JYOTINDRA MANHARLAL VAKIL Vs. REGISTRAR OF COMPANIES MAHARASHTRA

JUDGEMENT

(1.) THIS is a petition under section 633 (2) of the Companies Act for relieving each of the petitioners from criminal liability.

(2.) THE petitioners are directors and officers of the Premier Automobiles Limited. Petitioner No. 1 was the President and the Managing Director of the Company and petitioner No. 2 was the Company Secretary of the Company. The Registrar of Companies Maharashtra had issued show cause notices dated 27th August 1992 under the provisions of section 113 of the Act calling upon the Company to show cause as to why prosecution under section 113 (2) should not be initiated against them for the default committed by them under section 113 (1) of the Act. The alleged default was failure to deliver share certificates lodged for transfer within the prescribed period of two months from the date of lodgement.

(3.) IT must be stated that there is no dispute that the default has been committed. What is prayed in the petition is that the petitioners have acted honestly and without negligence and in the facts and circumstances of the case deserve to be excused under the provisions of section 633 of the Companies Act. It is pleaded that a substantial number of shares for transfer were received from Public Financial Institutions such as Unit Trust of India, New India Assurance Company Ltd. etc. It involved large number of shares which were lodged by the Stock Holding Corporation of India Ltd. It is contended that the Board of Directors of the Company by a resolution delegated the matter of approval of transfer and transmission of shares and debentures to a Committee of Directors. To provide expeditious and efficient service to its shareholders, the Company has retained the share transfer work in house. The day to day operations of the share department are managed by experienced Managers who operate under over all supervision and control of the Company Secretary. It is further asserted that a practice had developed during the past years in respect of delivery of share certificates pertaining to such bulk transfers. The share certificates and transfer documents are usually lodged by Stock Holding Corporation of India Ltd. , through their representative or their couriers and are again collected by their representatives or their couriers. This ensures the safety and security of the share certificates. The volume of share certificates lodged is often so large that postal delivery is not practicable. It is also asserted that so far as the resolution to transfer is concerned it was passed within a prescribed period. However due to the practice established there has been delay in actual delivery as none of the representatives of Stock Holding Corporation of India Ltd. , came to collect the transferred shares. The petitioners therefore have contended that though there has been default in delivering the share certificates within the period prescribed; each of them has acted honestly and reasonably and having regard to all the circumstances of the case ought fairly to be excused.