REGISTRAR OF COMPANIES Vs. BHARAT PRODUCE CO LTD

JUDGEMENT

(1.) The rule is directed against the order dated June 15, 1979, passed by the learned Chief Metropolitan Magistrate, Calcutta, dropping the proceeding of Case No. C-1718 of 1978 which was initiated on a complaint filed by the petitioner against the two opposite parties for an offence under Section 269(2) read with Section 629A of the Companies Act, 1956.

(2.) In the complaint it was stated that Bharat Produce Company Ltd., the accused opposite party No. 1, was incorporated as a public limited company on January 15, 1940, under the Indian Companies Act, 1913. Pursuant to a special resolution passed on July 9, 1956, it was converted into a private company. The company was again converted into a public company on or about December 15, 1970, by virtue of the provisions contained in Section 43A of the Companies Act, 1956, and continued to function as such. Sri Subkaran Chhawchharia (accused opposite party No. 2) was appointed as a director of the company on January 6, 1959, and in the general meeting of the company held on February 16, 1959, a special resolution was passed appointing him as a whole-time director with effect from January, 1959, at a remuneration of Rs. 500 per month.

(3.) The further allegation in the complaint is that the books of account of the company were inspected by an officer authorised by the Central Government under Section 209(4) of the Companies Act, 1956, as it stood before the Companies (Amendment) Act, 1974, came into force and during the course of the said inspection it was noticed that the accused No. 2 continued to be a whole-time director of' the company ever since January, 1959, till date. The records further reveal that he was reappointed as whole-time director for the first time on September 24, 1973, after the commencement of the Companies (Amendment) Act, 1960, in the meeting of the company held on that day. According to the complaint, in terms of Section 269(2) of the Companies Act, 1956, the re-appointment of a person as a whole-time director for the first time after the commencement of the Companies (Amendment) Act, 1960, cannot have any effect unless approved by the Central Government and as the two accused persons failed to obtain the approval of the Central Government in regard to re-appointment of accused No. 2 as a " whole-time director " on or about September 24, 1973, they contravened the provisions of Section 269(2) of the Companies Act rendering themselves liable for punishment under Section 629A of the Companies Act.