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PETITIONER: STATE OF ANDHRA PRADESH & ANR.

       Vs.

RESPONDENT: ANDHRA PROVINCIAL POTTERIES LTD. & ORS.

DATE OF JUDGMENT17/08/1973

BENCH: ALAGIRISWAMI, A. BENCH: ALAGIRISWAMI, A. KHANNA, HANS RAJ

CITATION:  1973 AIR 2429            1974 SCR  (1) 410  1973 SCC  (2) 786

ACT: Companies Act (1 of 1956) s. 220 and Companies Act 7 of 1913 s.  134 Prosecution for not sending copies of  balance-sheet etc. to Registrar-No, general body meeting held-Liability.

HEADNOTE: Section 220 of the Companies Act, 1956, which corresponds to s.  134  of the 1913-Act, provides that within  thirty  days after the balance-sheet and profit and loss account, as  the case  may  be,  have been laid before  the  company  at  the general  meeting. three copies thereof shall be  filed  with the registrar and that failure to do so is punishable. The respondent-company and its directors were prosecuted for failure to file with the Registrar of Companies on or before 30th  October  1967, the Balance-sheet and profit  and  loss account   of   the  company.   By  30th   September,   1967, admittedly, no general body meeting had been held.  The High Court  held  that since no general body  meeting  was  held, there  could  be  no question of  laying  the  balance-sheet before  the  general  body meeting and  complying  with  the requirements  of the section; and that, though  the  willful omission  to call a general body meeting and of  laying  the balance-sheet  and  profit and loss account  before  it  may expose  the  persons responsible to punishment  under  other provisions of the Act, it would not make them liable  either under s. 134(4) of the 1913-Act or s. 220 of the 1956-Act. Dismissing the appeal to this Court, HELD : On principle and authority it should be held that  no offence  was  committed under s. 220 of the  Companies  Act, 1956. [417B] (a)  The principle accepted by this Court in State of Bombay v. Bandhan Ram Bhandani [1961] 1 S.C.R_ 801, that a  company or  its directors in a prosecution under ss. 32 and  133  of the  1913-Act,  could not, in defence to  such  prosecution, rely upon their own failure to call the general body meeting would  not apply to a prosecution under s. 134 of the  1913- Act  or s. 220 of the 1956-Act.  Unlike ss. 32 and 133,  the responsibility  of I sending to the Registrar the copies  of the  balance-sheet and profit and loss account  arises  only after they have been laid before the company at the  general meeting, the obligation to do so being completely  dependent on its being laid before a general meeting. [414H-415E]

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(b)  Where  the  words  in  the  section  are  clear  it  is unnecessary  to consider whether it embodies  any  principle and whether that principle is consistent with the  principle as embodied in other sections which are differently  worded. In  interpreting a penal provision it is not permissible  to give  an extended meaning to the plain words of the  section on  the  ground of a principle recognised in  certain  other provisions. [415F-G] (c)  This  is not a case where an accused person  relies  on his default and pleads his innocence.  In the Companies  Act 1956, various stages have to be gone through before we reach the stage of a copy of the balance-sheet and the profit  and loss account being filed with the Registrar.  The failure to reach  any one of the stages within the time  prescribed  is made penal by the Act.  The respondents may be guilty of any of  those  offences but not of the offence with  which  they were charged. [416E-G] (d)  Further a daily penalty is provided after the thirtieth day  mentioned  in  s. 220 (1) of  the  1956-Act.   When  no general  body  meeting  was  held  it  is  not  possible  to calculate  the period of 30 days and there would  be  diffi- culty in working Cut he daily penalty. [416C-D)] 411 Dulal Chandra Bhar v. State of West Bengal, 1962-32  Company Cases  1143 Gopal Khaitan v. State (1969) 39  Company  Cases 150, Ramachandra & Sons (P) v. State, (1967) 11 Coml.  J. 92 JUDGMENT: Ltd.,  A.I.R. 1963 Rajasthan, 134 India Nutriments  Ltd.  v. Registrar of Companies, 1934 34.  Companies Cases 160 P.  S. N.  SAA.   Chettiar  & Company v.  Registrar  of  Companies, A.I.R. 1966 Madras 415, Registrar of Companies v. H. Mishra, A.I.R.  1969  Orissa  234, State  v.  Linkers  Private  Ltd. A.I.R.  1969  Patna 445 & (1970) 40 C.C.  17,  Registrar  of Companies  v. Gopala Pillai & Ors. 1951 K.L.J. 490  Debendra Nath Das Gupta v. Registrar of Joint Stock Companies, I.L.R. 1918  Calcutta 486, Ballev Dass v. Mohan Lal Sadhu,  1934-35 39  Calcutta  Weekly Notes 1152 and  Bhagirath  v.  Emperor, A.I.R.  1948, Calcutta 42 and re Cangipati  Appayya,  A.I.R. 1952 Madras 800, disapproved. Imperator  v.  The Pioneer Clay and Industrial  Works  Ltd., I.L.R.  [1948]  Bom.  86: A.I.R.  1948  Bombay  357,  Vulcan Industries (P) Ltd. v. Registrar of Companies Orissa, I.L.R. (1972)  Cuttack  373  and re Narasimha  Rao,  A.I.R.  (1937) Madras 341, approved.

