CR.RA/1242/1983 1/33 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD CRIMINAL REVISION APPLICATION No. 1242 of 1983 With CRIMINAL REVISION APPLICATION No. 17 of 1984 For Approval and Signature: HONOURABLE MR.JUSTICE C.K.BUCH ========================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================= THE REGISTRAR OF COMPANIES & 1 - Applicant(s) Versus M/S SHASHI THEATRES PVT.LTD. & 4 - Respondent(s) ========================================================= Appearance : MR DC SEJPAL, LD.CENTRAL GOVT. COUNSEL for Applicant(s) : 1 in both the Revision Applications. MR PD BHATE, LD.APP for State in both the Revision Applications. MS HETVI SANCHETI WITH MR.SV RAJU for Respondent(s) : 1, 3 in both the Revision Applications. DELETED for Respondent(s) : 2,4 – 5. ========================================================= CORAM : HONOURABLE MR.JUSTICE C.K.BUCH Date : 23/10/2007 COMMON CAV JUDGMENT 1. By way of both these Revision Applications, the petitioner has challenged the judgment and order dated 22nd September 1983 passed by the CR.RA/1242/1983 2/33 JUDGMENT learned Additional City Sessions Judge, Ahmedabad in Criminal Revision Application No.230 of 1983, reversing the order dated 18th July 1983 passed in Criminal Case No.1743 of 1982 by the learned Chief Metropolitan Magistrate, Ahmedabad, rejecting the application preferred by the accused citing the provisions of Section 468 of the Code of Criminal Procedure, 1973 (hereinafter referred to as 'the Code'). 2. Criminal Revision Application No.1242 of 1983 has been preferred by (i) Registrar of Companies and (ii) State of Gujarat, and the subsequent Revision Application i.e. Criminal Revision Application No.17 of 1984, has been preferred only by the Registrar of Companies and the State of Gujarat is joined as one of the respondents i.e. respondent no.6 in the said Revision Application. The original prosecution was against the respondent-accused persons whose names are shown as respondent nos.1 to 5 in both the Revision Applications. But ultimately, the said application came to be decided by the learned Magistrate on 18th CR.RA/1242/1983 3/33 JUDGMENT July 1983. 3. The respondent nos.1 to 5 challenged the said order dated 18th July 1983 by way of filing Criminal Revision Application No.230 of 1983 in the Court of learned City Sessions Judge at Ahmedabad. The order passed in the said Revision Application No.230 of 1983 is the order under challenge in these Revision Applications. Both these Revision Applications remained pending before this Court for several years and the record shows that respondent nos.2,4 and 5 have expired. Only the respondent no.1-orig.accused no.1 being a Private Limited Company and the respondent no.3-orig. accused no.3 being one of the directors, are facing both these proceedings. It appears that to avoid technicality, the second Revision Application i.e. Criminal Revision Application No.17 of 1984, has been preferred joining the State of Gujarat as party respondent no.6, but in sum and substance, the challenge in both the Revision Applications is the same. 4. The case of the prosecution is that one CR.RA/1242/1983 4/33 JUDGMENT complaint was filed against M/s.Shashi Theatres Pvt. Ltd. and its Directors in the Court of learned Chief Metropolitan Magistrate at Ahmedabad, for violation of Rule 10 of the Companies (Acceptance of Deposit) Rules, 1975 (hereinafter referred to as 'the Rules'). It is the case of the prosecution that the respondent no.1-Company and its Directors failed to submit their Return on or before 30th June 1981 and thereby, they have committed the offence punishable under Rule 11 of the said Rules. 5. The respondent-accused persons were called upon to face the charge but they preferred application contending that they cannot be prosecuted by virtue of Section 468 of the Code and the cognizance of the complaint was barred under the said provision. After hearing the learned Public Prosecutor and the advocate appearing for the respondent-accused persons, the learned Chief Metropolitan Magistrate turned down the contention of the respondents- accused and observed that the offence alleged against the respondents-accused was a CR.RA/1242/1983 5/33 JUDGMENT continuing offence and so even after 30th June 1981, the responsibility of the respondents- accused was to file Return under relevant Rules and this is a continuous obligation and, therefore, the offence also continued everyday even after that date of 30th June 1981. The learned Chief Metropolitan Magistrate held that the respondents-accused could not invoke the bar of cognizance under Section 468 of the Code and the said order was assailed by way of Criminal Revision Application No.230 of 1983 by the respondents-accused. 