{"id":51098,"date":"1960-09-23T00:00:00","date_gmt":"1960-09-22T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/the-state-of-bombay-vs-bandhan-ram-bhandani-and-others-on-23-september-1960"},"modified":"2018-09-30T00:59:07","modified_gmt":"2018-09-29T19:29:07","slug":"the-state-of-bombay-vs-bandhan-ram-bhandani-and-others-on-23-september-1960","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/the-state-of-bombay-vs-bandhan-ram-bhandani-and-others-on-23-september-1960","title":{"rendered":"The State Of Bombay vs Bandhan Ram Bhandani And Others on 23 September, 1960"},"content":{"rendered":"
Supreme Court of India<\/div>\n
The State Of Bombay vs Bandhan Ram Bhandani And Others on 23 September, 1960<\/div>\n
Equivalent citations: 1961 AIR 186, \t\t 1961 SCR (1) 801<\/div>\n
Author: A Sarkar<\/div>\n
Bench: Sarkar, A.K.<\/div>\n
           PETITIONER:\nTHE STATE OF BOMBAY\n\n\tVs.\n\nRESPONDENT:\nBANDHAN RAM BHANDANI AND OTHERS.\n\nDATE OF JUDGMENT:\n23\/09\/1960\n\nBENCH:\nSARKAR, A.K.\nBENCH:\nSARKAR, A.K.\nIMAM, SYED JAFFER\nGUPTA, K.C. DAS\n\nCITATION:\n 1961 AIR  186\t\t  1961 SCR  (1) 801\n CITATOR INFO :\n E\t    1973 SC2429\t (2,7,8)\n\n\nACT:\n Company--General meeting not called wilfully--Whether it can\n be  a defence--Indian Companies Act, 1913 (VII Of 1913),  as\n amended  by Companies Act, 1936 (22 of 1936), ss.  5,\t32(5)\n 131 and 133(3).\n\n\n\nHEADNOTE:\n The  respondents,  directors of a company,  were  prosecuted\n under\tss. 32(5) and 133(3) of the Companies Act, 1913,  for\n breaches Of ss. 32 and :131 of that Act for having knowingly\n and  wilfully authorised the failure to file the summary  of\n share\tcapital\t for the year 1953 and\tbeing  knowingly  and\n wilfully parties to the failure to lay before the company in\n general  meeting  the\tbalance sheet  and  profit  and\t loss\n account  as  at March 31, 1953.  The  respondents  contended\n that there was no default in complying with the requirements\n of  the section as no general meeting had been held  in  the\n year concerned.\n Held--A  person charged with an offence cannot rely  on  his\n default  as  an  answer  to  the  charge  and\tso,  if\t  the\n respondents  were  responsible for not calling\t the  general\n meeting,  they\t cannot\t be heard to say in  defence  to  the\n charges  brought against them that the general\t meeting  had\n not been called.\n The  company  and  its officers were bound  to\t perform  the\n conditions  precedent, if they could do that, in order\t that\n they might perform their duty.\n 802\n It is no less necessary to call a meeting for performing the\n obligations  imposed  by  s. 32 because  S.  76  creates  an\n obligation  to\t call a meeting and  imposes  an  independent\n penalty  for breach of that obligation.  Liability under  s.\n 32(5)\tor s. 133(3) would be incurred where the officer  has\n wrongfully assisted in the meeting not being held though  he\n might\talso be liable at the same time to the penalty\tunder\n s. 76.\n Sub-section (5) Of S. 32 by imposing a daily fine during the\n continuance  of  the  default does  not  indicate  that  the\n default is not committed till a meeting has been held.\t  The\n default occurs after the expiry of twenty-one days from  the\n day when the meeting should have been held.\n Imperator  v.\tThe Pioneer Clay and Industrial\t Works\tLtd.,\n I.L.R. 1948 Bom. 86, Queen v. Newton, (1879) 48 Law J.\t Rep.\n M.C.  77  and Dorte v. South  African\tSuper-Aeration\tLtd.,\n (1904) 20 T.L.R. 425, distinguished.\n Gibson\t v.  Bayton,  (1875) L.R. 1o  Q.B.  329,  Edmonds  v.\n Foster,  (1875) 45 Law J. Rep. M.C. 41 and park  v.  Lawton,\n [1911] 1 K.B. 588, approved.\n Doyle\tv.  South  African Super--Acration  Ltd.,  (1904)  2o\n T.L.R. 425, not applicable.\n\n\n\nJUDGMENT:\n<\/pre>\n
 CRIMINAL APPELLATE JURISDICTION: Criminal Appeals Nos. 93  &
\n 94\/1958.\n<\/p>\n
 Appeals  by special leave from the judgment and order\tdated
\n April\t9, 1956, of the former Bombay High Court in  Criminal
\n Appeals  Nos.\t419  and  420 of 1956,\tarising\t out  of  the
\n judgment  and\torder dated October 15, 1955,  of  the\tChief
\n Presidency Magistrate, Bombay, in Cases Nos. 370\/S and 371\/S
\n of 1955.\n<\/p>\n
 C. K. Daphtary, Solicitor-General of India, N. S. Bindra and
\n R. H. Dhebar, for the appellant (in both the appeals).
