BHAGIRATH CHANDRA DAS Vs. EMPEROR

JUDGEMENT

(1.) These four Rules arise out of a prosecution Under Secs.82 and 134, Companies Act. The four petitioners wore tried jointly by the Chief Presidency Magistrate, Calcutta, the allegation against them being that they were directors of a company known as the City Commercial Bank Ltd., that that company held an annual general meeting on 29-10-1944 and that that was the only general meeting of the company held during the year 1944. The further allegation was that no list of share-holders and summary were submitted within 21 days of that meeting as required by Section 32, Companies Act; and that the accused persons, as directors, knowingly and willfully authorized and permitted the company to commit the default and that they thereby committed an offence punishable Under Section 32(5), Companies Act. The other charge was that they omitted to file with the Registrar three copies of the balance sheet and profit and loss account made up to a date not earlier than the date of the meeting by more than nine months as required by Section 134, Companies Act, and that they as directors of the company knowingly and willfully authorized or permitted the company to make this default and that they thereby committed an offence punishable tinder Section 134 (4), Companies Act.

(2.) One witness was examined and a large number of documents were produced. The learned Magistrate held that of the present petitioners, B.C. Das was guilty only Under Section 134 but not guilty under Section 32(5) of the Act and sentenced this petitioner to pay a fine of Rs. 200 and in default to undergo simple imprisonment for three months. The remaining three petitioners were found guilty on both charges, they were sentenced Under Section 134(4), Companies Act, each to pay a fine of Rs. 100 and in default to undergo one month's simple imprisonment. No separate sentence was imposed Under Section 32(5), Companies Act.

(3.) It has been argued before me on behalf of all the petitioners that there was no material before the Court to show that the present petitioners knowingly and willfully authorized or permitted the default in these cases. It is suggested that these petitioners were directors with no real control of the affairs, were mere figure, heads who did not know that the law had not been complied with and who did not willfully authorize or permit the default. It is true that apart from the evidence to show that Mr. B.C. Das was the Chairman of the Managing Committee, there is no evidence to show that any particular duties were assigned to the various directors, but the Articles of Association and the Companies Act make it perfectly clear that all directors of a company are responsible to see that the duties imposed upon a company by the Companies Act are properly carried out. It is clearly the duty of all directors to see that the particular returns, the list and summary Under Section 32 and the copies of the balance sheet and profit and loss account are submitted Under Section 134. There is nothing on record to show that these directors made any attempt to see that these returns, list and statement, were properly submitted or that they were prevented in any way from seeing that the proper list, statement and returns were submitted. The presumption of law is that these directors knew their duties. The Articles of Association set out in some detail the duties imposed upon the directors by the Companies Act and it is obvious that the directors must have known what were the duties imposed upon them by the Articles of Association and presumably by the Companies Act. If directors, who are responsible for the management of a company and who presumably know the duties imposed upon them by law make no attempt to see that those duties are carried out, there is justification for holdingrin, my opinion, that they have willfully and knowingly permitted the company to fail to carry out the duties. The suggestion that these various directors were mere figureheads not taking any active part in the control of the company, is in my opinion, not worthy of serious consideration. They were directors, they attended meetings throughout the period with which we are concerned and they were responsible for the management of the company. There was nothing so far as we know to prevent them seeing that the duties imposed upon the company were properly carried out. If has been argued in the case of Mr. B.C. Das that he submitted his resignation on 10-11-1944, that is, before the date on which The default complained of had occurred and that, therefore, he at all events cannot be held to have knowingly and willfully permitted the default. The general meeting held in 1944 was held on 29 October that year. 21 days from that date elapsed on 19.11.1944. Mr. B.C. Das submitted a resignation of his post as director to the Board of Directors on 16-11-1944. That letter of resignation was considered apparently at a meeting held on 24-11-1944 and accepted on that date. From this it is clear, therefore, that Mr. B.C. Das continued to exercise his functions as a director until 24-11-1944, that is until some days after The expiry of the period within which the list of share-holders and summary required by Section 32 and the copies of balance sheet and profit and loss account required to be submitted by Section 134 had to be submitted. It cannot, therefore, be said that Mr. B.C. Das was not a director at the time when the default occurred.