SITARAM BIYANI Vs. REGISTRAR OF COMPANIES

JUDGEMENT

(1.) This revision petition under Section 397/401 read with Section 482, Cr. PC, is directed against order dated June 27, 1980, passed by the Judicial Magistrate, 9th Court, Alipore, in. Case No. C/813 of 1977 (T. R. No. 496 of 1977) arising out of a petition of complaint made by the Registrar of Companies, West Bengal, under Section 211(7) of the Companies Act, 1956. The petitioners before this court are two directors of a public limited company, namely, Jagadishpur Co. Ltd.

(2.) The principal allegation made against the petitioner accused in the petition of complaint was to the effect that as per balance-sheet and profit and loss account for the financial year ending March 31, 1976, and filed in the office of the complainant, it transpired that the accounts of the company have been drawn up on cash basis; and, as such, the said accounts without adjustment of the outstanding receipts/payments did not give a true and fair view of the state of affairs of the company and, as such, infringement of Section 211 of the Companies Act was made. The learned Magistrate took cognizance and issued summons. The accused petitioners, after entering appearance, filed a petition under Section 633 pf the Companies Act praying for relieving them wholly from their liability, if any, as alleged in the petition of complaint. They alleged that ever since the incorporation of the company in 1953, the company has been keeping books of account in cash system and they have been filing, the balance-sheet and profit and loss account with the Registrar of Companies every year but, no objection was ever taken. When they received the audit report of the company for the year ending on March 31, 1973, they noticed from the auditor's report that the company has been keeping its books of account in cash system and the Registrar of Companies by its letter dated December 14, 1973, called for a clarification from the company and by a letter dated December 21, 1973, the company replied to the said letter. No further instructions were ^received from the complainant opposite party. The petitioners alleged that cash system is a recognized and accepted system of accounting and was followed by the company since its incorporation in 1953 and they have all along acted honestly and reasonably.

(3.) After the above petition was filed, the learned Magistrate passed the impugned order. The learned Magistrate has observed in the order that the auditor's report is a qualified one and it is a matter of evidence. If it gives a true and fair view of the financial affairs of the company. The learned Magistrate proceeded to hold that it could not be said that, there was no prima facie case against the accused at this stage. On that view, he rejected the prayer of the accused for quashing the proceeding.