\n S. P. Varma, for respondents Nos. 1, 2 and 3 (In both\tthe
\n appeals).\n<\/p>\n
 A. N. Goyal, for respondent No. 4 (In both the appeals).
\n N.  P. Nathwani, S. N. Andley, J. B.  Dadachanji,  Rameshwar
\n Nath  and P. L. Vohra, for respondents Nos. 5 to 7 (In\t both
\n the appeals).\n<\/p>\n
 1960.\t September  23.\t  The  Judgment\t of  the  Court\t  was
\n delivered by
\n 803<\/span>
\n SARKAR\t J.-The\t respondents were Directors of\tHirjee\tMills
\n Ltd.\tThey  were  prosecuted before  the  Chief  Presidency
\n Magistrate,  Bombay, for two offences\tunder  the  Companies
\n Act,  1913,  as  amended by Act XXII  of  1936.   The\tfirst
\n offence was that they knowingly and wilfully authorised  the
\n failure  to file the summary of share capital for  the\t year
\n 1953 and thereby became punishable under sub-s. (5) of s. 32
\n of  the Act, for a default in carrying out the\t requirements
\n of  that  section.  The second offence was  that  they\t were
\n knowingly and wilfully parties to the failure to lay  before
\n the Company in general meeting the balance sheet and  profit
\n and  loss  account as at March 31, 1953 and  thereby  became
\n punishable  under  s.\t133(3) of the Act for  a  default  in
\n complying  with  the requirements of s. 131.\tThere  was  a
\n separate trial in respect of each offence.
\n The learned Magistrate found that no general meeting of  the
\n company  had  been held in the\t year  concerned.   Following
\n Imperator v. The Pioneer Clay and Industrial Works Ltd.  (1)
\n he  acquitted\tthe respondents, being of the  view  that  no
\n offence  under\t either section could be committed  till  the
\n general  meeting had been held.  The learned Magistrate  did
\n not  go into the merits of the cases on the facts.   Appeals
\n by the appellant to the High Court at Bombay from the orders
\n of the learned Magistrate were summarily dismissed.  It  has
\n preferred the present appeals from the decisions of the High
\n Court\tat Bombay with special leave granted by\t this  Court.
\n The  appeals have been heard together and are both  disposed
\n of by this judgment.\n<\/p>\n
 It  appears  that  respondent\tNo. 7,\tN.  K.\tFirodia,  was
\n discharged by the learned Magistrate because it was conceded
\n at  the trial that he was not a director of the  Company  at
\n any  material\ttime.  He has been made a respondent  to  the
\n present  appeals clearly through some misapprehension.\t  The
\n appellant, the State of Bombay, does not and cannot  proceed
\n against  him.\tThe name of respondent Firodia should  there-
\n fore be struck out from the records of this appeal.\n<\/p>\n
 (i) I.L.R. [1948] BOM. 86.\n<\/p>\n
 804<\/span><\/p>\n
 Respondent No. 5, Fateh Chand Jhunjhunwala, died while\t this
\n appeal\t was pending in this Court.  The appeal is  therefore
\n concerned with the remaining five respondents only.