6. Shri D.C. Sejpal, learned Central Government Counsel appearing for the petitioner, has submitted that the learned Additional City Sessions Judge has grossly erred in saying that the complaint was barred by limitation being offence punishable with fine only and Section 468 could have been invoked by the petitioner. It is further submitted that the offence committed by the respondents-accused was a continuous offence and, therefore, the question of limitation contemplated in the Code by way of provision of Section 468 had no CR.RA/1242/1983 6/33 JUDGMENT room to play. He has taken me through the relevant Rules 10 and 11 of the Rules. It is submitted that the ratio of the decision in the case of State of Bihar v. Deokaran Nenshi and another, reported in 1972(2) SCC 890, would apply considering the scheme of Rules 10 and 11 of the Rules. It is submitted that the Rule 11 of the Rules ought to have been read by the learned Revisional Court in its true perspective. The Rule 11 which provides for penalty takes care where the contravention is continuing one and the penalty is also provided for such continuing offence i.e. a fine of Rs.50/- per day after the first during which the contravention continues. The learned Chief Metropolitan Magistrate was right in saying that the said complaint can proceed further and the learned Magistrate is entitled to take cognizance of the offence committed. The Apex Court in the case of Deokaran (supra) was dealing with a case of non-filing of the Return under the Income Tax Act and it is observed as under : “5. A continuing offence is one CR.RA/1242/1983 7/33 JUDGMENT 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 is committed once and for all." CR.RA/1242/1983 8/33 JUDGMENT 7. The other say of Shri D.C. Sejpal, learned counsel appearing for the petitioner, is that this Court also may consider the ratio of the decision in the case of Bhagirath Kanoria and others v. State of M.P. and Bahadur Singh v. Provident Fund Inspector and others, reported in 1984 (4) SCC 222; wherein the Apex Court has observed about the same that it would fall in the category of continuing offence. The Apex Court was dealing with a case where the prosecution was instituted under Employees' Provident Fund and Miscellaneous Provisions Act, 1952, where the employer had failed in paying the contribution to the Provident Fund within 15 days. The Apex Court has observed that the continuing offence is one which continues and a non-continuing offence is one which is committed once and for all. 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 CR.RA/1242/1983 9/33 JUDGMENT an offence. Referring to the scheme of Sections 472 and 473 of the Code, it is also observed that the delay in filing complaint against offence relating to non-compliance with the provisions of a welfare legislation is condonable 'in the interest of justice'. So at least according to Shri D.C. Sejpal, the prosecution ought not to have been turned down on the technicality of limitation and, therefore, the Revision Application should be allowed and the respondents-accused may be directed to face the proceedings initiated against them. Of course, three of them have died, so the present Revision Application as well as original criminal proceedings would stand abated qua them, but at least the respondent no.1-Company and the respondent no.3- surviving Director, may be directed to face the prosecution. 8. There is strong resistance from the otherside. Ms.Hetvi Sancheti, appearing on behalf of Shri S.V. Raju, learned counsel appearing for the respondents-accused, has submitted that learned Additional City Sessions Judge, CR.RA/1242/1983 10/33 JUDGMENT Ahmedabad, has taken care of the entire scheme of Rules 10 and 11 of the Rules referred to by the learned Chief Metropolitan Magistrate. Undisputedly, the offence punishable under Rule 11 is only with fine extending upto Rs.500/- and, therefore, under Section 468 of the Code, the complaint for the offence punishable under Rule 11 of the Rules arising from the contravention of Rule 10 of the Rules should have been filed within six months from the date of the offence i.e. from 30th June 1981 and the same has been filed in May 1982. So the learned Chief Metropolitan Magistrate could not take cognizance of the offence. 9. To appreciate the rival contentions placed before the Court and mainly the judgment cited by Ms.Hetvi Sancheti, learned counsel appearing for the respondents-accused, it would be beneficial to reproduce the relevant Rules 10 and 11 of the Rules, which are as under : “Rule 10 : Return of deposits to be filed with the Registrar :(1) Every company to which these rules apply, CR.RA/1242/1983 11/33 JUDGMENT shall on or before the 30th day of June, or every year, file with the Registrar, a return in the form annexed to these rules and furnishing the information contained therein as on the 31st day of March of that year. Rule 11 : Penalty : If a company or any other person contravenes any provision of these rules for which no punishment is provided in the Act, the company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to five hundred rupees and where the contravention is continuing one, with a further fine which may extend to fifty rupees for every day after the first during which the contravention continues.” 10. The plain reading of Section 468 of the Code provides that except as otherwise provided elsewhere in the Code, no Court shall take cognizance of the category specified in sub- section (2) after the expiry of period of CR.RA/1242/1983 12/33 JUDGMENT limitation. Sub-section (2) of Section 468 of the Code speaks about the period of limitation and the sub-clause (a) prescribes six months as the period of limitation if the offence is punishable with fine only. So the provisions of Section 468 of the Code would apply and the complaint could have been filed within a period of six months from the date of the offence. It is not possible for this Court to say that the provisions of Section 468 will have no application. A bare reading of the aforesaid Rule 10 of the Rules shows that if the Return in the Form annexed to the Rules is not