ASSISTANT REGISTRAR OF COMPANIES MADRAS Vs. R NARAYANASWAMY

JUDGEMENT

(1.) THIS is a petition to set aside the order of the Sessions Judge, Coimbatore, in Crl. R.C. No. 84 of 1981, confirming the order of the Chief Judicial Magistrate, Coimbatore, in C.C. No. 858 of 1980, discharging the respondents accused Nos. 7 to 11. The complainant is the petitioner before this court. The petitioner herein, who is the Assistant Registrar of Companies of Tamil Nadu, Madras, has filed a complaint in the court of the Chief Judicial Magistrate, Coimbatore, in C.C. No. 858 of 1980, against the Southern Textiles Ltd. and its thirteen directors under s. 58A(3)(c) of the Companies Act of 1956. The gist of the offence is that the first accused-company had accepted deposits in excess of the limits prescribed by the Reserve Bank of India Act, 1934, and the rules framed thereunder and have failed to repay the excess on or before April 1, 1975, as required by s. 58A(3)(c) of the Companies Act. The Chief Judicial Magistrate found that there was no sufficient ground to proceed against accused Nos. 7 to 11, who are the respondents herein and discharged them. The complainant-petitioner herein preferred a revision before the Court of Sessions, Coimbatore, in Crl. R.C. No. 84 of 1981. The learned Sessions Judge dismissed the revision holding that respondents-accused Nos. 7 to 11 became directors only from July, 1975, and they were not responsible for the default committed as on April 1, 1975, and confirmed the discharge. Hence, this petition.

(2.) IT is not disputed before me by the learned counsel for the petitioner that the respondents became directors of the first accused-company only from July, 1975, and they were not directors on April 1, 1975, when the excess deposits had to be returned as per s. 58A(3)(c) of the Act. IT is, however, contended by him that the failure to repay the deposit on or before April 1, 1975, is a continuing offence and persons who became directors even subsequent to April 1, 1975, are liable for the default, so long as the excess deposits are not repaid. But, there is nothing in s. 58A(3)(c) or any other provision of the Act to hold that the non-repayment of the excess deposits on or before April 1, 1975, is a continuing offence. In CWT v. Suresh Seth, the question came up before the Supreme Court whether the failure to file a wealth-tax return by the assessee after the last date was over, was a continuing offence. IT was held by the Supreme Court that such a failure gave rise to a single default and to a single penalty the measure of which, however, is geared up to the time lag between the last date on which the return has to be filed and the date on which it is actually filed. The default, if any committed, is committed on the last date allowed to file the return, the default cannot be one committed every month thereafter. The words in s. 18(1)(a) of the Act, " for every month during which the default continued " indicate only the multiplier to be adopted in determining the quantum of penalty and do not have the effect of making the default in question a continuing one. The principle enunciated therein applies on all fours to the case on hand. The failure to repay the excess deposits on or before April 1, 1975, is a single default, which gets completed on the expiry of the aforesaid period and cannot be said to be a continuing one. As the respondents herein were not directors of the first accused-company on the date of the commission of the offence, viz., April 1, 1975, they are not liable to be proceeded against.In the result, the petition fails and is dismissed.