Whether the accused Roop Kishore Madan is/was Director in more than 20 companies on the date of filing of the complaint: The onus is upon the complainant to prove that accused Roop Kishore Madan was Director in more than the number of companies which is permissible under Section 165 of Companies Act, 2013. CW-1 has proved Ex. CW-1/1 & Ex. CW-1/2 to show the Directorship of accused. I have perused the documents. The Ex. CW-1/1 was taken from the MCA portal which reflects name and address details of the accused along with DIN No. Ex. CW-1/2 shows a list of companies in which the DIN number of accused is used for his appointment as Director.
Under the Rule 16 of The Companies (Appointment and Qualification of Directors) Rules 2014, the accused has the responsibility being Director to forward to the Registrar copy of resignation along with the applicable fees in Form DIR-11 within 30 days of such resignation. The claim of accused that the company had not filed form DIR-12 and therefore, he was not liable is rejected. It is admitted position that accused has not filed the said Form DIR-11. No reason has been adduced for such non filing which may save the accused from the present prosecution. It has come on record that accused was the Director in more than 20 companies as reflected in Ex. CW-1/2.
No evidence has been led to show submission of resignation before 01.04.15 by the accused. Accordingly, accused Roop Kishore Madan is convicted for the offence under Section 165(6) for contravention of Section 165(3) of the Companies Act, 2013.
FULL TEXT OF DELHI DISTRICT COURT
1. The ROC through, the then Assistant Registrar of Companies, NCT of Delhi & Haryana filed the present complaint against the aforesaid accused under Section 165(6) for contravention of Section 165(3) of the Companies Act, 2013 (in short ‘Act’) for violation of the said Section.
2. The facts of the case are that accused has been Director in more than the maximum number of companies as laid down in Section 165 of the Companies Act, 2013 as on 01.04.2015. It is further stated that according to the records available with the office, the accused in spite of holding directorship in excess of the limit specified in Section 165 of the Companies Act 2013 continued to hold such directorship even after one year from commencement of the Companies Act, 2013 and therefore, knowingly and willfully guilty of the contravention of Section 165(3) which is punishable under 165(6) of the Companies Act, 2013.
3. Upon service of summons, accused appeared. Copy of complaint and documents were supplied to him.
4. On 17.07.2018, notice U/s 251 Cr.P.C. was served upon the accused for the contravention of Section 165(3) which is punishable under Section 165(6) of the Act to which he pleaded not guilty and claimed trial.
5. Vide order dt. 09.08.2018 the application for substitution of complainant was filed by the ROC due to transfer of Dr. Afsar Ali and Ms. Shefali Gupta, AROC was substituted in the present complaint. In order to substantiate its allegations, the complainant examined Ms. Shefali Gupta, AROC as CW-1.
6. Ms. Shefali Gupta, AROC as CW-1 stated that she has been authorized to depose on behalf of complainant Dr. Afsar Ali who has been transferred to the office of ROC, Chandigarh and is deposing on the basis of available records. CW-1 reiterated the facts of the case as alleged in the complaint. In her testimony, she stated that accused having DIN No. 00656697 is/was Director in more than the maximum number of companies prescribed under Section 165 of the Act. She proved certified copies of the DIN application details as Ex. CW-1/1 and proof of directorship of accused in companies as Ex. CW-1/2. She further stated that show cause notice dt. 06.03.17 was issued to the accused which is Ex. CW-1/3. She further stated that email dt. 10.02.17 was sent and reply Ex. CW-1/4 was also received. She further relied upon certificate U/s 65B of Indian Evidence Act Ex. CW-1/5. She further stated that the complaint Ex. CW-1/6 was filed by the then AROC, Dr. Afsar Ali. She identified the signatures of Dr. Afsar Ali as she had worked with him in official capacity. During cross-examination, CW-1 stated that Ex. CW-1/2 also mentioned the companies in which the accused was earlier the Director and the list shows many of the companies which has already been strike off. She volunteered that the struck off companies has already been excluded to arrive at the number of companies in which accused was the director which is more than the prescribed limit.
7. No other witness was examined by the complainant and accordingly, complainant evidence was closed.
8. Thereafter, statement under Section 313 Cr.P.C. read with Section 281 of Cr.P.C. of accused was recorded wherein accused denied that he was the director in more than 20 companies.
