GAUTAM KANORIA Vs. ASSISTANT REGISTRAR OF COMPANIES

JUDGEMENT

(1.) The petitioners who are directors of the New City of Bombay Manufacturing Co. Ltd., have preferred this petition under Sec. 633(2) of the Companies Act, 1956 ('the Act'). The respondents issued a show-cause notice dated 10-8-1992, to the petitioners calling on the petitioners to show cause as to why they should not be prosecuted for not holding the annual general meeting in respect of the financial year ending 30-6-1983, and thereafter up to the financial year ending 1991 as also of filing annual returns for the year ending 31-12-1986, and thereafter up to the year 1991. On behalf of the company show cause was shown by letter dated 1-10-1992. In the reply it is pointed out that the management of the company was taken over pursuant to the Textile Undertakings (Taking Over of Management) Ordinance, 1983, which was published in the Central Gazette on 18-10-1983. The said Ordinance has thereafter been replaced by an Act. It is further pointed out that in view of the above the directors are unable to discharge their objections under the Companies Act, 1956, for the reasons beyond their control. In spite of the reply to the said show-cause notice the petitioners apprehending that they will be prosecuted for violation of the provisions of the Companies Act have approached this Court by this petition filed under Sec. 633(2).

(2.) An affidavit has been filed on behalf of the respondents. It is the contention of the respondents that this Court in some other proceedings have held that the powers of the High Court under Sec. 633(2) should be sparingly used and the officers of the company cannot, as a matter of right, claim that criminal proceedings should be instituted against them for the defaults committed by them.

(3.) I have heard counsel on behalf of the petitioners as also the respondents. Sec. 633(2), has conferred a power on this Court in situations arising from apprehension by the officers of a company that proceedings may be brought against them in respect of any negligence, default or breach of duty and in these situations they can apply to this Court to be relieved from such proceedings. This Court by virtue of Sec. 633 has similar powers to relieve them as the Court before whom the proceedings will be filed by virtue of Sub-section (1) of Sec. 633.