\n Sub-section (1) of s. 32 requires a company once at least in
\n every year to make a list of its shareholders as on the date
\n of  the first or only ordinary general meeting in the\tyear.
\n Sub-section  (2)  requires  that the list  shall  contain  a
\n summary  specifying  various particulars  mentioned  in  it.
\n Sub-section  (3) states that the list and summary  shall  be
\n completed within twenty. one days after the day of the first
\n or only ordinary general meeting in the year and the company
\n shall forthwith file a copy with the registrar together with
\n a  certificate\t from  a  director  or\tthe  manager  or  the
\n secretary of the company that the list and summary state the
\n facts\tas they stood on the day aforesaid.  Sub-section  (5)
\n contains  the\tpenal provision, that ” If  a  company\tmakes
\n default in complying with the requirements of this  section,
\n it shall be liable to a fine not exceeding fifty rupees  for
\n every\tday  during which the default  continues,  and\tevery
\n officer of the company who knowingly and wilfully authorises
\n or permits the default shall be liable to the like penalty”.
\n It  is\t said on behalf of the respondents that there  is  no
\n default  in complying with the requirements of\t the  section
\n until a general meeting is held.  That, it is said,  follows
\n from  the language of the section, for it  requires  certain
\n things\t as  at the date of the meeting to be stated  in  the
\n list and summary and also requires these to be filed  within
\n a  certain time of the meeting.  So, it is said,  that,  the
\n section  requires certain things to be done only  after  the
\n meeting  has been held and no question of  performing\tthose
\n things arises till the meeting has been held.
\n A   contrary  view  has  been\ttaken  in  England   on\t  the
\n corresponding\tprovisions of the English Companies  Acts  of
\n 1862 and 1908: see Gibson v. Barton(1), Edmonds v. Foster(2)
\n and  Park v. Lawton (3).  It was said in these cases that  a
\n person charged with an
\n (1) (1875) L.R. 1o Q.B. 329.\n<\/p>\n
 (2) (1875) 45 Law J. Rep. M.C.\t 41.\n<\/p>\n
 (3) [1911] 1 K.B. 588.\n<\/p>\n
 805<\/span><\/p>\n
 offence  could not rely on his own default as an  answer  to
\n the  charge, and so, if the person charged  was  responsible
\n for  not calling the general meeting, he cannot be heard  to
\n say  in defence to the charge that the general\t meeting  had
\n not been called.  It was also said that the company and  its
\n officers  were bound, to perform the condition precedent  if
\n they  could do that, in order that they might perform\ttheir
\n duty.\tThis seems to us to be the correct view to take.   If
\n the  person  charged  with  the failure  to  carry  out  the
\n requirements  of the section could have called the  meeting,
\n he cannot defeat the provisions of the section simply by not
\n calling the meeting wilfully.\n<\/p>\n
 It is true that under s. 76 of the Act a general meeting  of
\n a  company  has to be held once at least in  every  calendar
\n year  and  if\ta  default is made,  the  company  and\tevery
\n director or the manager of the company who is knowingly  and
\n wilfully  a party to the default shall be liable to  a\t fine
\n not exceeding five hundred rupees.  That however is, in  our
\n opinion,  no reason for saying that a person charged with  a
\n failure  to file the list and summary as required by  s.  32
\n where a meeting had not been held, could only be  prosecuted
\n under\ts.  76 and not under s. 32.  Section  76  imposes  an
\n obligation  to\t hold a meeting and attaches a penalty\tto  a
\n failure to perform that obligation.  In the case of s. 32 it
\n is  necessary that the meeting should be held in order\t that
\n the requirements of that section may be carried out.  It  is
\n no  less  necessary  to call a meeting\t for  performing  the
\n obligations  imposed by s. 32, because under s. 76 there  is
\n an obligation to call a meeting the breach of which  entails
\n an   independent  penalty.   The  two\tsections  deal\t with
\n different  matters  and s. 76 does not\t interfere  with  the
\n operation  of\ts. 32.\tThe effect of s. 32 must  be  derived
\n from  its  terms: the terms cannot  have  different  effects
\n depending  on\twhether there is a provision like  s.  76  in
\n another part of the Act or not.  Without a provision like s.
