TMI Blog1993 (1) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... te company by name Udaya Pipes and Concrete Products Private Limited, a company incorporated under the Indian Companies Act having its office at Madras and branch at Bangalore, were tried by the learned Additional Chief Metropolitan Magistrate for Economic Offences II. On a complaint preferred by the Additional Registrar of Companies, Madras-6, alleging that the first accused/revision petitioner in the capacity of the managing director along with the other accused as directors of the said company failed to produce the account books of the company for the years 1979-80 and 1980-81 before the inspecting officer, when he inspected the registered office of the said company from August 1, 1985, and August 3, 1985, and thus has contravened the provisions of section 209A(5) and (8) of the Companies Act. Nor did they produce the account books of the company for the said period. But on completion of inspection one Radhakrishnan, director of the company, gave a letter, exhibit P-1, requesting time till September 10, 1985, to produce the books of account, which was followed by another letter, exhibit P-2, thereby asking time till September 20, 1985. But they have not produced the books of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion petitioner and that has been duly exercised by the issuance of a notice given by P.W.-2 and that has been marked as exhibit P-5 dated February 17, 1986, which was found served on the revision petitioner on February 20, 1986, as per exhibit P-6 and to which three replies had been sent to the Registrar of Companies under exhibits D-3, D-4 and D-5 and under which sufficient cause has been shown to the authorities constituted under the company law, namely, P.Ws.-1 and 2, and explained the attendant situation due to which the first accused/ revision petitioner was unable to produce the account books and that, therefore, he has not committed any offence. And that in the context of the above cause adequately shown under the above said exhibits D-3 to D-5 and that inasmuch as the same has not been rejected and there was no response from the complainant, learned counsel contended that the launching of the prosecution under section 209A(5) and (8) of the Companies Act is not at all proper and cannot be sustained ; then learned counsel would further contend that inasmuch as a notice, exhibit P-5, has been issued by P.W.-2 as required by sub-section (2) of section 209A of the Act ; then i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e revision petitioner. In the light of the above rival contentions projected on behalf of the respective parties herein the only question which arises for consideration before me is whether the courts below while finding the revision petitioner guilty of the offence charged and tried against him committed any error of law or irregularity in doing so and as such it is liable to be interfered with in this revision ? Before proceeding to discuss the various findings recorded by the courts below on the basis of the tendered oral and documentary evidence, it has become useful for me to advert to section 209A of the Companies Act which reads as follows : "The books of account and other books and papers of every company shall be open to inspection during business hours ( i )by the Registrar, or ( ii )by such officer of Government as may be authorised by the Central Government in this behalf : Provided that such inspection may be made without giving any previous notice to the company or any officer thereof." A mere casual reading of the above sub-section (1) of section 209A makes it clear that either the Registrar of Companies or such officer of the Government authorised by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution as was rightly contended by learned counsel for the revision petitioner. In this context it is meaningful to advert to sub-section (2) of section 209A which reads as follows : "It shall be the duty of every director, other officer, or employee of the company to produce to the person making inspection under subsection (1), all such books of account and other books and papers of the company in his custody or control and to furnish him with any statement, information or explanation relating to the affairs of the company as the said person may require of him within such time and at such place as he may specify." In the context of the abovesaid sub-section (2) for the purpose of appreciation of the rival contentions involved in this case, suffice it for me to refer to the above said sub-section (2) only and the rest are unnecessary for the disposal of the instant case. This sub-section (2) has cast the mandatory duty on the inspecting officers to require all the books of account and papers of the company to be produced by the company or its employees specifying the time within which they should produce and the place for the production and inspection of the same. Therefore, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tipulated time, it will be presumed that you have nothing to say in the matter and prosecution will be launched against you without any further reference in the matter." Thus, the above requirement clearly specified by P.W.-2 to be complied with by the revision petitioner was seen on full compliance of what has been mandated or required in sub-section (2) of section 209A. It is seen further that this notice, exhibit P-5, has been duly served on the revision petitioner on February 20, 1986, under exhibit P-6. The same day on which the official liquidator sealed off the registered office of the company and took custody and charge of all the properties and records of the company in question as I have already referred to. But what is more interesting in this case, as rightly pointed by Mr. Harikrishnan, learned counsel for the revision petitioner, is that the revision petitioner was not silent on the receipt of exhibit P-5 under exhibit P-6. He had written three letters as evidence from exhibits D-3, D-4 and D-5. It has to be noticed that the revision petitioner had addressed a letter to the Additional Registrar of Companies on February 27, 1986, under exhibit D-3 wherein he has stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of section 209A of the Act demonstrably clinches the fact that if the authorities found that the mandatory clause of sub-section (1) of section 209A of the Act has been contravened, before launching of the prosecution for the offence under sub-section (8) against such defaulters of the company, they should be heard by providing an opportunity to them with a view to facilitate them to explain their inaction, otherwise known as non-compliance with the mandatory provision by giving and specifying ample time and place in writing and then only the prosecution can be launched. In the instant case, it has to be noticed that P.Ws.-1 and 2 have not acted upon nor exercised their mind on the cause shown by the revision petitioner about their explanation tendered in compliance with exhibits P-5 and D-4. Without doing so on the principle built in, in all the sub-sections of section 209A of the Act, launching the prosecution against such defaulters in the context of their explanation would clearly be not only against the spirit of the mandatory obligations provided in the section itself, but also against the principles of natural justice and thus in my firm view, the launching of prosecutio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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