SWARMAL GOENKA Vs. REGISTRAR OF COMPANIES

JUDGEMENT

(1.) This company petition under Section 633(2) read with Sections 159, 166, 210 and 220 of the Companies Act has been filed (i) seeking a restraint order against the Registrar of Companies, Bihar, from initiating any criminal proceeding against the petitioners as the directors of Bihar Cotton Mills Limited, Phulwarisharif, Patna, for having committed default in preparation and filing of the balance-sheet, profit and loss accounts of the company for the year ending on December 31, 1982, and onwards, (ii) extending the time for holding the annual general meeting and filing the balance-sheet and profit and loss accounts for the years in question and (iii) directing the Bihar State Financial Corporation, which has in the meantime taken over the assets of the company, to allow the petitioners access to the registers and books of account lying in their office so that the petitioners may get the balance-sheet and profit and loss accounts prepared and filed.

(2.) This petition, for the reasons mentioned hereinafter, is fit to be dismissed. Sub-section (1) of Section 633 of the Companies Act provides that in any proceeding for negligence, default, breach of duty, misfeasance or breach of trust against an officer of the company, if it appears to the court that the officer is or may be liable in respect of his acts of negligence, default, breach of duty, misfeasance or breach of trust, but that he has acted honestly and reasonably, the court may excuse him either wholly or partly from his liability on such terms as it thinks fit, Sub-section (2) of Section 633 of the Act provides that where the officer has reasons to apprehend that any proceeding will or might be brought against him in respect of any such alleged act, he may apply for being excused from the liability. This provision in other words contemplates, what may be called, an "anticipatory" order of the nature envisaged under Section 633(1).

(3.) The provision of Section 633(2) has to be read in the context of the proceeding contemplated under Section 633(1). There cannot be any doubt that such proceeding can be filed only where the act of negligence, default, breach of duty, misfeasance or breach of trust, as the case may be, has occasioned or resulted in any loss to the company, it is only in such a situation that the proceeding is to be filed for determining the liability of the officers. In terms of Section 633(1) it is open to the officer to plead bona fides and seek an excuse.