1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR 1. S.B. CRIMINAL APPEAL NO.228/1986 Registrar of Companies, Rajasthan vs. M/s. Steamco Enterprises Pvt. Ltd. & Ors. 2. S.B. CRIMINAL APPEAL NO.229/1986 Registrar of Companies, Rajasthan vs. M/s. Steamco Enterprises Pvt. Ltd. & Ors. 3. S.B. CRIMINAL APPEAL NO.230/1986 Registrar of Companies, Rajasthan vs. M/s. Steamco Enterprises Pvt. Ltd. & Ors. Date of order : 18/7/2008. HON'BLE MR.JUSTICE MOHAMMAD RAFIQ Shri Shyam Kant Sharma & Shri Tapasvi Vashistha for Shri K.K. Sharma, Assistant Solicitor General for Union of India. None present for the respondents. ****** REPORTABLE These three appeals by leave of the Court were filed way back in the year 1986. Under challenge in the appeals are the orders by which the Chief Judicial Magistrate (Economic Offences), Rajasthan acquitted the accused respondents for offences u/s. 159 read with Section 162 of the Companies Act. Shri Shyam Kant Sharma, learned counsel for the appellant has argued that the 2 acquittal of the respondent by the learned trial court was contrary to the provisions of Section 151 read with Section 162 of the Companies Act, 1956. The learned trial court grossly erred in holding that the offence u/s. 159 read with Section 162 of the Companies Act, 1956 is not a continuing offence. Learned counsel in support of his arguments relied on the judgement of Supreme Court in Bhagirath Kanoria & Ors. vs. State of M.P.-AIR 1984 SC 1688. He argued that in view of the law laid down by the Supreme Court in Bhagirath Kahoria, supra, the offence for not filing of the return of the Annual General Meeting with the Registrar of Companies by the respondents should be treated as a continuing offence and therefore the bar of limitation contained in Section 468 Code of Criminal Procedure for filing of the complaint within a period of six months therefrom, would not be attracted. Learned counsel argued that the trial court erred in law in relying on the judgement of division bench of Calcutta High Court in National Cotton Mills & Ors. vs. Assistant Registrar of Companies, West 3 Bengal & Anr.-(1984) 56 Company Cases 222 (Cal.). It was argued that leave was granted on 25.11.1985 against the aforesaid judgement of the division bench by the Supreme Court and appeal was filed, but the learned counsel for the appellant is not in a position to inform the outcome of such appeal. I have examined the matter on merits and scanned the records. The judgement of Supreme Court in Bhagirath Kanoria, supra, on which reliance has been placed, is one relating to the offence of non payment of contribution by the employer to the Provident Fund. Section 17 of the Employees' Provident Fund and Family Pension Fund Act of 1952 provides that the company is required to pay employers' contribution within 15 days of the close of each month. Question that arose before the Supreme Court was whether non payment of employer's contribution to the Provident Fund was a continuing offence so as to exclude the application of chapter XXXVI of the Code of Criminal Procedure, especially Section 468 thereof, regarding 4 the limitation for cognizance of certain offences. It was held that 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. The failure to pay employer's contribution before the due date, considering the object and purpose of that provision, which is to ensure welfare of the workers, it cannot be said that the offence is not of continuing nature. The Supreme Court holding so further observed that where a controversy is raised as to whether an offence is continuing or non continuing in nature, the object and purpose of the Act are required to be seen to determine the question. That view was taken by the Supreme Court in the context of non payment of the contribution by the employer towards provident of an employee. This judgement was distinguished by the learned trial court and in my view rightly because the object and purpose of the Act in so far 5 as the provisions contained in Companies Act, 1956 are concerned are entirely different than the one for deposit of the contribution by the employer towards Provident Fund of the employee. Calcutta High Court in National Cotton Mills, supra, however considered the very same provisions of Section 159 and 162 of the Companies Act and rejected the argument that since the penalty which is provided for by Section 162 is continuing in nature, therefore, the offence under Section 159 for which this penalty is provided under Section 162, should be also taken as continuing offence. The argument in substance was that since Section 162(1) provides that if a company fails to comply with any of the provisions contained in section 159, 160 or 161, 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. The argument was sought to