& CRIMINAL  APPELLATE JURISDICTION:-Criminal Appeal No. 34  of 1970. Appeal  by  certificate  under  Article  134(1)(c)  of   the Constitution  of  India from the judgment  and  order  dated 18-3-1969  of  the  Andhra Pradesh High  Court  in  Criminal Revision Case No. 360 of 1968. F.   S. Nariman, Additional Solicitor General of India and A. V. Rangam, for the appellants. L.   N. Sinha, Solicitor General of India and A. V. V. Nair, for the Advocate General Andhra Pradesh. The Judgment of the Court was delivered by ALAGIRISWAMI,  J.-This is an appeal against the judgment  of the Full Bench of the Andhra Pradesh High Court reported  in A.I.R.  (1970) A.P. 70.  It arises out of a complaint  filed against  the  1st respondent company and its  directors  for failure  to Me with the Registrar of Companies on or  before 30-10-1967 the balance sheet and profit and loss account  of

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the  company  as  required  under  section  220(1)  of   the Companies  Act, 1956, which is punishable under  sub-section (3) of that section.  Admittedly no general body meeting had been  held and, therefore, the balance sheet and profit  and loss account had not been laid before a general body meeting nor could it be so laid. The  Full Bench speaking through Jaganmohan Reddy, C.J.,  as our learned brother then was, held that if no balance  sheet is  laid before a general body, there can be no question  of that  balance sheet not being adopted nor of complying  with the  requirements of section 220 and though wilful  omission to call a general body meeting and to lay the balance  sheet and profit and loss account before it may expose the  person responsible to punishment under other provisions of the Act, it  certainly does not make him liable under the  provisions of section 134(4) of the Companies Act, 1913 or section  220 of the Companies Act, 1956.  In this the Bench was taking  a view  contrary to that of most of the High Courts after  the decision of this Court in The State of Bombay v. Bandhan Ram Bhandani & Ors.(1) In that case this Court (1)  [1961] (1) S.C.R. 801, 412 had  taken the. view that a person charged with  an  offence cannot  rely on his default as an answer to the  charge  and so,  if  he  was responsible for  not  calling  the  general meeting, he cannot be heard to say in defence to the charges brought against him that because the general meeting had not been  called, the balance sheet and profit and loss  account could not be laid before it.  In that case the directors  of a company were prosecuted under ss. 32(5) and 133(3) of  the Companies Act, 1913, for breaches of ss. 32 and 131 of  that Act for having knowingly and wilfully authorized the failure to  file the summary of share capital for the year 1953  and being  knowingly and wilfully parties to the failure to  lay before the company in general meeting the balance sheet  and profit and loss account as at March 31, 1953. The  Bombay  High  Court,  however,  following  its  earlier decision  in  Imperator v. The Pioneer Clay  and  Industrial Works  Ltd.(1) had upheld the acquittal of the directors  by the Presidency Magistrate.  Referring to the decision of the Bombay  High Court in that case this Court pointed out  that decision  turned  on s. 134 of the Companies Act,  1913  the language of which was to a certain extent different from the language  used  in ss. 32 and 131 and refrained  from  going into  the  question whether the difference  in  language  in section 134 on the one hand and ss. 32 and 131 on the  other made  any  difference to the decision of  the  case.   After referring to the decisions in Gibson v. Barlon(2) Edmonds v. Foster(3)  and  Park v. Lawton(4 )where it was held  that  a person  charged  with an offence could not rely on  his  own default  as an answer to the charge, and so, if  the  person charged was responsible for not calling the general meeting, he cannot be heard to say, in defence to the charge that the general  meeting had not been called, and that  the  company and  its  officers  were  bound  to  perform  the  condition precedent  if they could do that, in order that  they  might perform  their  duty,  this Court  considered  that  as  the correct view to take. As  we have noticed, this Court was not dealing  there  with the provisions of section 134 of 1913 Act which  corresponds to section 220 of the 1956 Act.  That question now  directly arises for decision in this case.  As we said earlier,  most of the High Courts which have considered this question after the decision of this Court have proceeded on the basis  that the decision necessarily led to the conclusion that even  in

