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PETITIONER: H.V.  JAVA RAM

       Vs.

RESPONDENT: INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA LTD.

DATE OF JUDGMENT:       15/12/1999

BENCH: K.T.  THOMAS, M.B.Shah

JUDGMENT:

     Leave granted.

     The only question involved in these appeals is whether the  complaint for the offence punishable under Section  113 (2) of the Companies Act.

     1956  could be filed only where the registered  office of  the  company  is situated or where  the  complainant  is residing.

     The  appellant  had lodged criminal cases  before  the Special   Court  for  economic   offences  in  Karnataka  at Bangalore  on  the allegation that the respondent  companies had  committed  offences punishable under Section 113(2)  of the  Companies Act.  Criminal Petition Nos.240, 1485,  1548, 1848  and 1849 of 1996 before the High Court of Kamataka  at Bangalore  challenged  the order passed by the  trial  court rejecting  applications for the discharge on the ground that the  Magistrate  had no territorial jurisdiction to try  the alleged  offences.   In  some cases,  companies  straightway approached  the  High Court questioning the order passed  by the  learned Magistrate issuing summons to them after taking cognizance  of  the  offence.   It   was  pointed  out  that admittedly   the  registered  offices   of  the   respondent companies  are not located in the State of Kamataka but  are located  either  at Bombay or at Gujarat.  As against  this, the.   appellant who is a practising advocate contended that he  was  a  permanent  resident  of  Bangalore  and  letters requesting  the  company to transfer the shares and to  send memorandum,  articles  of association, balance  sheets  etc. were  sent  from Bangalore to the registered offices of  the companies  and,  therefore,  cause of action also  arose  at Bangalore.  The High Court after considering the various

     I decisions relied upon by the learned counsel for the parties  arrived at the conclusion that under the  provision of  Section 53 of the Companies Act two modes arc prescribed for  serving the documents, one to serve personally and  the other by post.  As the documents were sent to the respondent by  post,  as  requested by him, the cause of  action  would arise  only  where the head office is situated.  The  Court, therefore,  arrived at the conclusion that having regard  to Section  201  of the Cr.P.C., the Magistrate is required  to return  the  complaint  for presentation before  the  proper court with an endorsement to that effect.

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     The  learned  counsel  appearing  on  behalf  of   the appellant  (complamant) strenuously contended that the order passed  by  the High Court is, on the face of it,  erroneous because  admittedly the appellant is residing at  Bangalore. Being  purchaser  of the shares, he was entitled to get  the share  certificates  at Bangalore and, therefore,  cause  of action  would arise at Bangalore also.  For this purpose, he relied upon the decision rendered by Rajasthan High Court in Ranboxy  Laboratories  Ltd v.  Smt.  Indra  Kala  {(1.997)24 CLA203 (Raj.)}.

     As  against  this, learned senior counsel, Mr.   Desai submitted  that  the  order paused by the High Court  is  in accordance with the provision of

     Section 113 read with Section 53 of the Companies Act. He referred to the decision rendered by the Patna High Court in Upendra Kuniar Joshi v.  Manik Lal Chatterjee and others, {1982  (Vol.  52) Company Cases 177 (Patna)}.  He  submitted that   the  litigation  is  frivolous   and  it  should   be discouraged.

     For  appreciating the contention raised by the learned counsel  for  the  parties, we would refer to  the  relevant parts  of  Sections 53 and 113 of the Companies Act.   which arc as under:-

     *’53.  Service of documents on members of company.(1) A  document may be served by acompany on any member  thereof either  personally,  or by sending it by post to him to  his registered  address, if any, within India supplied by him to the company for the giving of notices to him.

     (2) Where a document is sent by post.

     (a)  service thereof shall be deemed to be effected by properly   addressing,  prepaving  and   posting  a   letter containing  the  document, provided that where a member  has intimated to th" company in advance that documents should be sent  to him under a certificate of posting or by registered post  with or without acknowledgement due and has  deposited with  the company a sum sufficient to defray the expenses of doing  so, service of the document shall not be deemed to be effected  unless  it is sent in the manner intimated by  the member;  and

     (3)  ..................   (4) ..................   (5) ...................

     113.     Limitation    of    time    for   issue    of certificates.(1)  "[Every company, unless prohibited by any provision  of law or of any order of any court, tribunal  or other  authority,  shall,  within  three  months  after  the allotment  of  any  of its shares, debentures  or  debenture stock,  and within two months after the application for  the registration of the transfer of any such .shares, debentures or   debenture  stock,  deliver,  in  accordance  with   the procedure  laid down in section 53, the certificates of  all shares,  debentures  and certificates of  ^debenture  stocks allotted or transferred;

     Provided....  .....  ]

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     (2)  If default is made in complying 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.

