FR. AUGUSTINE KANDATHIL Vs. REGISTRAR OF COMPANIES

JUDGEMENT

(1.) This application is filed for relief under S.633(2) of the Companies Act. The applicant was a Director in Chundakkal Plantations (Private) Ltd., a company registered under the Companies Act. He became a Director in 1971. For failure to file the annual return for the year 1974 the Registrar of Companies filed a complaint against him and four others as C.C. No. 249 of 1975 before the Chief Judicial Magistrate, Ernakulam. He pleaded guilty and the court pronounced judgment in the case on 29th June 1976 convicting and sentencing him to pay a fine and also directing him to file with the Registrar the annual return within a period of two months thereof. Since he failed to file the return the Registrar by his letter dated 6th October 1976 marked Ext. A reminded him of the Court's order to file the return within two months and intimated him that the Registrar will be constrained to invoke the penal provisions under S.614A(2) of the Act. On receiving that letter the applicant has come forward with this application for an order to relieve him from the liability to file the documents called for in the said letter and from being proceeded against by the Registrar under S.614A. According to the applicant he became a Director under peculiar circumstances. The company had agreed to sell over 100 acres of the company's estate at Kazhani in Palghat and received Rs. 25,000 from him. There were also further advances to the Managing Director, but the proposed sale did not take place and instead he was allotted 42 shares and made a Director of the Company in 1971. One M. G. Menon and his mother Janaki Amma were Directors for life under the Articles of Association of the Company and Mr. M. G. Menon is the Managing Director of it for life. He further contended that he was not in possession of any records of the company and no meeting of the Board of Directors or the General Body have since been held or conducted after he became a Director. Even before he received the Registrar's letter he had written to the Registrar that the Managing Director of the company was reported to have expired some time in July 1976, that the estate of the company was in the possession of the Receiver appointed by the Sub Court of Palghat in O.S. 93 of 1973 and since Mr. M. G. Menon was in possession of the books of the company, he had no access of the books and papers and even their whereabouts. He had also resigned his Directorship on 19th March 1976. In these circumstances the applicant is not in a position to file the return and the default on his part has occurred in the circumstances beyond his control. He further submitted that he has acted honestly and reasonably all along and that having regard to all the circumstances connected with his appointment the High Court may be pleased to relieve him from the liability in respect of the proposed action of the respondent referred to earlier.

(2.) In answer to this the Registrar has filed a counter affidavit. He contended that after the petitioner was made a Director the Company had held its 10th Annual General Meeting on 27th September 1971 at which the Balance Sheet and Profit and Loss Account as at 31st March 1971 was placed and adopted. The Company filed the said Balance Sheet and Profit and Loss Account with the registrar and one of the signatories to the said document was shown as the applicant. Therefore it is not correct to say that there was no General Body Meeting after the applicant was appointed a Director. The Registrar, further submitted that he is not aware of the suit and the appointment of the receiver to the estate and also regarding the statement that the applicant has resigned from the directorship with effect from 19th March 1976. No intimation as required in Form No. 32 as per the provisions of S.303(2) of the Companies Act has been filed before the Registrar regarding the cessation of the Directorship of the applicant. Further the applicant did not take up the plea before the Magistrate that he had no access to the books and papers of the Company nor did he take the plea that he resigned the Directorship on 19th March 1976 and that he will not be able to comply with the direction if passed under S.614A(1) of the Companies Act. On the other hand he pleaded guilty to the charge and did not choose to take any steps to challenge the order of the learned Magistrate relating to the direction under S.614A(1) of the Companies Act. In the light of the applicant's contention that he is not an officer of the Company he is not competent to file an application under S.633(2) of the Act. And lastly it was contended that the application under S.633 (2) is not maintainable as the failure to comply with the direction of the Magistrate's Court cannot be taken as a default, breach of duty, misfeasance or breach of trust within the meaning of these expressions used in S.633(2) of the Act and there is no case made out to show that the petitioner acted reasonably and honestly.

(3.) The petitioner has filed a rejoinder wherein he repeated his earlier stand that he had resigned his Directorship from 19th March 1976 and he had hoped that the Managing Director and other Directors who arc also coaccused and were in possession of the entire records of the Company will file the overdue returns. He did not intimate the fact of his resignation to the Magistrate's Court only because that was not relevant in that case inasmuch as it related to a period before his resignation. He further maintained that the only forum where he can get relief is an application under S.633(2) in the nature of the threat held out by the respondent.