JUDGMENT
Padmini Jesudurai, J.
1. The petitioner whose complaint against the respondents for an offence under section 113 of the Companies Act, 1956 (hereinafter referred to as “the ACt”), for failure to issue to him share certificates had been dismissed by the Additional Chief Metropolitan Magistrate (E.O.I.), Egmore, Madras, under section 203,Criminal Procedure Code, has preferred this revision, challenging the above order of dismissal.
2. The facts briefly are : The petitioner filed a complaint under section 200, Criminal Procedure Code, before the above court against the respondents, for an offence under section 113(2) read with section 621 of the Act, on the allegation that he is the holder of 466 equity shares, 236 preference share and 2069 redeemable preference share that share certificates for the above shares have not been issued to him even though the ordinary and preference shares had been transferred to him even though the ordinary and preference shares had been transferred to him even on December 2, 1963, and the redeemable shares were allotted to him on December 13, 1963. Despite several letters requesting the respondents to issue certificates, the respondents, while admitting the fact that the petitioner was the owner of the above shares, expressed inability to issue the necessary certificates due to lack of funds to incur expenses for printing the share certificates. This was in violation of section 113 of the Act and since the offence was a continuing offence, the petitioner preferred the above complaint. The first respondent is the company and respondents Nos. 2 to 5 are the directors.
3. The learned Magistrate dismissed the above complaint under section 203, Criminal Procedure Code, on the following grounds :
(i) that an offence under section 113 of the Act is not a continuing offence and the complaint, therefore, was barred by limitation under section 468, Criminal Procedure Code.
(ii) that since the offence is not a continuing offence, respondents Nos. 3 to 5 who are the directors only for the last three years, could not be held liable for an offence committed 13 years earlier and the second respondent, who was the managing director,has sent an explanation that the share certificates could not be printed due to lack of funds. The learned Magistrate also placed reliance on certain decisions.
4. Thiru Prakash Gokulaney, learned counsel for the petitioner, contended that the offence under section 113 of the Act is a continuing offence, that the complaint is saved by section 472, Criminal Procedure Code, and that,therefore, both the findings of the lower court are untenable. The decisions relied on by the learned Magistrate are no longer good law.
5. The short question that arises for consideration is whether the offence under section 113 of the Act is a continuing offence.
6. The term “continuing offence” has not been defined either in the Criminal Procedure Code or in any other statute. However, judicial pronouncements of the Supreme Court and other High Courts under different statutes give us certain guidelines. The Supreme Court in State of Bihar v. Deokaran Nenshi , while holding that the offence mentioned under section 66 of the Mines Act, 1932, in failing to furnish returns and notice within the prescribed time, is not a continuing offence, observed as follows (at page 909 of AIR):
“A continuing offence is one which is susceptible of continuance and is distinguishable from the one which is committed once and for all. It is one of those offences which arises out of failure to obey or comply with a rule or its requirement and which involves a penalty, the liability for which continues until the rule or its requirement is obeyed or complied with. On every occasion that such disobedience or non-compliance occurs and recurs, there is the offence committed.”
7. Again in Bhagirath Kanoria v. State of M. P. , the Supreme Court, when considering the question whether the non-payment before the due date of the employer’s contribution to the provident fund punishable under section 14(2A) of the Employees’ Provident Fund and Family Pension Fund Act (19 of 1952), is a continuing offence or not,made the following observations (at page 1692) :
“The question whether a particular offence is a continuing offence must necessarily depend upon the language of the statute which creates that offence, the nature of the offence and, above all, the purpose which is intended to be achieved by constituting the particular act as an offence.”
8. It was held that the above offence was a continuing offence, because though the contribution was required to be paid within the specified date, the liability to pay the contribution continued despite the expiry of the date, so long as the contribution remained unpaid.
9. In a recent decision in Maya Rani Punj v. CIT , the Supreme Court, while holding that section 271(1)(a) of the Income-tax Act, 1961, was a continuing offence, laid down the acid test to determine the above issue (at page 341) :
“If a duty continues from day-to-day, the non-performance of that duty from day to day is a continuing wrong. We are of the view that the legislative scheme under section 27(1)(a) of the 1961 Act, in making provision for a penalty coterminous with the default to be raised, provides for a situation of continuing wrong.”
10. It, therefore, follows that if the penalty is made coterminous with the default, then the offence is a continuing offence.
11. The Companies Act has been enacted in the interest of the general public who would be contributing shares to the floating of a company and would, therefore, be entitled to receive certain benefits therefrom. Safeguards, therefore, have been provided in the Act to prevent exploitation of the shareholders and to ensure proper administration. Elaborate procedure, therefore, has been laid down with regard to formation of companies, their management and administration and, finally, the winding up of companies. Certain violation of the provisions of the Act have been made penal. In the scheme of the Act, in the matter of awarding punishment, we find three different categories of punishments provided under the Act. For certain offences, the punishment provided is a maximum for every offence. In this category, we find sections 105, 108F, 166, 218, 232, 233, 248, 295(4) and other offences. In this second category, under section 162 of the Act, we find offences:
“….shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.”