     Section  113  infer  aha requires  that  within  three months  after  the  allotment of any shares and  within  two months  after  the application for the registration  of  the transfer  of  any such shares, every company shall  deliver. in  accordance  with the procedure laid down insection  53., the  certificates  of  all shares allotted  or  transferred. Sub-section  (2)  provides punishment if default is made  in complying with sub-section (1).  Reading Sections 113

     Procedure  laid down in Section 53.  A document is  to be  served  cither  personally  or sending  it  by  post  at registered   address  within  India.    Sub-   section   (2) specifically mentions that where a document is sent by post, such  service  thereof  shall  be demed to  be  effected  by properly  addressing  prepay  ing  and  posting  the  lelter containing  the document.  Hence, once there is a  statutory mode  of  delivering  the  document   by  post  and  deeming provision  of such delivery, the place where such posting is done  is the place of performance of statutoryy duty and the same  stands  discharged as soon as the document is  posted. Hence  the  cause of action for default of not  sending  the share certificates within stipulated time would arise at the place where the registered office of the company is situated as  from that place the share certificates can be posted and are  usually  posted.  If the addressee is available at  the same  locality where the registered oJiice of the company is situated,  it  is;   reasonable  to think  that  service  of documents  may be effected by personally delivering to  him. But  if the addressee is residing at a.  distant place it is unreasonable  to  expect the company to depute  somebody  to travel  upto that distance to personally deliver it to  him. The only usual mode which any company would then adopt is to send  it to him by post.  For such default, as  contemplated under  Section 113(1), there is no question of any cause  of action  arising at the place where compainant was to receive postal

     delivery.  What is punishable under sub-section (2) of Section  113  is  non-  delivery,  in  accordance  with  the provision laid down under Section 53, of the certificates of shares  within prescribed time.  if the documents are posted within stipulated time, there would be compliance of Section 113 and that there would not be any offence.

     In  H.P.   Gupta  V.  Hiralal (1970(1) SCC  437),  the court  considered a similar provision of Section 207 of  the Companies Act, which provides for payment of dividend within 42-days  of its declaration by a company and its non payment wilhin  stiplulated  period  is punishable.   Section  inter (ilia  provides  that  where  dividend is  declared  by  the company  but  has  not been paid, or warrant in  respect  of thereof  has not been posted within 42-days From the date of its  dacia ration, to any shareholder enticed to the payment of dividend., then it would be an.  offence punishable under Section  207.  In that case.  Court also considered  Section 205(5)(b),  which is similar to Section 53, which inter alia provides  that any dividend payable may be paid by cash or a cheque  or a warrant sent by post directed to the registered address  of  the shareholder entitled to the payment of  the

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dividend.   The  Court held that when the company posts  the dividend   warrant   at  the   registered  address  of   the shareholder,  the  post  office  becomes the  agent  of  the shareholder  and  the loss of a dividend warrant during  The transit  thereafter is at the risk of the shareholder.   The Court further held that the place where the dividend warrant would  be  posted  is the place where the company  lias  its registered  office and the offence under Section 207 of  the Act  would  also  occur at the place where  the  failure  to discharge  that  obligation arises, namely, the  failure  to post  the dividend warrant within 42-days.  In the facts  of that case, the Court observed thus:  -

     The  venue  of the offence, therefore, would be  Delhi and  not Meerut.  and the Court competent to try the offence would  be  that Court within whose jurisdiction the  offence takes  place.  i.e..  Delhi.  This should be so both in  law and common-sense.  for.  If held otherwise, the directors of companies  can  be  prosecuted at hundreds of places  on  an allegation  by shareholders that they have not received  the warrant.   That  cannot be the intention of the  Legislature when  it enacted Section 207 and made failure to pay or post a  dividend  warrant within 42 days from the declaration  of the dividend an offence.

     Same  would be the position for the offence punishable under  Section 113 of the Act.  Cause of action for  failure to  deliver  the  share  certificates  or  documents  within prescribed  time would arise where the registered office  of the company is situated.

     However, learned counsel for the appellant relied upon the   decision   of  Rajasthan   High  Court   in   Ranbaxy’ Laboratories  Ltd,  v.  Smt.  Indra Kala {(1997) 24 CLA  203 (Raj.)}.  In the said case complaint was filed before

     the Judicial Magistrate at Jaipur in Rajasthan for the offences punishable under Section 113 of the Act against the directors  and  officers  of the company alleging  that  the complainant  had purchased 200 shares of the Company and had duly  sent such shares to the head office of the company for registration  of  the  transfer in its  books,  but  despite repeated  requests,  reminders and efforts made by her,  the Company  did not register the transfer of the shares in  her name.   Registered office of the company was at Delhi.   The High  Court  negatived  the contention of the  company  that Judicial  Magistrate at Jaipur did not have jurisdiction  to deal with the case by holding thus:  -

     "Company  collects  money from the public at large  by selling its shares and transactions of sale and purchase are governed   by   the  provisions  of   the   Companies   Act. Registration  of the transferred shares is one of the duties of  the  company  in the course of conducting  its  business according to the provisions of law.  Therefore, the interest of  the  members  of the public  transacting  such  business cannot  be allowed to be defeated on the plea that relief to the aggrieved persons can be granted only at the place where the office of the company is located."

     In  our  view,  it appears that the attention  of  the learned Judge was not drawn to the decision rendered by this Court  in H.P.  Gupta v.  Hiralal {1970(1) SCC 437} and also to  Section  113 of the Act, which inter aUa  provides  that company shall deliver the documents,, such as.  certificates

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of

     shares,  debentures  and   certificates  of  debenture stocks  allotted  or  transferred  in  accordance  with  the procedure  laid  down in Section 53.  Section 53  proscribes the  mode of delivery inter alia by sending the document  by post  at  registered  address  and sub-section  (2)  is  the deeming  provision for delivery of .such letter.  In Upendra Kumar  Joshi  v.   Manik Lal Chatterjee  and  others,  {1982 (vol.52)  Company Cases 177 (Patna)}.  the Patna High  Court has  followed  the decision rendered by tills Court  in  the case  of H.P.  Gupta (Supra) and has rightly arrived at  the conclusion that the cause of action would arise at the place where registered office of the company is situated.

     In the result, the aforesaid appeals are dismissed.