SOL PHARMACEUTICALS LIMITED REP Vs. REGISTRAR OF COMPANIES

JUDGEMENT

(1.) The petitioners herein who are A-1 to A-3 in S.T.C. No.21of 1998 on the file of the Court of Special Judge for Economic Offences, Hyderabad, seek quashing of the said proceedings on the ground that launching of prosecution against the petitioners herein is an abuse of the process of the court.

(2.) The case, according to the complaint filed by the Registrar of Companies, is that the 1st petitioner is a company represented by its Managing Director of which the 2nd petitioner is one of the Directors and the 3rd petitioner is the Secretary. According to the complaint, in the Annual General Meeting held on 27-9-196, the company declared dividend @ 30% but failed to pay the same to the shareholders within 42 days as mandated under Section 207 of the Companies Act.

(3.) The learned counsel for the petitioners Mr. C. Praveen Kumar contended before this court that it is true that dividend was declared by the company but the same could not be paid in time as mandated under Section 207 of the Companies Act in view of the directions issued by the Company's Financial Institutions and in that regard, he also brought to my notice the letters addressed by (1) SICOM Limited dated 23-9-1996 and (2) EXIM Bank Limited dated 18-11-1996 addressed to the 1st petitioner company wherein the said financial institutions have categorically requested the company not to declare or pay the dividends unless the overdues under the loan are liquidated. Learned counsel for the petitioners therefore submits that the petitioners could not pay the dividends in time in view of the said letters only and that the non-payment by the company is protected under Clause (e) of the proviso to Section 207 of the Companies Act.