9. Accused did not lead any defence evidence. However, when the matter was at the stage of final arguments, an application U/s 468 Cr.P.C. was filed. Ld. Counsel argued that the complaint is barred by limitation. He prays for acquittal. On the other hand, Ld. Company Prosecutor argued that complaint is not barred by limitation and accused continued to be director in more than 20 companies till 31.07.15. She prays for conviction of accused.
10. I have given my thoughtful consideration to the submissions advanced on behalf of both the parties and gone through the relevant records. I have also considered the relevant provisions of law.
11. Section 165 (3) of Companies Act, 2013 provides that “Any person holding office as director in companies more than the limits as specified in sub-section (1), immediately before the commencement of this Act shall, with in a period of one year from such commencement,-
(a) choose not more than the specified limit of those companies, as companies in which he wishes to continue to hold the office of director;
(b) resign his office as director in the other remaining companies; and
(c) intimate the choice made by him under clause(a), to each of the companies in which he was holding the office of director before such commencement and to the Registrar having jurisdiction in respect of each such company.
Section 165 (6) of Companies Act, 2013 provides that if a person accepts an appointment as a director in contravention of sub section (1), he shall be punishable with fine which shall not be less than five thousand rupees but which may extend to twenty-five thousand rupees for every day after the first during which the contravention continues.
12. Whether the complainant has proved the documents filed with the complaint: Ld. Company Prosecutor had argued that in terms of Section 397 and 399 of Companies Act 2013, the documents have been duly proved. Section 397 of Companies Act 2013 provides that any document reproducing or derived from returns and documents filed by a company with the Registrar on paper or in electronic form or stored on any electronic data storage device or computer readable media by the Registrar, and authenticated by the Registrar or any other officer empowered by the Central Government in such manner as may be prescribed, shall be deemed to be a document for the purposes of this Act and the rules made there under and shall be admissible in any proceedings there under without further proof or production of the original as evidence of any contents of the original or of any fact stated therein of which direct evidence is admissible and shall in all legal proceedings be admissible in evidence as of equal validity with the original document.
13. The complainant has filed Ex. CW-1/1 which is computer printout dt. 24.08.17 downloaded from the MCA portal showing the details of DIN application. This document bears stamp of the ROC along with signatures of Dy./AROC. This document satisfied the requirement of admissibility of document as evidence U/s 397 of the Act. The document CW-1/2 also bears stamp of certification of the Registrar of Companies as provided under the Act. There is due compliance of section 397 of the Act to prove the evidence of documents kept by Registrar. Hence, I am satisfied that complainant has proved the documents as admissible evidence for the present prosecution.
14. Whether CW-1 Ms. Shefali Gupta AROC is competent to depose in the present case:- Ld. Counsel for accused had argued that CW-1 is an incompetent witness as she has not filed the complaint and is not aware about the documents filed with the complaint. As per Section 2(75) of Companies Act 2013, an Assistant Registrar or Deputy Registrar is included in the definition of Registrar to function on or behalf of Registrar of Companies. The complaint was filed by a public servant in his official capacity and admittedly, he was transferred during the pendency of the present case. Witness CW-1 Ms. Shefali Gupta is presently posted as Assistant Registrar of Companies and derives her knowledge on the basis of official record. The argument of CW-1 being an incompetent witness is rejected.
15. Whether the complaint is barred by limitation:- At the stage of final arguments, It was argued that complaint is barred by limitation as the complaint was filed on 19.09.17 and the applicant has resigned from 9 companies between 01.04.2015 and 01.08.2015 and after such resignation, the applicant held directorship in 18 companies and hence, the period of default has come to an end on 31.07.2015 and therefore, complaint should be dismissed. Ld. Counsel for accused has placed reliance upon the document showing list of companies in which the applicant has resigned and changes in directorship between 01.04.2015 to 05.10.2018 and a copy of the report dt. 04.02.19 filed by the office of complainant before NCLT, New Delhi in the proceedings filed by the accused U/s 441 Companies Act 2013 for composition of default U/s 165(1) of the Companies Act. Copy of the said report is filed along with the application U/s 468 Cr.P.C. On the other hand, Ld. Company Prosecutor argued that offence is a continuing one and therefore, the provisions of limitation as provided U/s 468 Cr.P.C. are not applicable.