be supported by the earlier judgement of the Calcutta High Court in Ajeet Kumar Sarkar vs. Assistant Registrar of Companies-(1979) 6 49 Comp Cas 909 (Cal). The division bench of Calcutta High Court held that such a prescription as provided for by Section 162 was made with the object of enforcing strict compliance with the requirement of s.159 under the threat of enhanced penalty and getting relief from such penalty on enhancing scale by early submission of returns even after the default. That does not render the initial default a continuous one. It was held that it cannot be said that the offence is repeated or committed from day to day after the initial default. It is only where the offence is committed from day to day or repeated from day to day that it can be called a continuing offence. Thus the division bench reversed the judgment of Single Bench of its own Court in Ajeet Kumar Sarkar. The question whether failure to furnish the annual return in the prescribed form within the time prescribed directly fell for consideration of the Supreme Court in State of Bihar vs. Deokaran Nenshi-AIR 1973 SC 908. That was a case where the owners of a stone quarry failed to furnish to the Chief 7 Inspector the annual returns required to be filed as per the provisions of Regulation-3 of the India Metalliferous Mines Regulations, 1926 on or before 21st of January in each year. Failure to furnish the annual return within the prescribed time attracted offence punishable under Section 66 of the Mines Act, 1952. Section 79 of the Mines Act which provided for limitation of six months gave rise to a question whether a complaint filed thereafter could be valid treating the offence as continuing one. This question was raised in the context and on the basis of explanation to Section 79 which provides that for the purpose of the aforesaid section, in the case of continuing offence, the period of limitation shall be computed with reference to every point of time during which the offence continues and where for the performance of any act time has been extended under this Act, the period of limitation shall be computed from the expiry of the extended period. It was in that context that the Supreme Court in para 5 of the judgment observed as under:- 8 “5. 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 a 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. The distinction between the two kinds of offences is between an act or omission which constitutes an offence once and for all and an act or omission which continues and therefore, constitutes a fresh offence every time or occasion on which it continues. In the case of a continuing offence, there is thus the ingredient of continuance of the offence which is absent in the case of an offence which takes place when an act or omission in committed once and for all.” Question whether non filing of the return required by Section-14 of the Wealth Tax Act, 1957 attracting penalty under Section 18 thereto, would be a continuing offence was again considered by Supreme Court in Commissioner of Wealth-tax, Amritsar vs. Suresh Seth-AIR 1981 SC 1106. The Supreme Court in that case observed that Section 18 of the said Act does not require the assessee to file a return during every month after the limitation to file such 9 return is over. Non-performance of any of the acts gives rise to a single default and to a single penalty, the measure of which, however, is geared up to the time lag between the last date on which the return has to be filed and the date on which it is filed. The observations of the Supreme Court in para 19 of the judgement are worth quoting:- “19. Section 18 of the Act with which we are concerned in this case, however, does not require the assessee to file a return during every month after the last day to file it is over. Non-performance of any of the acts mentioned in Section 18(1)(a) of the Act gives rise to a single default and to a single penalty, the measure of which, however, is geared up to the time lag between the last date on which the return has to be filed and the date on which it is filed. The default, if any committed is committed on the last date allowed to file the return. The default cannot be one committed every month thereafter. The words `for every month during which the default continued' indicate only the multiplier to be adopted in determining the quantum of penalty and do not have the effect of making the default in question a continuing one. Nor do they make the amended provisions modifying the penalty applicable to earlier defaults in the absence of necessary provisions in the amending Acts. The principle underlying Section 6 of the General Clauses Act is clearly applicable to these cases. It may be stated here 10 that the majority of the High Courts in India have