FAROUK IRANI Vs. REGISTRAR OF COMPANIES

JUDGEMENT

(1.) CHALLENGE in this appeal is to the order of dismissal of C.P.No.265 of 2001 by the learned single Judge, whereby the petitioners' request to exercise the discretion of the Court under Section 633(1) of the Companies Act, 1956, read with Rule 11(a)(23) of the Companies (Court) Rules, 1959, to relieve the petitioners from criminal prosecution pursuant to the show cause notice issued by the 1st respondent in No.6423/CI/209A/628/2001 dated 27.07.2001, was denied.

(2.) THE facts, which led the petitioners/appellants to file the said appeal were that the 1st petitioner is Managing Director of M/s. First Leasing Company of India Limited and the 2nd petitioner is formerly the Company Secretary of the said Company between 04.10.1994 and 15.11.2001. THE books of accounts and registers of the said company were made under Section 209A of the Companies Act, 1956 and the inspection report was submitted on 01.05.2000. Certain violations of mandatory provisions of the Companies Act, 1956 and Rules were pointed out and that the returns were not in accordance with the requirements and hence, there was a violation of Section 161(2)(9) of the Companies Act, 1956. On receipt of the show cause notice, an explanation was offered by the petitioners/appellants inter alia stating that there was no violation, that the invocation of Section 628 of the Act was misconceived and hence, the action was not maintainable since the entire essential requirements were not satisfied with. Apart from that, it was also averred that the company has filed a revised return incorporating the details and particulars and also paid the additional fees thereon. Pending consideration of the said explanation, the show cause notice referred to above was served upon the petitioners. Apprehending the criminal action pursuant to the show cause notice, the company petition was brought before this Court.

(3.) CONTRARY to the above contentions, the learned counsel appearing for the respondents would submit that in the instant case, 20 violations were noticed and many of them were the violations of mandatory provisions and thus, in a given case, once they violated the mandatory provisions, they cannot be taken or termed as mistakes crept in and in a case where the acts committed by the petitioners were deliberate or dishonest, it has got to be decided only on adducing evidence before the Court of law. But, in the instant case, it is quite clear that the acts of the petitioners are violative of the mandatory provisions. Thus, the learned single Judge was perfectly correct in refusing to exercise discretionary power vested upon the Court, and hence, the appeal has got to be dismissed.