G.D. BHARGAVA Vs. REGISTRAR OF COMPANIES

JUDGEMENT

(1.) THIS application under Section 633(2) of the Companies Act, 1956, (hereinafter referred to as the Act), by three directors of Radha Govind Industries Ltd., Kosi Kalan, Mathura, sets out a history of the company concerned. It mentions that the chairman of the board of directors of the company, Rai Saheb Govind Das Bhargava, had died on June 19, 1965, and that his eldest son, G.D. Bhargava, the first of the three applicants, was a patient of high blood pressure, who had also suffered a heart attack. It states that the relations between the sons of the deceased, Rai Saheb Govind Das Bhargava, became strained so that L.D. Bhargava, I.A.S., demanded the return of the entire sum of money loaned by him to the company. A winding up application made by L.D. Bhargava in this court, with the result that the money lent by him was paid back to him, as well as an investigation instituted by the Company Law Board, early in 1963, into the affairs of the company, are mentioned, presumably to show the hostility of L.D. Bhargava to the applicants. I am unable to appreciate the bearing of this background on the merits of the application before me. If the object was to suggest that the Registrar of Companies or the police at Mathura have acted as a result of anything done by L.D. Bhargava, the suggestion is totally unsupported by any assertion which could give rise to that inference. Moreover, an applicant for relief whether under either Section 633(1), for which he can only apply to the court in which a proceeding mentioned there has been instituted or is pending, or, under Section 633(2), against apprehended proceedings against him, must show his own honesty and reasonableness so as to establish that he 'ought fairly to be excused'. Motives of other persons or authorities in taking action against him are not really relevant there at all.

(2.) CERTAIN allegations against the applicants in a complaint made to the Superintendent of Police, Mathura, by means of a registered A. D. letter, by the Registrar of Companies, are revealed by annexure I to a counter -affidavit filed by Rabhubir Sahai Bhatnagar, Station Officer of police station Kosi Kalan, district Mathura, and by annexure 'D' to an affidavit of Shri P.R. Mukhopadhyay, the present Registrar of Companies, filed on December 22, 1969. The Station Officer's counter -affidavit also discloses the contents of a first information report (annexure II) against the applicants lodged at the police station Kosi Kalan by Shri S.C. Bharadwaj, who was formerly the Registrar of Companies, although its date is not mentioned. The counter -affidavits, together with the annexed documents mentioned above, indicate that the police has been investigating into certain alleged offences by the directors said to be punishable not only under the Companies Act but also under Sections 420 and 471 of the Indian Penal Code. Therefore, the petitioners seek relief against possible apprehended proceedings against them.

(3.) G .D. Bhargava, director and secretary of the company, even filed the printed copy of the balance sheet with the Registrar of Companies some time about November 29, 1965. The excuse is that he thought ' that the auditors would sign and give their report as in the past '. In other words, although the balance sheet and the auditors' report had not been signed, they were printed as though signed and then passed and then filed before the Registrar presumably with the knowledge that the original documents had not been signed at all by the auditors. It is stated, in paragraph 9 of the application, that, as soon as Gokul Das Bhargava realised his mistake, he immediately informed the auditors and wrote to the Registrar of Companies with his explanation on September 19, 1966. The Registrar then served a notice dated October 14, 1966 (annexure ' C ' to the applicants' affidavit), asking him to show cause why action should not be taken against officers of the company under Section 628 of the Act. On October 31, 1966, the auditors gave their version to the Registrar (annexure ' E ' to the affidavit in support of the application) showing that, although the company was fully apprised of the reasons for the refusal of the auditors to sign the report, yet, it filed the papers with the Registrar without obtaining the auditors' signatures. On November 12, 1966, G.D. Bhargava gave an explanation (annexure ' D ' to the affidavit in support of the application) in answer to the show cause notice. Here, he expressed his regret for the mistake he had committed in submitting the balance sheet ' thinking that the auditors would eventually sign the same '. It is asserted there that the general meeting of the company which considered the matter was aware of the whole position. The explanation ends with a request to excuse the ' lapses this time and to condone the mistake'. Another letter, dated January 21, 1967 (annexure ' F ' to the affidavit in support of the application), tries to justify the stand of the directors on the differences between the company and the auditors about certain items of expenditure. It is said that another general meeting was held on April 28, 1967, after the auditors had given and signed their report and that it was approved and adopted. It was then stated that the applicants acted honestly and reasonably. A medical certificate was also filed to show that G.D. Bhargava was a patient of high blood pressure and had a heart attack. The Registrar's interpretation of admitted facts differs from that of the applicants and the correctness and relevance of some of the assertions made on behalf on the applicants is also denied by the Registrar.