TOLARAM JALAN Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) THIS is a petition under sub-section (2) of S. 633 of the Companies Act 1956 for relief against liabilities for fines or penalties in regard to the failure of Filmistan Private Ltd. to file with the Registrar of Companies copies of balance sheet and Auditor's report for the year ending on the 81st of August 1956.

(2.) THE reason given by the petitioners for this omission is that accounts up to the year 1950-51 used to be audited by M/s. Sharp and Tannon but that sometime in August 1955 the auditing of the accounts was entrusted to M/s. Kalyaniwala and Mistry, who were then appointed the Company's auditors and that the new auditors could not audit the accounts owing to a radical conflict of opinion between the Company on the one hand and the Income Tax authorities on the other hand as to the manner in which the unexploited value of five cinematographic pictures produced by the Company should be determined for the purpose of computing annual profits or losses of the Company. The case of the petitioner is that until the value of these unexploited pictures was finally deter mined, it would not be possible for the auditors to prepare a true and fair balance sheet and profit and loss account except on a hypothetical basis. It appears therefore that there is considerable force in the contention of the petitioners that it was due to this difference of views between the Company and the Income Tax authorities that the balance sheet and the profit and loss account for the year 1955-56 could not be prepared in time to enable the petitioners to file the same with the Registrar of Companies as required by the Act. It may be stated that it is not the case of the Re gistrar, who opposes this petition, that this omission to file the balance sheet and the profit and loss account was due to any deliberate attempt on the part of the petitioners to delay in preparing the profit and loss account and the balance sheet. On behalf of the Registrar it was conceded that no dishonesty could be imputed to the petitioners in respect of this omission. That being so, I would proceed upon the footing that the omission of the petitioners so far to file the balance sheet and the profit and loss account for the year 1955-56 as required by S. 220 of the Act was not mala fide but that there was a real difficulty in the way of the Company in having the balance sheet and the profit and loss account prepared in time.

(3.) THE question that has been seriously canvassed before me is whether I have jurisdiction under sub-section (2) of S. 633 of the Act to grant relief against the liability of the petitioners, who are Directors and Secretary of the Company respectively, which they apprehend they might have incurred and for which steps might be taken against them under Ss, 159, 162 and 220 of the Act. Section 159 provides that every Company having a share capital shall within 42 days from the day on which each of the annual general meetings referred to in S. 166 is held, prepare and file with the Registrar a return containing particulars set out therein. Section 162 is a penalty section and provides that if a company fails to comply with any of the provisions contained in Ss. 159, 160 or 161 the company and every officer of the company who is in default shall be punishable with a certain fine. There is no dispute that the petitioners are the persons to whom Ss. 159 and 162 of the Act apply.