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PETITIONER:

REGISTRAR OF COMPANIES

Vs.

RESPONDENT:

RAJSHREE SUGAR & CHEMICALS LTD. & ORS.

DATE OF JUDGMENT: 11/05/2000

BENCH:

Ruma Pal, D.P.Mohapatro, K.T.Thomas

JUDGMENT:

RUMA PAL, J

Leave granted.

This appeal has been preferred from the decision of

the High Court of Madras dated 17th March, 1998. The appeal

was filed on 26th July, 1999 after a delay of 406 days. The

application for condonation of delay filed by the appellant

shows that the Department of Legal Affairs took up the

matter only on 16th December, 1998. No explanation

whatsoever has been given for the appellants inaction

during this period of nine months. The observation of this

Court in State of U.P. versus Bahadur Singh and Others, AIR

1983 SC 845 regarding the latitude to be shown to the

Government in deciding questions of delay, does not give a

licence to the Officers of the Government to shirk their

responsibility to act with reasonable expedition. However,

since the matter has been permitted to be argued on merits,

it would not be appropriate to dismiss the appeal on the

ground of delay, but our disapproval of the conduct of the

appellant in this regard will be reflected in the costs

which we intend to award against the appellant in favour of

the respondents, irrespective of our decision on merits.

The issue to be decided in this appeal relates to an offence

allegedly committed by the respondents under Section 113 of

the Companies Act, 1956 ( referred to as the Act). The

complaint was filed by the appellant against the

respondents on 28th August, 1992 alleging that the

respondents had, in violation of Section 113 of the Act,

defaulted in transfer of shares within the time specified in

that Section. The Chief Judicial Magistrate, Coimbatore by

his order dated 30th March, 1993 dismissed the complaint on

the ground that it was barred by limitation under Section

468 of the Code of Criminal Procedure ( for short the

Code). The appellant filed a petition under Sections 397

and 401 Cr.P.C. before the High Court of Madras praying for

revision of the order dated 30th March, 1993. The High

Court by the impugned judgment not only upheld the order of

the trial court but also held that the appellant was

incompetent to file a complaint in respect of an offence

under Section 113 of the Act. Section 113 sub-Section (1)

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of the Act requires a company to deliver the share

certificates to the allottee or transferee within three

months after the allotment and within two months after the

application for registration of transfer of the shares. The

period is extendable in certain circumstances on an

application by the company to the Company Law Board subject

to a maximum period of nine months. Sub Section (2) of

Section 113 provides that if default is made in compliance

with sub Section 1 the company and every officer of the

company who is in default shall be punishable with fine

which may extend to five hundred rupees for every day during

which the default continues. In addition to this criminal

liability for punishment, under Section 113 (3) a person

entitled to have the shares delivered to him, may apply to

the Company Law Board for a directive on the company to

deliver the certificates or the debentures to the

complainant. The Company Law Board is authorised to pass an

order directing the company and any officer of the company

to make good the default within such time as may be

specified and also provide for the costs of and incidental

to the application to be paid to the complainant by the

company or any officer of the company who may be responsible

for the default. In this case, the complaint filed by the

appellant was under Section 113 (2). It was alleged in the

complaint that the company was sent share transfer

certificates along with applications for transfer in two

batches; - on 23.11.1990 and 18.12.1990. The first batch

of applications for transfer was received by the company on

11.12.1990, approved on 29.3.1991 and dispatched on

6.4.1991. The second batch of applications was received on

26.12.1990 approved by the company on 3.4.1991 and

dispatched on 16.4.1991. Apparently, Section 113 (1) was

not complied with. This came to the knowledge of the

appellant only on 20.7.1992 when the appellant inspected the

books of account of the company under Section 209A (1) (i)

of the Act. The complaint was filed by the appellant on

20th August 1992 before the Chief Judicial Magistrate,

Coimbatore. As already noted, the Chief Judicial Magistrate

dismissed the complaint relying on Section 468 of the Code,

which provides: 468. Bar to taking cognizance after lapse

of the period of limitation: - (1) Except as otherwise

provided elsewhere in this Court, no Court shall take

cognizance of an offence of the category specified in

sub-section (2), after the expiry of the period of

limitation.

(2) The period of limitation shall be-

(a) six months, if the offence is punishable with fine

only;

The date on which period of limitation is to commence

has been provided for in Section 469 of the Code in the

following manner: 469. Commencement of the period of

limitation. (1) The period of limitation, in relation to

an offender, shall commence, -

(a) on the date of the offence; or

(b) where the commission of the offence was not known

to the person aggrieved by the offence or to any police

officer, the first day on which such offence comes to the

knowledge of such person or to any police officer, whichever

is earlier."

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It is unnecessary to decide whether the offence under

Section 113 of the Act is a continuing one under Section 472

of the Code on the facts of this case. Even if the offence

were a continuing one, the offence, if any, continued upto

the date when the deliveries were in fact effected under

Section 113 viz. on 6.4.91 and 16.4.91. As the offence of

delayed delivery is punishable with a fine, the time to

initiate proceedings under Section 468 of the Code would

expire at the latest in October, 1991. The appellant, in

fact, filed the complaint almost a year later. According to

the appellant, the Magistrate overlooked the provisions of

Section 469 (1) (b) of the Code which provides for the

computation of the period of limitation from the first day

on which the offence comes to the knowledge of the person

aggrieved by the offence or to the police officer. The

High Court rejected the submission holding that the

appellant was neither the person aggrieved nor a police

officer and that the prosecution under Section 113 could be

launched only on the application of an affected shareholder.