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a prosecution under s. 134 of the 1913 Act (corresponding to section  220 of the 1956 Act) the company and its  directors could  not rely upon their failure to call the general  body meeting  as  a  defence  to  the  prosecution.   Under  this category  fall the decisions in Dulal Chandra Bhar v.  Slate of  West  Bengal,(5) and Gopal Khaitan v. State (6)  of  the Calcutta  High  Court.   Ramachandra  &  Sons  (P)  Ltd.  v. State(T)  of  the  Allahabad  High Court,  State  v.  T.  C. Printers (P) Ltd. (8) of the Rajasthan (1)  I.L.R. (1948) Bom. 86; A.I.R. 1948 Bombay 357. (2)  [1875] L. R. 10 Q. B. 329.   (3) (1875) 45 Law J.  Rep. M. C. 41. (4)   [1911]  1 K. B. 588.          (5)  (1962)  32  Company Cases 1143. (6)  [1969] 39 Company Cases 150. (7)  [1967] 11 Com 1, J. 92 & (1966) 36 Company Cases 585. (8)  A.I.R. (1963) Rajasthan 134. 413 High   Court,   India  Nutriments  Ltd.  v.   Registrar   of Companies(1) and P.S.N.S.A. Chettiar & Company v.  Registrar of  Companies(2) of the Madras High Court.  The Orissa  High Court had taken a similar view in Registrar of Companies  v. Misra (3) but in a latter decision in Vulcan Industries  (P) Ltd.  v.  Registrar of Companies, Orissa(4) it has  taken  a contrary  view  and  followed the  decision  of  the  Andhra Pradesh  High  Court  in the judgment  under  appeal.   That decision  is also pending in appeal before this Court.   The Patna High Court in State v. Linkers Private Ltd.(5) and the Kerala High Court in Registrar of Companies v. Gopala Pillai & Ors. (6) have also taken a similar view. We  may now refer to some of the earlier decisions  on  this Point.   The earliest decision is the one in  Debendra  Nath Das Gupta v. Registrar of Joint Stock Companies.(?) In  that case  the  principle  laid down in  Park  v.  Lawton(8)  was applied  and  it  was  held  that it  is  not  open  to  the petitioner to plead in answer to a charge under sections 134 his  prior  default  in  respect  of  the  calling  of   the prescribed general meeting and of placing before the company at  such meeting a duly prepared and audited balance  sheet. The  decision in Ballav Dass v. Mohan Lal Sadhu(9)  did  not refer  to the wording of the section but merely stated  that the  provisions of section 134 were not complied with.   The same  court in Bhagirath v. Emperor(10) took the same  view. In re Varaszmha Rao(11) a learned Single Judge of the Madras High  Court  took the view that the same persons  cannot  be charged   in  respect  of  the  same  years  with   offences punishable both under ss. 131 and 134, Companies Act because S.  134  clearly contemplates the sending of a copy  of  the balance-sheet  only  after  it has been  placed  before  the company at a general meeting under s. 131 and that where  in a case there is no such placing of the balance-sheet  before the  company at a general meeting, the offence under S.  134 cannot  ’,be committed.  In re Gangipati Appayya(12) a  view contrary  to the one taken earlier by a Judge of  that  High Court was taken. We  may  now set out the reasoning which  weighed  with  the Andhra Pradesh High Court in the decision under appeal :               "The  reference to Section 210 by the  use  of               the word aforesaid" and the emphasis indicated               by the words "were so laid" make the filing of               copies of those balance-sheets and the  profit               and  loss accounts which are laid  before  the               general    body    meeting    an     essential               prerequisite.   If no general body meeting  is               held,  it  is obvious that no  copies  of  the

