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Companies Act, 1956 - Section 633 - Power of the court

Court :
High Court

Brief :
Companies Act, 1956 - Section 633 - Power of the court to give relief against prosecution - minor defaults by the company-ROC sought to prosecute the highest ranking officers of the company- Whether relief could be granted to the officers of the company Held, yes.

Citation :

Brief Facts: Registrar of Companies issued show-cause notices to the petitioners, officers and/or directors of Sulzon Energy d (the company) for violation of different provisions of the Act. The company had furnished adequate replies to the queries raised by the Regional Director and was under the bona fide belief that the Regional Director had dropped the matter. However, the Regional Director issued show-cause notices against the company and the petitioners alleging violation of different sections of the Act. The company tendered its reply to each of such notices. The petitioners moved the High Court under section 633(2) of the Act and sought relief from the ended prosecution. The High Court stayed the show cause notices and required the RoC not to initiate prosecution proceedings if he had not yet started. Preliminary issue against the maintainability of petitions and against granting of ad interim relief was raised by the respondent. Decision: Petition allowed. Reasons: Considering the facts in which the notices had been issued by the Registrar himself and the alleged offences were in respect of the Act for prosecuting the officers of the company despite the fact that explanation was already tendered earlier to the Regional Director, the court was of the view that the ad interim relief was required to be granted so as to meet the ends justice and/ or to prevent the abuse of the process of the court. Further, the court was not granting any final relief relieving the petitioners from any of the alleged offences which may be branded my negligence, default, breach of duty, misfeasance or breach of duty, misfeasance or breach of trust. The court had merely asked the Registrar of Companies to stay his hands till the returnable date by granting three days' time only with a view that on hearing the Registrar of Companies if the petitioners were found not entitled to the ad interim relief, it could be vacated 1ediately. Looking to the nature of offences alleged against the petitioners and then explanation tendered by them in their replies, the court was of the prima facie view that the petitioners had taken all due care and caution in complying with the provisions of the Act and even if there may be minor lapses, those were required to be condoned. For such minor lapses and defaults of technical nature, to prosecute the company and its highest ranking officers was not just and proper.

on 30 July 2008
Published in Corporate Law
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