Case studies of secretaries

B. N. KAUSHIK V REGISTRAR OF COMPANIES [(2009)150 COMP CAS 97(DEL)] REVA KHETRAPAL, J. [DECIDED ON 8-4-2009]

Companies Act, 1956 – sections 162 and 220 – offences and prosecution – failure to file Balance-sheets, etc.- honorary secretary resigned – violations pertaining to period after resignation – initiation of action 22 years after resignation – whether conviction was correct – held, no

Brief Facts:  The petitioner resigned as the honorary secretary of a company with effect from July 27, 1971. He sent his letter of resignation to the registered office of the company and a copy of it to the Registrar of Companies. Upon failure of the company to file balance sheets, etc., with the Registrar for the period covering 1982 to 1986, complaints were lodged by the Registrar and the petitioner was convicted and sentenced. The petitioner challenged his conviction, on the grounds that (i) the complaints were instituted beyond the period of limitation prescribed in law and did not disclose sufficient ground or material to proceed against him; (ii) as per Circular No.42(400)-cl-II-59 dated December 29,1959, sending the letter of resignation to the Registrar of Companies was sufficient resignation; (iii) that in the proceedings of winding up of the company the registrar had admitted the receipt of the resignation letter from the petitioner and (iv) the violations were for the period after his resignation.

Decision:  Petition allowed

Reason:  The petitioner had tendered his resignation 11 to 15 years prior to the alleged violations. The receipt of the resignation letter was admitted by the Registrar and no material had been placed on record to show that it was not accepted or was objected to either by the company or by the Registrar of Companies. The complaints were initiated more than 22 years after the letter of resignation had been communicated to the Registrar of Companies by the petitioner and which had been accepted in terms of the Department’s circular. The order of conviction and sentence had to be set aside.