According to the High Court, this was clear from clause (3)

of Section 113. It is contended by learned counsel

appearing for the respondents that the view of the High

Court has also been taken by a learned Single Judge of the

Gujarat High Court in Vasantlal Chandulal Majmudar V.

Navinchandra Manilal & Anr. Guj. LR Vol. XXII 436; by a

learned Single Judge of the Delhi High Court in Nestle India

Limited and Others V. State and Another 1994(4)Comp L.J.

446 (Del) as well as by a learned Single Judge of the Madras

High Court in Sulochana V. State of Registrar of Chits

(Investigation and Prosecution), Madras 1978 Crl.L.J. 116.

A contrary view has been expressed by two Division Bench

judgments of the Calcutta High Court in Bhagwati Prasad V.

Assistant Registrar of Companies (1983) 53 Company Cases 56;

Sushil Kumar and Others V. Registrar of Companies (1983) 53

Comp. Cases P. 54 with reference to Section 113 of the

Act. As far as the decision of the Gujarat High Court is

concerned, it dealt with the provisions of the Gujarat Co-

operative Societies Act, 1967, the provisions of which are

not before us. As far as the decision of the High Court of

Madras is concerned, the decision of the learned Single

Judge in Sulochana V. Registrar (Supra) has been expressly

over-ruled by the Division Bench of the Madras High Court in

Abdul Rahim V. State represented by the Chit Registrar

Nagapattinam 1978 (1) L.W. Crl. 195. The Division Bench

has held that the Registrar of Chits was a person

aggrieved within the meaning of S.469 (1) (b) of the Code

and was competent to initiate prosecution for an offence

under the Tamilnadu Chit Funds Act, 1961. Sulochanas case

was also distinguished in the two Calcutta High Courts

decisions noted earlier. The only decision cited by the

respondents which is on Section 113 of the Act is the

decision in Nestle India Limited (supra). Neither the

learned Judge in his decision in Nestle India nor the High

Court in the judgment under appeal considered the provisions

of Section 621 (1) of the Companies Act, which provides:

621 (1) No Court shall take cognizance of any offence

against this Act (other than an offence with respect to

which proceedings are instituted under Section 545), which

is alleged to have been committed by any company or any

officer thereof, except on the complaint in writing of the

Registrar, or of a shareholder of the company, or of a

person authorised by the Central Government in that behalf.

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Under this Section therefore, the appellant is

competent to file a written complaint in respect of offences

under, inter-alia, Section 113 of the Act. The phrase

person aggrieved has not been defined in the Code.

However, as far as offences under the Companies Act are

concerned, the words must be understood and construed in the

context of Section 621 of the Act. If the words person

aggrieved are read to mean only the person affected by

the failure of the Company to transfer the shares or allot

the shares, then the only person aggrieved would be the

transferee or the allottee, as the case may be. Under

Section 621 of the Act, no Court can take cognizance of an

offence against Companies Act except on the complaint of a

share-holder, the Registrar or the person duly authorised by

the Central Government. Where the transferee or allottee is

not an existing share-holder of the Company, if the words

person aggrieved is read in such a limited manner, it

would mean that Section 469 (1) (b) of the Code would be

entirely inapplicable to offences under Section 113 of the

Act. There is, in any event, no justification to interpret

the words person aggrieved as used in Section 469 (1) (b)

restrictively particularly when, as in this case, the

statute creating the offence provides for the initiation of

the prosecution only on the complaint of particular persons.

Having regard to the clear language of Section 621 of the

Act, we have no manner of doubt that the appellant would be

a person aggrieved within the meaning of Section 469 (1)

(b) of the Code in respect of offence (except those under

Section 545) against the Companies Act. Apart from

overlooking the provisions of Section 621 of the Act, the

High Court erred in construing the provisions of Section 113

(2) with reference to Section 113(3). The latter deals with

the civil liability of the Company and its officers for a

breach of Section 113 (1) at the instance of the transferee

of the shares. Section 113 (2) deals with the criminal

liability arising out of a violation of Section 113 (1).

The objects of the two sub-sections are disparate. Section

113 (3) is primarily compensatory in nature whereas Section

113 (2) is punitive. An application under Section 113 (3)

can only be made by the transferee. And as already seen, a

transferee who is not an existing share-holder of the

Company cannot file a complaint under Section 113 (2) at

all. For the reasons stated, we are of the view that the

appellant as a person aggrieved would be entitled to the

benefit of the provisions of Section 469 (1) (b) of the

Code. It is not in dispute that the appellant came to know

of the offences on 20th July 1992. The commencement of the

period of limitation of six months for initiating the

prosecution would have to be calculated from that date. The

complaint was filed on 20th August 1992 well within the

period specified under Section 468 (2) of the Code. In the

circumstances, the decision of the High Court as well as the

Chief Judicial Magistrate, Coimbatore are set aside and the

matter is remanded back to the Chief Judicial Magistrate,

Coimbatore for being decided on merits. Because of the

inordinate delay by the appellant in preferring this appeal,

the appellant shall pay the costs of the appeal to the

respondents.