RITZ CONTINENTAL HOTELS LTD Vs. STATE

JUDGEMENT

(1.) THIS Rule is directed against a proceeding which is pending before the learned Metropolitan Magistrate, 6th Court, Calcutta. The prosecution is under Section 58A(3)(a) of the Companies Act, 1956. The petitioner is the Ritz Continental Hotels Limited a Company under the Companies Act, 1956 having its registered office at 12, Jawaharlal Nehru Road, Calcutta. The petitioner has prayed for quashing the proceeding which is pending against the said Company and the Directors of the Company. The facts leading to the prosecution of the petitioner and others are as follows: The Ritz Continental Hotels Limited as I have stated is incorporated as a Public Limited Company under the Companies Act, 1956 and was registered on the 30th March, 1964 having its registered office at 12, Jawaharlal Nehru Road, Calcutta. In the petition of complaint it is alleged that under clause (a) of Sub -section (3) of Section 58A of the Companies Act, 1956 every deposit accepted by a Company at any time before the commencement of the Companies (Amendment) Act, 1974, according to the directions made by the Reserve Bank of India, shall unless renewed, be repaid in accordance with the terms of such deposit. It is alleged that from the balance sheet of the Company as on 31 -3 -1974 it appears that a sum of Rs. 29,21,100/ - has been mentioned in fixed deposit and Rs. 23,62,100/ - under the head unsecured loan as against Company's paid up capital of Rs. 42,21,600/ - and Rs. 1,09,23,956/ - as free reserve. The said Company was permitted to - accept deposit maximum to a sum of Rs. 37,86,380/ - being the prescribed limit of 25% of the paid up capital and free reserve of the Company. It was further alleged that the complainant came to know from the different complaints made by the various depositors that the Company had failed to repay the amounts of deposit on their maturity. The petitioner along with its Directors had failed to comply with the provision of Section 58A(3)(a) and thus rendered themselves liable for punishment under Section 58A(5)(b) and under Section 629A of the Companies Act, 1956. The learned Magistrate on receiving the petition of complaint took cognizance and issued summons against the petitioner and its Directors under the Indian Companies Act.

(2.) IT is submitted by Mr. P. C. Ghosh, learned Advocate appearing for the petitioner that the Company is being prosecuted under Section 58A, Clause (3) for contravention of any directions made under Chapter III -B of the Reserve Bank of India Act, 1934 for not making any repayment of such deposit received By them on or before 1st April, 1975 after maturity. Further under Sub -section (5) of Section 58A, if a company omits or fails to make repayment of a deposit in accordance with the provisions of Clause (c) of Sub -section (3) of the said section of the Companies Act, it is liable to be punished with fine which shall not be less than twice the amount in relation to which the repayment of the deposit has not been made. Now, so far as this offence is concerned the punishment is only by way of fine and according to Section 468 Cr. P. C. which provides that 'except as otherwise provided elsewhere in this Code, no Court shall take cognizance of an offence of the category specified in Sub -section (2) after the expiry of the period of limitation under Sub -section (2) (a) the period of limitation shall be six months if the offence is punishable with fine only. Since the petitioner had failed to pay back the deposits after they had matured on 23 -12 -1975, 9 -7 -1976, 10 -9 -1976, 3 -9 -1975, 16 -4 -1976 and 26 -12 -1975 respectively to their respective depositors in respect of those parties mentioned in paragraph 4 of the petition of complaint the company is liable as stated above. The petition of complaint was filed on 21st day of Feb. 1978 long after the six months period had lapsed. So far as this offence is concerned certainly, the court cannot take cognizable of this offence as Section 468(2)(a) Cr. P. C. is a bar to taking cognisance of the same, unless it is shown that it is a continuing offence.

(3.) IN this case the company and its Directors are guilty of violation or contravention of the directions of the Reserve Bank of India by not returning the deposits to the depositors after they attained maturity. Further it is incumbent on the company and its Directors to return the deposits within time as directed by them under the Rules of the Reserve Bank upon maturity. Therefore, there are two offences in paragraphs 3 and 4 of the petition of complaint. In paragraph 3 it is stated that in accordance with the directions made by the Reserve Bank of India unless renewed every deposit should be repaid in accordance with the terms of such deposits. The company would be liable for both the offences mainly for violation of the directions of the Reserve Bank of India i. e. acceptance of deposits and return of deposits on but it will be found on maturity that no punishment is prescribed in the Act and for not returning the deposits to the depositors on maturity. Therefore, we have to turn to Section 629A to find out what is punishment prescribed for such offences. Section 629A provides punishment of five hundred rupees fine and, where the contravention is a continuing one, with a further fine which may extend to fifty rupees for every day after the first during which the contravention continues. Therefore, it will be seen that the punishment is confined only to payment of fine whereas for second offence for non -payment of the deposit within time after maturity. Sub -section (5) (b) of Section 58A clearly makes provision for the punishment in case of violation to return the deposits after maturity by making it punishable with fine which would be twice the amount of deposits made and out of the fine after repaying the depositors the amount of their deposits, the rest will go to the exchequer of the State as fine. But it must be remembered that this punishment is meant for the company only the Directors, however, would be liable to imprisonment for five years for violation of those conditions.