TMI Blog2003 (3) TMI 604X X X X Extracts X X X X X X X X Extracts X X X X ..... , First Main Road, United India Colony, Kodambakkam, Chennai. The authorised capital of the company is Rs. 75 crores. The object for which the company is incorporated is to carry on business pertaining to or connected with and involving development of system software, application software, enterprise resource planning, internet net linking, multimedia, entertainment and any other software development in any area including communication, information technology in India or any part of the world, and such other objects as let out in the memorandum and articles of association of the company. 3. The respondent pointed out in the show cause notice that Mr. Ashok Kumar Verma, Patna, alleged in his letter dated 17th September, 2001 that he has not received dividend for the year ending 31st March, 2001. The company, in the annual general meeting, held on 20th July, 2001, declared equity dividend at 30 per cent as per section 207 of the Act. The dividend warrants should be sent to all the shareholders within thirty days from the date of annual general meeting and the dividend warrant was sent to Mr. Ashok Kumar Verma on 27th September, 2001 with a delay of ten days. The show cause notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, no prosecution has been filed against Sri K. Srinivasan, the petitioner in CP No. 162 of 2002 and Sri S. Ramasamy, secretary of the company and second petitioner in CP No. 160 of 2002. 7. The petitioners have not placed any material as to how they have acted honestly and reasonably under the circumstances of the case. The complaint dated 17th September, 2001 received from Shri Ashok Kumar Verma was forwarded by the Regional Director on 3rd December, 2001. The company was asked to send a reply on the complaint and since no reply was received, a reminder was issued to the company on 10th April, 2002. The company furnished a reply dated 25th April, 2002 informing that they have paid the dividend and also paid interest for the delay in payment of the dividend. However, the company had not furnished the particulars as to the date of payment. The petitioners, as directors of the company, have duty to see that the company has complied with the provisions of section 207. They have not stated what steps have been taken to comply with the provisions of the Act. 8. Section 207 of the Act is a legislation passed to protect the interest of the investors and to act as a deterrent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2002 and the petitioner in CP No. 162 of 2002 have not been prosecuted before the criminal court by the respondent for alleged offence of section 207 of the Act. 14. The respondent had sent show cause notice to the petitioners on 6th March, 2002, respondent also sent a letter on 10th April, 2002 reminding them to send a reply. The company sent a reply on 16th April, 2002 and another reply on 25th April, 2002. It appears that Ashok Kumar Verma had sent a complaint on 17th September, 2001 that he has not received the dividend for the year ending with 31st March, 2001 from the company. Admittedly, the company in annual general meeting held on 20th July, 2001 declared the equity dividend at 30 per cent. Ashok Kumar Verma is holding 100 equity shares in the company, and the dividend warrant should be sent to all the shareholders within 30 days from the date of annual general meeting; and, in the present case, dividend warrant was sent to Ashok Kumar Verma on 27th September, 2001 and there was a delay of ten days in posting the dividend to the shareholders. Because of this only, the respondent sent a show cause notice that the petitioners have violated section 207 of the Act. 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 633(2) of the Act reads as follows : "(2) Where any such officer has reason to apprehend that any proceeding will or might be brought against him in respect of any negligence, default, breach of duty, misfeasance or breach of trust, he may apply to the High Court for relief; and the High Court on such application shall have the same power to relieve him as it would have had if it had been a court before which a proceeding against that officer for negligence, default, breach of duty, misfeasance or breach of trust had been brought under sub-section (1)." 19. It is, therefore, clear that if the petitioners have reason to apprehend that any proceedings will be taken against them by the respondent for any negligence, default, breach of duty, misfeasance or breach of trust, they may apply to this court for relief and this court can grant the relief taking into consideration the overall circumstances of the case. It is pertinent to point out that, admittedly, the dividend has been paid to Mr. Ashok Kumar Verma with a delay of ten days and even for the delay, interest has been paid. The show cause notice was issued on 21st March, 2002 and the reply was sent by the petitioners on 16t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice or the date of a petition by the company and/or its officers, when there cannot possibly be any complaint against the company by its depositors under the Companies (Acceptance of Deposits) Rules, 1975, the court can direct under section 633(2) the Registrar of Companies to forbear from prosecuting the company and/or its officers for the offence which, however, would be, in the circumstances, made out in the case and should not be construed as condoning of the lapses on the part of the company and/or its officers." (p. 265) 23. Reliance is also placed on Prahlad Bai Lath v. Registrar of Companies [1979] 49 Comp. Cas. 317 (Ori.), and it reads as follows : "Where acts of negligence, default, breech of duty, misfeasance or breach of trust of an officer of the company appear to the court not to have occasioned any loss to the company, and the court is satisfied that the omissions on the part of the officer are not due to any dishonest or any deliberate remissness or any deliberate attempt to delay the winding up proceedings, the court can exercise its power under section 633 of the Act, and can condone the irregularities." (p. 317) 24. Reliance is also placed on M. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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