12. In this category is included offences falling under sections 159, 160, 161, 220 and 142(1) and other offence. In the last category, under sections 168 and 234 of the Act and other sections, we find:
“….shall be punishable with fine which may extend to rupees…. and in the case of a continuing default with a further fine which may extend to rupees ….for every day after the first during which such default continues.”
13. In this category are included offences under sections 166, 167, 234 and other offence. It is, therefore, clear that the Legislature intended certain offences under the Act which were committed once and for all, to be non-continuing offences, while certain other offences, because the default continued were to be treated as a continuing offence, continuing so long as the default continued. Categories 2 and 3 therefore, in spite of the difference in the language,would fall within the category of continuing offences. Offences under sections 159, 160, 161 and 220, made punishable under section 162 of the Act, relate to failure to file certain documents before the Registrar of Companies. Filing of the above documents before the Registrar is required in the interest of the welfare of the shareholders. While furnishing a false statement to the Registrar, either in the annual returns or in the balance-sheet, is made punishable under section 628 of the Act, is punishable merely with a fine of rupees (sic) for the commission of the offence, thereby indicating that the offence is not a continuing offence, failure to furnish annual returns and audited balance-sheet to the Registrar under sections 159 and 220 of the Act and made punishable under section 162 of the Act, entails a fine of rupees…. for every day during which the default continues. thereby indicating the clear distinction between the two kinds of offences with reference to the same documents.
14. It would now be useful to extract the relevant part of section 113 of the Act for a better appreciation of the legal issue involved:-
“(1) Every company shall, within three months after the allotment of any of its shares, debentures or debenture stock and within two months after the application for the registration of the transfer of any such shares, debentures or debenture stock, complete and have ready for delivery the certificates, of the shares, the debentures and the certificates of all debenture stock allotted or transferred, unless the conditions of issue of the shares, debentures or debenture stock otherwise provide.
The expression `transfer’ for the purposes of this sub-section,means a transfer duly stamped and otherwise valid, and does not include any transfer which the company is for any reason entitled to refuse to register and does not register.
(2) If default is made in complying with sub-section (1),the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues.”
15. The object of requiring share certificates to be issued is relevant. The share certificate is a declaration by the company that the person in whose name the certificate is issued is a shareholder in the company and the object of issuing the certificate is to enable the person to use it as proof of the ownership of the shares and also to enable others to act upon that certificate either for sale or transfer of shares. The share certificate is the only documentary evidence of title in the possession of the shareholder. It is with this object that the company is required to issue share certificates and a minimum time of three months after the allotment of any share, and two months after the transfer of any share, is given to the company to get ready to issue the share certificates and a minimum tome of three months after the allotment of any share, and two months after the transfer of any share,is given to the company to get ready to issue the share certificates. Once this period is over, the liability of the company to issue the share certificates commences and continues so long as the share certificate is actually delivered to the shareholder. So long as the share certificate are not delivered to the shareholder, the default continues and the offence also continues. A reading of section 113(2) of the Act also indicates the mind of the Legislature that the penalty of Rs.500 for every day during which the default continues has been provided since the offence is a continuing one. The mere fact that in the penal part of sections 168, 234 and certain other provisions a lump sum fine is indicated for the first day of the commission of the offence, and a lesser sum for every subsequent day during which the default continues, would not indicate that the offence under section 113(2) of the Act is not a continuing offence.
16. The trial court has relied upon a Bench decision of the Calcutta High Court in National Cotton Mills v. Assistant Registrar of Companies, West Bengal [1984] 56 Comp Cas 222, which had overruled a decision of the single judge of the same court in Ajit Kumar Sarkar v. Asst Registrar of Companies [1979] 49 Comp Cas 909 and held that the offences punishable under section 162 of the Companies Act are not continuing offences. It is, however, significant that in Maya Rani Punj v. CIT , the Supreme Court has referred with approval to the decision of the single judge of the Calcutta High Court in Ajit Kumar Sarkar Kalaimagal Corporation Limited v. Assistant Registrar of Companies, (Order in Crl. R. C. Nos. 390 to 394 of 1984, dated July 28,1987). I have disagreed with the view of the Division Bench of the Calcutta High Court in National Cotton Mills v. Asst. Registrar of Companies [1984] 56 Comp. Cas 222 accepting the view of the single judge of the same court in Ajit Kumar Sarkar v. Asst. Registrar of Companies [1979] 49 Comp Cas 909, and held that the failure to file annual returns under section 159 of the Act and balance-sheet under section 220 of the Act punishable under section 162 of the act are continuing offences. The decision of the Division Bench of the Calcutta High Court, referred to above, relied on by the learned Magistrate, therefore, cannot be accepted. It therefore, follows that the offence under section 113 of the Act is a continuing offence.
17. In view of the above findings, neither of the grounds put forward by the learned Magistrate in dismissing the complaint under section 203, Criminal Procedure Code, can be legally sustained. The petition is allowed and the order of dismissal is set aside and the complaint is sent back to the trial court for disposal according to law.