filed with the Registrar of Companies before 30th June of every year, the offence for contravention of Rule 10 would be completed and the prosecution could be instituted for such offence. So on completion of each year, separate prosecution can be filed. In the present case, the prosecution could have been lodged on 01st July 1981 i.e. on the next day of 30th June 1981. In paragraph no.5 of the judgment under challenge, the learned Additional City Sessions Judge, Ahmedabad, has discussed the relevant legal position and has CR.RA/1242/1983 13/33 JUDGMENT logically reached to a conclusion that non- filing of the Return under the scheme of a particular Statute like Taxation laws, etc. would not apply to each case where the person under obligation fails in filing the Return. I would like to quote the relevant paragraph no.5 of the judgment which also refers to the provision of Section 58(B)(2) of the Reserve Bank of India Act, 1934, which is as under : “5. As I read Rule 10 of the Rules, the offence for the contravention of that Rule does not seem to be a continuing offence. Mr.A.P. Desai, the learned Addl. Public Prosecutor, invited my attention to the decision in the case of UNITED SAVINGS AND FINANCE CO. PVT. LTD. & ANOTHER Vs. THE DEPUTY CHIEF OFFICER, RESERVE BANK OF INDIA, rendered by His Lordship Manojkumar Mukharjee J. of the Calcutta High Court, which has been reproduced in the 'Practical Guide to Company Deposits' by K.V. Shanbhogue and K. Ganesan, and submitted that just as an offence punishable under S.58 B (2) of CR.RA/1242/1983 14/33 JUDGMENT the Reserve Bank of India Act is a continuing offence as held by the Calcutta High Court, the offence for the contravention of Rule 10 of the Rules punishable under Rule 11 of the Rules is also a continuing offence. I have gone through the Calcutta High Court decision and I think it does not help the prosecution in the case before me. In the Calcutta case the prosecution was for an offence under S. 58 B (2) of the Reserve Bank of India Act, 1934. That sub-section(2) reads as follows : “58 B (1) xxx xxx (2) If any person fails to produce any book, account or other document or to furnish any statement, information or particulars which, under this Act or any order, regulation or direction made or given thereunder, it is his duty to produce or furnish or to answer any question put to him in pursuance of the provisions of CR.RA/1242/1983 15/33 JUDGMENT this Act or of any order, regulation or direction made or given thereunder, he shall be punishable with fine which may extend to two thousand rupees in respect of each offence and if he persists in such failure or refusal, with further fine which may extend to one hundred rupees for every day, after the first during which the offence continues.”” 11. The Court is of the view that the learned Revisional Court has even cared to compare the scheme of one of the Rules, being sub-section (2) of Section 58-B of the Reserve Bank of India Act, during the course of hearing vis-a- vis the Rule 10 of the Rules which was relevant and the language employed between two distinct provisions and it is observed that the wrong of violating Rule 10, which is made punishable under Rule 11 is not a continuing offence and, therefore, the scheme of Section 468 of the Code would attract. This finding sounds good logic and correct interpretation CR.RA/1242/1983 16/33 JUDGMENT of law. There is no perversity in interpreting the legal provisions or the facts. The scope of condonation of delay in a given case especially when the Court is dealing with the benevolent or welfare legislation would be altogether a different aspect. It is neither the say of the complainant nor it was submitted before the Revisional Court that the act of non-filing of Return under Rule 10 was violation of welfare legislation and, therefore, there was scope for the Court to condone the delay. It is rightly submitted that the present case is practically now covered by the judgment of the Kolkata High Court in the case of National Cotton Mills and others v. Assistant Registrar of Companies, W.B. and others, reported in 1956 Company Cases 222, where the Division Bench of the Kolkata High Court held that failure to file annual Return is not a continuing offence. The cognizance after expiry of period of limitation, is barred. On careful reading of the cited decision, I am of the view that the head-note prepared by the editors gives the CR.RA/1242/1983 17/33 JUDGMENT correct reflection of the ratio of the said decision and the observations made by the Division Bench. The said Head Note is the gist of the observations made by the Court in various paragraphs of the judgment which are at page nos.225, 226 and 227, and while recording finding, the Division Bench has referred to number of decisions including the judgment in the case of State of Bihar v. Devkaran Nanshi, AIR 1973 SC 908 and in the case of United Savings and Finance Company v. Deputy Chief Officer, R.B.I., reported in 1980 Cr.L.J. 607 (Cal), dealing with the scheme of Section 58B(2) of the R.B.I. Act. The relevant part of the said head-note would buttress the say of the learned counsel appearing for the respondents-accused : “Head Note : Held, (i) that under s.200 of the Cr.P.C., 1973, the obligation on the part of a Magistrate taking cognisance of an offence on complaint to examine witnesses present is dispensed with when the complaint is made in writing by a public servant