V K LAKSHMANA MUDALIAR Vs. EMPEROR

JUDGEMENT

(1.) There were five accused in this case of whom accused 1 to 4 were the directors of a certain company called National Livestock Registration Bank Ltd., Madras, and accused 5 was the company itself. There were three charges against them: the first Under Section 134(4), Companies Act, the second Under Section 32(4) and the third Under Section 87(2). All the accused were found guilty of the first two offences. Accused 3 was acquitted of the third offence. Accused 1, 2, 4 and 5 were convicted and various fines imposed. Accused 3 is since dead. Cr. R. C. No. 641 of 1931 has been put in by accused 1 and 2 and Cr. R. C. No. 648 by accused 4 and 5.

(2.) Taking the first charge Under Section 134(4), Section 134(1) says: After the balance sheet has been laid before the company at the general meeting a copy thereof signed by the Manager or Secretary of the Company shall be filed with the Registrar at the same time as the copy of the annual list of members and summary prepared in accordance with the requirements of Section 32.

(3.) The first balance sheet, Ex. Y, prepared for the year ending 31 July 1928, was passed at a general meeting of the company held on 26 December 1929 and filed with the Registrar on 16 January 1930. The next annual balance sheet of the company representing the state of the Bank on 31 July 1929 has not as yet been tiled. On 9 January 1930 the Registrar sent a reminder (Ex. Z) to the Bank to expedite the balance sheet. The Managing Director of the Bank replied by Ex. Z (1) dated 18 January 1930 acknowledging receipt of Ex. Z and promising to sent the balance sheet. A further reminder, Ex. C, was sent on 29 May 1930 to which Ex. P, dated 5 June 1930, is the Bank's reply promising to send the balance sheet. A still further reminder, Ex. Q, dated 14 July 1930 and another, Ex. S, on 19 August 1930 were sent. The contention of the accused is that as the last general meeting was held on 26th December 1929 there was time to convene the next general meeting till 26 December 1930 and therefore the call for the balance sheet by the Registrar was premature. It is in the evidence of the Registrar's clerk himself that the last general meeting was held on 26th December 1929 and the next general meeting should be held within 15 months and that for the purpose of the general meeting there was time till 31 December 1930. The learned Presidency Magistrate got over this plea by saying that Under Section 131(1) of the Act the Bank should have its balance sheet prepared at intervals of not more than 15 months and the latest date up to which the balance sheet should have been prepared is therefore up to the period ending 31 October 1929 and that Under Art. 151 of the Articles of Association such a balance sheet should have been put before the general meeting within not more than four months, and hence there should have been a general meeting not later than 28 February 1930. Apart from the fact that the Articles of Association have no statutory force, this is not what Art. 151 says. It runs: At every ordinary general meeting the directors shall lay before the company a profit and loss account, and a balance sheet, containing a summary of the property and assets and liability of the company made up to a date not more than four months before the meeting, from the time when the last preceding account and balance sheet were made up.