MALAYALA MANORAMA CO LTD Vs. REGISTRAR OF COMPANIES

JUDGEMENT

(1.) S. 58a of the Companies Act 1 of 1956 was introduced by the Companies (Amendment) Act 1974 enabling the Central Government to prescribe the limits up to which, the manner in which, and the conditions subject to which, deposits may be invited or accepted by a company either from the public or from its members. The prescriptions made mention of in S. 58a are contained in the Companies (Acceptance of Deposits) Rules 1975 (hereinafter referred to as the rules ), dated February 3, 1975. Rule 3 prescribes the conditions relating to acceptance of deposits by companies. Sub Rule (1) provides inter alia that on and from the commencement of the Rules, the deposits accepted by a company shall not exceed 10% of the aggregate of the paid up share capital and free reserves of the company. The Explanation to the rule states that, for the purpose of the rule, in arriving at the aggregate of the paid up share capital and free reserves of a company, there shall be deducted from the aggregate of the paid up share capital and Free reserves, as appearing in the latest audited balance sheetof the company, the amount of accumulated balance of loss, balance of deferred revenue expenditure and other intangible assets, if any, as disclosed in the said balance sheet. In other words, the Explanation provides the mode in which the aggregate of the paid up share capital and free reserves of a company is to be arrived at.

(2.) RULE 10 of the RULEs requires every company to file with the Registrar of Companies on or before the 30th day of June of every year a return in the form annexed to the RULEs, furnishing the information required therein' as on the 31st day of March of that year duly certified by the auditor of the company. The form appended contains a certificate to be attested by the manager of the Company certifying inters alia that the aggregate of the paid up capital and free reserves etc. is arrived at on. The lw. es indicated in the explanation to RULE 3.

(3.) IN doing so, the petitioner followed the same practice, which they had adopted in previous years, for which their returns had been accepted. It is true that in two prior years, in relation to the returns as on March 31,1980 and March 31, 1981, the respondent had raised a dispute that the petitioner should have adopted the figures as per the balance sheets for the years ending December 31,1978 and December 31, 1979 respectively, instead of those as on December 31 of the years 1979 and 1980. But this objection was not persisted in after the petitioner explained its stand by the letter Ext. PZ dated July, 15,1982, that the latest audited balance sheet as on the date of filing of the return were for the years ending December 31, 1979 and December 31, 1980 respectively. The matter rested there, and no objection was raised subsequently in relation to the returns as on March 31,1982 and march 31,1983, made following the same pattern. But the matter was raked up again when the petitioner submitted its return in the same manner containing the information as on March 31, 1984. A large volume of correspondence passed between the parties, both sides sticking to their respective positions. The respondent was firmly of the view, as evident from his letters Exts. P4, P6, P8 and P11, that the petitioner had to arrive at the aggregate of paid up share capital and free reserves with reference to the balance sheet for the year ending December 31, 1982, since that was the last audited balance sheet as on march 31. 1984. But the petitioner equally firmly stuck to its point that the return can reflect the State of affairs as on December 31,1983 inasmuch as that was the latest audited balance sheet as on the date on which the return was filed, namely June, 30, 1984. That is the controversy to be resolved in these proceedings.