\n 76  a\tdelinquent  officer of the company  may\t make  s.  32
\n infructuous,  and therefore, as already stated, it  must  be
\n held that liability
\n       103<\/span>
\n 806<\/span>
\n under s. 32 would be incurred where the officer has  wrongly
\n assisted  in the meeting not being held.  The result  cannot
\n be different because of the presence of a provision like  s.\n<\/p>\n
 76.
\n Nor do we think that sub-sec. 5 of s. 32 by imposing a daily
\n fine  during the continuance of the default  indicates\t that
\n the default is not committed till the meeting has been held.
\n In order that the default may continue it has no doubt first
\n to  occur.   In our view, it occurs after the expiry  of  21
\n days  from  the day when the meeting should have  been\t held
\n within the year.\n<\/p>\n
 The respondents referred to the case of Queen v. Newton  (1)
\n where it having been proved that the general meeting was not
\n held,\tthe persons charged with the default were  acquitted.
\n That case however is clearly distinguishable, ” because  the
\n decision  proceeded on the ground that, the  summons  having
\n alleged in terms that the default was made after the general
\n meeting had been held, it became essential to prove when the
\n meeting was held as a matter of fact, and in the absence  of
\n proof the court held that the summons was rightly  dismissed
\n “. In this case Cockburn, C. J., expressed some doubts about
\n the  correctness of the decision in Edmonds v.\t Foster\t (2).
\n In Park v. Lawton (3) however, Lord Alverstone said that  he
\n was  unable  to share those doubts, and with this  view,  we
\n agree.\t We may add that such doubts have not been shared  by
\n anyone upto now.\n<\/p>\n
 Another  case\tto which we were referred on  behalf  of  the
\n respondents  was Dorte v. South African Super-Aeration\t Ltd.
\n (4).\tThere a company was convicted for a failure  to\t file
\n the list and summary in a case where the general meeting had
\n not  been  held and fined Id and Id per day upto  a  certain
\n day.\tSubsequently a further summons against it  was\ttaken
\n out  in  respect of the same default for  further  penalties
\n from  that day to another later day.  It was held  that  the
\n word  ” default ” implied a wilful and continued neglect  to
\n do an act required and that the company could not
\n (1)  (1879) 48 Law J. Rep. M. C. 77.\n<\/p>\n
 (2)  (1875) 45 Law J. Rep. M. C. 41.\n<\/p>\n
 (3)  [1911] 1 K.B. 589.\n<\/p>\n
 (4)  (1004) 2o T.L.R. 425.\n<\/p>\n
 807<\/span><\/p>\n
 be  liable to a continuing daily fine for an omission\twhich
\n it  was impossible to remedy.\tThe report does not  set  out
\n the  arguments nor the judgment and it is not clear on\t what
\n grounds  the decision was given.  It appears, however,\t that
\n Lord Alverstone was one of the Judges who decided that came.
\n In Park v. Lawton(1), Lord Alverstone himself observed\t with
\n regard\t to  the  Dorte’s case that there,  ”  there  was  no
\n question  of the defendant being also in default as  to  the
\n general  meeting,  and that decision, therefore, in  no  way
\n conflicts  with the earlier authorities.” We do  not  think,
\n therefore, that Dorte’s case assists the respondents at all.
\n It  is authority only for the proposition that a  continuing
\n daily\tfine will not be exacted where, owing to  no  meeting
\n having\t been held, it is impossible to remedy\tthe  default:
\n see Buckley’s Company Law (13th Ed.), p. 311.