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             balance sheet               (1)   (1964) 34 Company Cases 160.               (3)   A.I.R. 1969 Orissa 234.               (5) A.I.R. 1969 Patna 445 & (1970) 40 C.C. 17.               (6)   1961 K.L.J. 490.               (8)   [1911] 1 K.B. 588               (10)  A.I.R. 1948 Calcutta 42.               (12)  A.I.R. 1952 Madras 800.               (2)   A.T. R. 1966 Madras 415.               (4)   I.L.R. 1972 Cuttack 373.               (7)   I.L.R. 1918 Calcutta 486.               (9)   [1934-35] 39 Calcutta Weekly Notes 1152.               (11) A.I.R. 1937 Madras 341.               414               and profit and loss account can be filed  even               though the default may be wilful.  Both  under               section  134  of  the Old  Companies  Act  and               Section  220  of the Act, the  laying  of  the               balance sheet and the profit and loss  account               before   an  annual  general  meeting   is   a               condition  precedent to the  requirement  that               copies  of  such documents so laid  should  be               filed before the Registrar.  The intention  is               made further clear by the provision under sub-               section (2) of the respective sections of both               the  Acts  that if the balance  sheet  is  not               adopted at the general meeting before which it               is  laid, a statement of that fact and of  the               reasons  therefore have to be annexed  to  the               balance  sheet  and  to  the  copies   thereof               required  to be filed with the Registrar.   If               no  balance  sheet is laid  before  a  general               body, there can be no question of that balance               sheet not being adopted nor of complying  with                             the  requirements  of the  Sub-section   (2)  of               Section  134  of  the  Old  Companies  Act  or               Section  220  of the Act as the case  may  be,               while  wilful omission to call a general  body               meeting and omit to lay the balance sheet  and               profit  and loss account before it may  expose               the  person  responsible to  punishment  under               other provisions of the Act, it certainly does               not   make   him   liable   udder    aforesaid               provisions.    The  punishment   under   these               sections  is for default in filing  copies  of               the  balance  sheet  or the  profit  and  loss               account  which are laid before a general  body               and  for not sending a statement of  the  fact               that  the balance sheet was not  adopted.   It               may  be  that copies of the balance  sheet  so               laid  before  the general body may  have  been               forwarded under sub-section (1) of Section 134               of the Old Companies Act or sub-section (1) of               section 220 of the Act but nonetheless if  the               requirements of sub-section (2)     of     the               respective  sections  have not  been  complied               with even  then,  the persons concerned  would               be liable for punishment  for that default.               In  our  view, these  provisions  unmistakably               indicate, as we said earlier, that the holding               of  the annual general meeting and the  laying               before it of the balance sheet and the  profit               and loss account is a sine qua non for  filing               of  the copies thereof before  the  Registrar.

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             If  no  general  body  meeting  is  held,  the               persons  concerned  cannot  be  said  to  have               committed  a default in complying  with  those               provisions." In  this  state of difference of opinion among  the  various High  Courts and the absence of a decision of this Court  on section  134  this  appeal  has  been  filed.   Though   the respondent was not represented before this Court the learned Addl.   Solicitor  General  who appeared for  the  State  of Andhra  Pradesh  and  the  learned  Solicitor  General   who appeared  for the Advocate General of Andhra Pradesh  fairly placed before this Court all the decisions for and  against, which we have already referred to, and also placed before us all  the  relevant considerations.  It was urged  before  us that  the principle accepted by this Court in The  State  of Bombay v. Bandhan Ram Bhandani & Ors. (supra) that a company or  its  directors  in a prosecution under  section  32  and section  133  of the 1913 Act could not in defence  to  such prosecution rely upon their own 415 failure to call the general body meeting, applies with equal force to a prosecution under section 134 of the Act.  But it appears to us that there is a very clear distinction between ss.  32  and 133 on the one hand and s. 134  on  the  other. Section  32 relates to the preparation of a list of  members of the company and of persons who have ceased to be  members as  well  as a summary, and also provides that it  shall  be completed within 21 days after the day of the first or  only ordinary general meeting in the year.  It also provides that the  company shall forthwith file with the registrar a  copy of  the list and summary, and any default hi complying  with the  requirements of the section is made punishable.   Under section  131  the laying of a balance-sheet and  profit  and loss  account before the company in the general  meeting  is made  obligatory.  Under section 133 the failure  to  comply with  section 131 is made punishable.  But section 134  lays down that after balance-sheet and profit and loss account or the income and expenditure account, as the case may be, have been  laid before the company at the general  meeting  three copies  thereof  shall be filed with the  registrar,  and  a failure to do so is made punishable under sub-section (4) of that section.  The difference in language is very clear  and pointed.  The responsibility of sending three copies of  the balance-sheet and profit and loss account or the income  and expenditure  account, as the case may be, arises only  after they  have  been  laid before the  company  at  the  general meeting.  Without so laying copies could not be sent to  the Registrar  and  even  if they are sent it  would  not  be  a compliance  with  the  provisions of  the  section.   It  is possible to conceive of the law providing that the  balance- sheet  and  profit  and loss account shall be  sent  to  the registrar  even  without the necessity of their  being  laid before  the  general body meeting of the company.   In  that case  any  failure  to do so would  be  punishable  and  the question  whether a general body meeting had been  held  and the balance-sheet and profit and loss account have been laid before it Will not arise.  Therefore the condition precedent or  the essential prerequisite of the balance-sheet and  the profit  and  loss  account being  laid  before  the  general meeting of the company not being fulfilled, the  requirement of section 134 cannot be complied with.  While the appeal to a question of principle might be attractive we cannot ignore the  clear  words of the section.  Where the  words  of  the section are very clear it is unnecessary to consider whether it  embodies  any principle and whether  that  principle  is

