S THIAGARAJAN Vs. ASSISTANT REGISTRAR OF COMPANIES MADRAS

JUDGEMENT

(1.) THIS is a petition under section 482 of the Code of Criminal Procedure to quash the proceedings in C. C. No. 482 of 1976 on the file of the Judicial First Class Magistrate II, Madurai, in so far as the petitioners are concerned. Accused Nos. 3 and 4 are the petitioners. The respondent, Assistant Registrar of Companies, Madras, has launched criminal prosecution against Sri Meenakshi Mills Ltd. and five others on the following averments. Sri Meenakshi Mills Ltd., Madurai, the first accused in the above case, is a public company incorporated under the Companies Act, 1913. The second accused was the managing director, accused Nos. 3 and 4, managing directors designate, the fifth accused was a director and the sixth accused was the secretary. The returns filed by the company under rule 10 of the Companies (Acceptance of Deposits) Rules, 1975, showed that a sum of Rs. 1, 95, 000 in respect of forty accounts remained unpaid to the depositors during the year ending March 31, 1976, though claimed. The non-repayment of the deposits of Rs. 1, 95, 000 on maturity is in contravention of section 58A(3)(a) of the Companies Act, 1956, punishable under section 629A of the said Act. Hence the prosecution.

(2.) IT is contended by the learned counsel for the petitioners that the acceptance of deposits by non-banking non-financial institutions was formerly governed by the directions and regulations issued by the Reserve Bank of India under the Reserve Bank of India Act, 1934, and violation of the directions of the Reserve Bank of India in the acceptance of deposits was punishable with imprisonment up to a period of three years only, but, under section 58A of the Companies Act introduced by the Amendment Act XLI of 1974, the punishment has been enhanced to five years, that an offence committed earlier cannot be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence and, hence, section 58A imposing a greater punishment of five years is hit by article 20 of the Constitution. IT is also urged that prior to the Companies (Amendment) Act of 1974, the failure to repay the deposits on due dates was not punishable while section 58A of the Companies Act introduced by the Companies (Amendment) Act, 1974, has made the failure to repay the deposits on the due dates an offence and it is not open to the Legislature to make the default in repayment of deposits an offence when it was not so when the deposits were accepted. The first contention proceeds on the assumption that the prosecution in this case is with respect to the deposits accepted in violation of the directions of the Reserve Bank of India under Chapter III-B of the Reserve Bank of India Act and on that basis, an argument is built that the Companies (Amendment) Act has made the penalty severer than it was when the offence was committed.

(3.) THE prosecution, in this case, has been launched for violation of section 58A(3)(a) of the Act and it deals with deposits accepted before the commencement of the Companies (Amendment) Act of 1974 in accordance with the directions made by the Reserve Bank of India under Chapter III-B of the Reserve Bank of India Act of 1934. THE offence complained of is that those deposits to the tune of Rs. 1, 95, 000 were not returned after maturity. THE complaint filed by the respondent does nowhere say that deposit of Rs. 1, 95, 000 had been accepted by the first accused-company in violation of the directions of the Reserve Bank of India. This prosecution is, therefore, in respect of deposits accepted in accordance with the directions of the Reserve Bank of India, but not refunded in time. THE argument advanced by the learned counsel for the petitioners on the assumption that the deposits which are the subject-matter of this prosecution had been accepted in contravention of the directions of the Reserve Bank of India and a greater punishment is imposed therefor has no basis and must fall.