CR.RA/1242/1983 18/33 JUDGMENT (viz., the Asst. Registrar of Companies) acting or purporting to act in the discharge of his official duties; (ii) that in order to constitute a continuing offence, the offence must arise “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”. Section 159 of the Companies Act, 1956, which requires every company to file with the Registrar the particulars specified in the section in the form of a return within sixty days from the date on which the annual general meeting is held, does not impose any liability which so continues. The offence on the breach thereof is complete with the failure to furnish the return in the manner or within the time stipulated. Such an offence is committed once and for all as and when one commits the CR.RA/1242/1983 19/33 JUDGMENT default. The provision does not contemplate that the obligation to submit the returns continues from day to day until the return is actually submitted nor does it provide that continuance of business without filing of such returns is prohibited so that non-fulfillment of a continuing obligation or continuing of business without filing of such returns becomes a continuing offence. When s.162 of the Act prescribed the penalty of fine “which may extend to fifty rupees for every day during which the default continues, it merely prescribed the measure of penalty- such a prescription being 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 cannot be said that the offence is repeated or committed from day to day CR.RA/1242/1983 20/33 JUDGMENT after the initial default. It is not only where the offence is committed from day to day or repeated from day to day that it can be called a continuing offence. There being no express provision in s.162 in that behalf as there are in ss.234, 598, etc. of the Companies Act, 1956, it cannot be held that the offence under s.162 is a continuing offence. (iii) That, since the offence was not a continuing one, the cognisance thereof after the expiry of the period of limitation provided in s.468 of the Cr.P.C., 1973 was not proper and was invalid.” 12. In the case of Ramnuggar Cane and Sugar Com. Ltd. and others v. Assistant Registrar of Companies, reported in 1989 Cr.L.J. 2395, the Division Bench of the Kolkata High Court has reiterated the said principle in the year 1989. It has been held by the Kolkata High Court that three elements must concur before the offence is held to be continuing one which CR.RA/1242/1983 21/33 JUDGMENT are as under : “Three elements must concur before an offence can be held to be continuing one- (a) contravention or non- compliance with the relevant provisions of law, (b) provision for penalty for such contravention or non-compliance, and (c) liability for such punishment to continue until the provisions of law are complied with. It must be noted that it is not the liability for continued punishment in the shape of daily fine or otherwise that is the sine qua non for a continuing offence, but that the contravention of the liability for punishment that makes it so.” 13. Ultimately, the Kolkata High Court in the cited decision in the case of Ranuggar Cane and Sugar Com. Ltd. (supra) held that when there is nothing to indicate either in the provision of Rule 10 or Rule 11 or Section 58- A of the Companies Act, that the liability for the punishment for non-submission of Return CR.RA/1242/1983 22/33 JUDGMENT within the period prescribed would also arise and continue on or for each day even after the period prescribed, an offence for the contravention of Rule 10 cannot be treated as a “continuing contravention” within the meaning of Rule 11 of the Rules. 14. Karnataka High Court has also taken a similar view in the case of Shree Dharma Sudar Industries Pvt. Ltd. and others v. Registrar of Companies, Bangalore, placing reliance in the case of Deokaran Nenshi (supra), the Karnataka High Court has held that : “5. The learned counsel Shri Patil contended that the offence in each case was committed once for all by 30th of June of every year when the return was not filed. According to him, it is an offence committed once for all and it is not a continuing offence. He relied for that purpose on State of Bihar v. Deokaran Nenshi, AIR 1973 SC 908 :(1973 CrLJ 347). It was a case arising under the Mines Act, 1952. CR.RA/1242/1983 23/33 JUDGMENT Section 66 of the Mines Act 1952, provides that any person omitting inter alia to furnish any return, notice etc. in the prescribed form or manner or at or within the prescribed time required by or under the Act to be made or furnished shall be punishable with fine which may extend to Rs.1000/- Section 79, however, lays down that no court shall take cognizance of any offence under this Act unless a complaint whereof has been made within six months from the date on which the offence is alleged to have been committed or within six months from the date on which the alleged commission of the offence came to the knowledge of the Inspector, whichever is later. The Explanation to the Section provides that if the offence in question is a continuing offence, the period of limitation shall be computed with reference to every point of time during which the said offence continues. The Supreme Court laid down in para.5 as :- CR.RA/1242/1983 24/33 JUDGMENT “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 a failure to obey or comply with a rule or its requirement and which involves a penalty, the liability for which