\n Turning  now  to  s.  131, we\tfind  that  it\trequires  the
\n directors  of\ta company, once at least  in  every  calendar
\n year, to lay before the company in general meeting a balance
\n sheet\tand  profit and loss account of\t the  company.\t Sub-
\n section (3) of s. 133 makes the company and every officer of
\n it  who is knowingly and wilfully a party to the default  in
\n carrying out the provisions Of s. 131, punishable with\t fine
\n which may extend to five hundred rupees.  As in the case  of
\n s.  32 and for the same reasons, here also it is no  defence
\n to the charge for breach of s. 131 to say that a meeting was
\n not called.\n<\/p>\n
 As  regards Imperator v. Pioneer Clay and  Industrial\tWorks
\n Ltd.\t(2),  OD  which\t the  courts  below  held  that\t  the
\n respondents must be acquitted, we find that it turned on  s.
\n 134  of  the  Companies Act, 1913.   The  language  of\t that
\n section  is to a certain extent different from the  language
\n used  in ss. 32 and 131.  Section 134(1) says, ”  After  the
\n balance sheet and profit and loss  account………………
\n have  been laid before the company at the  general  meeting,
\n three\tcopies\tthereof………  shall\t be  filed  with  the
\n Registrar.”  Sub-section  (4)\tof this\t section  provides  a
\n penalty  for  breach of s. 134, in terms  similar  to\tthose
\n contained  in sub-see. (5) of s. 32.  If the language of  s.
\n 134(1)
\n (1) [1911] 1 K.B. 588.\n<\/p>\n
 (2) I.L R. [1948] Bom. 86.\n<\/p>\n
 808<\/span><\/p>\n
 makes\tany difference as to the principle to be  applied  in
\n ascertaining  whether a breach of it has occurred or  not-as
\n to  which we say nothing in this case-then that case can  be
\n of  no\t assistance to the respondents.\t If however  no\t such
\n difference  can  be  made, then we think  that\t it  was  not
\n correctly  decided.   We  observe that Chagla,\t C.  J.,  who
\n delivered  the judgment of the Court in that case,  did  not
\n question  the correctness of the decision in Park v.  Lawton
\n (1)  which  be was asked to follow.  All that he  said\t with
\n regard\t to  that case was that the scheme and terms  of  the
\n section on which it turned were different from s. 134 of the
\n Companies  Act, 1913.\tThat may or may not be so.  There  is
\n however no difference between s. 26 of the English Companies
\n Act,\t1908,  on  which  Parker’s  case  turned  and\twhich
\n apparently  through some mistake Chagla, C.J., cited s.  36,
\n and  s. 32 of the Indian Companies Act of 1913, except\t that
\n the  English  section\trequired the  summary  to  include  a
\n statement in the form of a balance sheet containing  certain
\n particulars mentioned, whereas our section does Dot  require
\n that.\tSection 131 of our Act contains some provision\tabout
\n the laying of the balance sheet before the general  meeting.
\n This  provision was inserted in the Act by the amending  Act
\n of  1936.   The fact, that one of the\trequirements  of  the
\n English section 26 is not present in s. 32 of our Act cannot
\n create any material difference between s. 32 of our Act  and
\n s.  26 of the English Act.  If the principle that  a  person
\n charged with an offence cannot rely on his own default as an
\n answer\t to  the charge is correct, as we think\t it  is,  and
\n which\twe do not find Chagla, C. J., saying it is not,\t then
\n that principle would clearly apply when a person is  charged
\n with a breach of s. 32 of our Act.\n<\/p>\n
 We  think therefore that the appeal should be\tallowed.  The
\n case  will now go back to the learned Presidency  Magistrate
\n and be tried on the merits according to the law as laid down
\n in this judgment.\n<\/p>\n
 A.p.peal allowed.  Case remanded.\n<\/p>\n
 (1) [1911] 1 K.B. 588.\n<\/p>\n
 809<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India The State Of Bombay vs Bandhan Ram Bhandani And Others on 23 September, 1960 Equivalent citations: 1961 AIR 186, 1961 SCR (1) 801 Author: A Sarkar Bench: Sarkar, A.K. PETITIONER: THE STATE OF BOMBAY Vs. RESPONDENT: BANDHAN RAM BHANDANI AND OTHERS. DATE OF JUDGMENT: 23\/09\/1960 BENCH: SARKAR, A.K. BENCH: SARKAR, A.K. 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