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consistent  with the principle as embodied a  certain  other sections  which are differently worded.  In  interpreting  a penal  provision it is not permissible to give  an  extended meaning to the plain words of the section on the ground that a   principle  recognised  in  respect  of   certain   other provisions  of  law  requires that this  section  should  be interpreted is the same way. We  may  also point out that in Park v. Lawton  (supra)  the principle  laid in which has been adopted in  this  Court’-, decision  in The State of Bombay v. Bandhan Ram  Bhandani  & Ors.   (supra)   it  is  realised  that   there   might   be circumstances where the principle laid down in that decision will not apply.  The court there observed :               "If it were the case that everything  required               to  be inserted in the list was  dependent  on               the  fact of the general meeting  having  been               held,  it  might perhaps have  been  contended               with               416               some force that it is impossible to  calculate               a  continuing  penalty from a  day  which  has               never  come into existence; but when one  sees               that S. 25 requires a number of most important               matters to be included in the list of  members               which are entirely independent of the  holding               of  a general meeting, this very much  weakens               the  contention that no list need be  compiled               if,  owing  to the failure to hold  a  general               meeting,  it is impossible to say what day  is               the fourteenth day thereafter." This  observation  may provide no defence to  a  prosecution under  section 133 but it might well do so in a  prosecution under  section  134.  This was what  the  learned  Solicitor General  was  fair enough to point out with  regard  to  the difficulty  of  working out the daily penalty under  s.  162 after  the thirtieth day mentioned in section 220(1) of  the 1.956  Act.  He pointed out that where no meeting  has  been held it was not possible to calculate the period of 30  days specified  in that section and it would not be  possible  to give  effect to the provisions of that section.  The  Bombay High  Court  pointed out in Emperor v. Pioneer  Clay  &  In- dustrial Works(1) that the decision in Park v. Lawton(2)  is based  on S. 36 (it is a mistake for s. 26) of  the  English Act,  which  in its scheme and terms is  entirely  different from  the  section with which they (the Bombay  High  Court) were concerned, and that the section in the English Act is a composite one which lays down various requirements which are to be complied with by the company under its first four sub- clauses  and  sub-cl.  (5) is the  penal  sub-section  which penalises the failure to comply with any of the requirements contained in any of the four preceding sub-sections.  In our Act  various stages have to be gone through before we  reach the stage of a copy of the balance-sheet and the profit  and loss account being filed with the Registrar and the  failure to reach any one of the stages within the time prescribed is made penal by the ’Act.  The court pointed out that this  is not a case where an accused person relies on his default and pleads his innocence.  What he says is, I may have committed an offence, but the offence that I have committed is not the one  with  which I am charged.  On the facts proved  by  the prosecution an offence is not disclosed under s. 134(4).   A different offence might have been committed either under  S. 76(2) or under S. 133(3). It  is  interesting to note that it was argued  in  Park  v. Lawton(2)  that  the  fact that S. 26 makes  the  offence  a

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continuing  one also shows that the obligation to  file  the list  is  independent of the holding of a  general  meeting. The  observations which we have extracted earlier will  show that  the  submission  on behalf  of  the  prosecution  that provisions (1) I.R.L. [1948] Bom. 86 : A.I.R. 1948 Bom. 357. (2) [1911] 1 K.E. 417 of  S.  26  show that the, obligation to file  the  list  is independent  of  the  holding of  the  general  meeting  was accepted.   But  under  section  134 of  the  1913  Act  the obligation  to send a copy of the balance-sheet  and  profit and  loss account is dependent completely on its being  laid be, fore a general meeting.  It is clear, therefore, that on principle  and authority it should be held that  no  offence was  committed by the directors in this case  under  section 134.   They might have been guilty of offences under ss.  76 and  133 but not under s. 134.  We say nothing about  s.  32 about which this Court has already laid down the law. The appeal is dismissed. V.P.S. Appeal dismissed. 418