager of the company. There is no allegation in the complaints that the petitioner was specified by the board of directors. The complaints state only that the petitioner was prosecuted only because he was a director of the company at the relevant time. Annex-III in Crl.M.C 3731/2013 is a copy of the annual return submitted by M/s Business India Shares and Insurance Services Private Limited. The annual return is signed by one Sri.K.P.Sasi as the whole-time director of the company. As the company had a whole-time director at the relevant time, the petitioner cannot be prosecuted. 6 ## **Crl M.C Nos 3731 & 3732 of 2013** The prosecution against him is liable to be quashed. 8. I place reliance on the decision of this court in **Kuttiamu vs M/s Majestic Shares and Securities Pvt Ltd (2005 KHC 2082)** . The same view is taken by the High Courts of Andhra Pradesh and Rajasthan in **G.Vijayalakshmi vs Securities and Exchange Board of India (2000 (100) Company Cases 726)** and **Ravindra Narayan vs Registrar of Companies (1994 (81) Company Cases 925)** respectively. 9. Both the criminal miscellaneous cases are allowed. The proceedings in ST 1573/2011 and ST 1574/2011 on the file of the court of the additional chief judicial magistrate (economic offences), Ernakulam are quashed to the extent those proceedings relate to the petitioner. It is made clear that the prosecution in those cases against any other accused is no way affected by this order. SD/- ## **A.M.BABU Judge** _sks/18.12.2017_