also taken the same view.” It would therefore be evident from the above that the latter two Supreme Court judgements namely Deokaran Nenshi,supra and Suresh Seth, supra are directly on the point dealing with the offence arising out of the failure or omission to file the returns within the prescribed time. In fact the Supreme Court in last few lines of para 19 of the report has approvingly mentioned that similar view has been taken by some of the High Courts. Reference in this connection may be made to the following reported cases wherein it has been held by different high courts that offence under Section 159 read with Section 162 of the Companies Act is not continuing one. (i) Mehta (K.K.) vs. Registrar of Companies (1991) 71 Comp Cas 669 (Delhi); (ii)Rakesh Kumar vs. Registrar of Companies (1995) 82 Comp Cas 681 (P&H); (iii)Shivalik Ice Factory and Cold Storage (Pvt.) Ltd. vs. ROC, (1988) 64 Com Cases 113, 115 (P&H); (iv)Kalaimagal Corporation Ltd. vs. Asst. ROC, 1987 LW (Cri) 501, 507 (Mad); (v) Chandra Spinning & Weaving Mills v. ROC, (1990) 69 Com Cases 117, 137 (Kar); (vi)Eastern Paper Mills Ltd. vs. State, (1988) 1 Cal LR (HC) 179 (Cal-DB); (vii)Nripendra Kumar Ghosh v. ROC, (W.B.), ` 11 (1985) 58 Com Cases 672 (Cal); (viii)Central Manbhum Coal Co. (P.) Ltd. vs. Assistant ROC, (W.B.), (1986) 59 Com Cases 176 (Cal); (ix)Praveen Jha vs. State of U.P. (2000) 3 Comp LJ 426: (2001) 30 SCL 387 : (2001) 106 Com Cases 554 (All). If a person does an act prohibited by law and if the law provides for a penalty for doing such an Act, he may be guilty of committing an act of commission amounting to offence in the eye of law. When however a person omits to do an act, which the law required him to do and also attaches a penalty for its such omission, he is guilty of committing not an act of commission but an act of omission which equally is an offence in the eye of law. A distinction has therefore to be drawn between the cases where the alleged offence was founded on an act of commission and where it is based on act of omission. While in the case of former, the offence is immediate and complete immediately when the act of commission is committed but in latter cases it becomes an offence on failure of the person concerned to perform the act required by law on expiry of the time within which it 12 is to be performed. In fact, the Supreme Court in Suresh Seth drew a very fine distinction between the act of commission which amounts to an offence in the eye of law and act of omission amounting to offence in the eye of law. In para 11 of the report, the Supreme Court dealing with this aspect of the matter observed as under:- “xxxxxxxx.....the contention is that the wrong or the default in question has been altered into a continuing wrong or default giving rise to a liability de die in diem, that is, from day to day. The distinctive nature of a continuing wrong is that the law that is violated makes the wrong doer continuously liable for penalty. A wrong or default which is complete but whose effect may continue to be felt even after its completion is, however, not a continuing wrong or default. It is reasonable to take the view that the court should not be eager to hold that an act or omission is a continuing wrong or default unless there are words in the statute concerned which make out that such was the intention of the legislature. In the instant case whenever the question of levying penalty arises what has to be first considered is whether the assessee has failed without reasonable cause to file the return as required by law and if it is held that he has failed to do so then penalty has to be levied in accordance with the measure provided in the Act. When the default is the filing of a delayed return the penalty may be 13 correlated to the time lag between the last day for filing it without penalty and the day on which it is filed and the quantum of tax or wealth involved in the case for purposes of determining the quantum of penalty but the default however is only one which takes place on the expiry of the last day for filing the return without penalty and not a continuing one. The default in question does not, however, give rise to a fresh cause of action every day.” In view of the above discussion, the offence of non filing of the return by the respondents within the time prescribed cannot be held to be a continuing offence and therefore, the view taken by the learned trial court the provisions with regard to the limitation contained in Section 468 of the Code of Criminal Procedure would be attracted and further therefore the complaint being barred by limitation, the accused were liable to be acquitted, cannot be faulted. I therefore do not find any merit in these appeals, which are accordingly dismissed. (MOHAMMAD RAFIQ), J. RS/