HERDILIA UNIMERS LTD Vs. RENU JAIN

JUDGEMENT

(1.) THIS petition under Section 482 of the CriminalProcedure Code has been submitted to quash the proceedings of CriminalCase No. 164 of 1994 - -Renu Jain v. Herdilia Unimers pending before theSpecial Court of Judicial Magistrate (Economic Offences), Rajasthan, Jaipur,and to discharge the accused petitioners.

(2.) THE brief facts of the case are that Mrs. Renu Jain had applied for allotment of 100 shares of the petitioner -company on the basis of its prospectus dated April 30, 1992, vide Application Nos. 2533789, dated June 1. 1992 The cheque was also given along with the application form for the requisite amount and the same was encashed on or about June 18, 1992. The complainant came to know of the allotment through her broker, Shri S. C. Jain, who received the brokerage amount in respect of the application made by the complainant. The shares were required to be sent by the petitioner -company on or before November 1, 1992, but the shares were not sent. According to the conditions incorporated in the prospectus, the company had undertaken to allot the shares within 10 weeks of the close of the public issue and the shares were required to be sent by registered post to the address given in the application form itself. Since the shares were not sent within the stipulated time; violation of provisions of sections 61, 73 and 113 of the Companies Act was alleged. For the alleged contravention of the provisions of Section 61 it was prayed that an enquiry be made into the conduct of the accused and the accused be punished under Section 63 of the Companies Act. And that for the breach of Section 73 the punishment as provided under Section 73(2B) of the Companies Act was prayed for. In respect of contravention of the provisions of section 113 it was stated that the punishment of fine upto Rs. 500 per day during the period of default be awarded and the amount so received be directed to be given under Section 626 of the Companies Act by way of award.

(3.) IT is submitted that the company is having the managing director and manager as well and, as such, the chairman or the directors cannot be held responsible and the proceedings against them should not beallowed to be continued. The provisions of Section 5 have contemplated the managing director, whole -time director and the manager responsible and it is only in a situation where the persons specified in Clauses (a), (b) and (c) are not existing in a company, that the director or the directors can be made responsible. This by itself is a question of fact as to whether the managing director or the whole -time director or the manager exists so as to exclude the directors of the company from being considered 'as officer who is in default'. It may also be observed that, under the Companies Act, 1956, section 175 has contemplated the chairman of a meeting and it may be by virtue of the articles of association that a chairman is being appointed. The definition of managing director have been given under Clause (26) of section 2, which is as under :