16. The offence U/s 165 of Companies Act is continuing in nature till the directorship of accused remains in more than 20 companies after 01.04.15. As per Ex. CW-1/2 the accused was shown as director in more than 20 companies as on 26.07.17 i.e. the date when Ex. CW-1/2 was downloaded from MCA portal. However, complainant themselves have filed copy of letter dt. 23.02.17 of the accused which is Ex. CW-1/4 wherein accused has detailed that his directorship is within the permissible limit as provided U/s 165 of Companies Act. Moreover, the report dt. 04.02.19 mentions in para 11 that “as per the petition, the director Mr. Roop Kishore Madan had resigned from the post of Directorship in the other remaining companies where he was exceeding the specified limit of 20 Directorship w.e.f. 01.08.2015.”
17. The resignation of accused has not been filed with the complainant office. Moreover, offence U/s 165 is punishable with fine only for each day during which the default continues. (Ref: State of Bihar Vs. Deokaran Nenshi: AIR 1973 SC 908 ). In the matter of Luxmi Printing Works Ltd. & Ors. Vs. Assistant Registrar of Companies, 1990 69 CompCas 442 Cal wherein the question was whether offences punishable U/s 162 (1) and U/s 220 (3) of the Companies Act which are also punishable with fine only, are continuing offences with the meaning of Section 472 Cr.P.C. Para no. 06 of the said judgment reproduced here for the sake of convenience:
“6. The decision of the Supreme Court in State of Bihar v. Deokaran Nenshi, is a clear authority for the view that when law requires submission of returns within a certain period, and there is failure to do so, such non-compliance is ordinarily complete on the expiry of the period and is not a continuing offence. That was a case under the Mines Act, 1952, Section 66 whereof enjoined submission of the annual return within the time prescribed and the Supreme Court rules (at p. 910) that since the relevant “regulation does not lay down that the owner, manager, etc., of the mine concerned would be guilty of an offence if he continues to carry on the mine without furnishing the returns or that the offence continues until the requirement of the regulation is complied with”, non-compliance with the provisions resulting from non-submission of the return within the prescribed period could not be a ”continuing offence”. As a logical corollary, the inference would be that, if the relevant law has not only made the default punishable as an offence, but has further provided that the penal liability therefor would also continue until the default is removed and that the continuance of the default is also punishable so long it continues, the continuance of the default would be a “continuing offence”.”
18. Furthermore, in para no.25 it is held that :
“We may, therefore, say that a continuing offence is an act or omission over which the offender can exercise his control irrespective of the penal provision of daily fine. Law may cast an obligation upon a person either to discontinue an act or abstain from continuing an omission. If the obligation continues and it is not discharged, the default constitutes a continuing offence. If continuance of an act or omission is an offence, it shall be a continuing offence until the act is discontinued or the omission is abated. If this test is applied in the cases before us, the offences are to be regarded as continuing offences.”
19. In the case of Gokak Patel Volkart Ltd. Vs. Dundayya Gurushiddaiah Hiremath & Ors : (1991) 2 Supreme Court cases 141, the question was whether offence U/s 630(1)(b) of the Companies Act is a continuing offence for the purpose of limitation. Hon’ble Supreme Court after discussing the definition as provided in Black’s Law Dictionary (Revised 4th edn.), held that continuing offence means a transaction or a series of acts set on foot by a single impulse, and operated by an unintermittent force, no matter how long a time it may occupy. It was further held in para 21 that
“………………. 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 continues until the rule of 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 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.”
20. Hon’ble court further held:
The concept of continuing offence does not wipe out the original guilt, but it keeps the contravention alive day by day.”The expression ‘continuing offence’ has not been defined in the Code. The question whether a particular offence is a ‘continuing offence’ or not must, therefore, necessarily depend upon the language of the statute which creates that offence, the nature of the offence and the purpose intended to be achieved by constituting the particular act as an offence.
Applying the law enunciated above to the provisions of Section 630 of the Companies Act, we are of the view that the offence under this section is not such as can be said to have consummated once for all. Wrongful withholding, or wrongfully obtaining possession and wrongful application of the company’s property, that is, for purposes other than those expressed or directed in the articles of the company and authorised by the Companies Act cannot be said to be terminated by a single act or fact but wuld subsist for the period until the property in the offender’s possession is delivered up or refunded. It is an offence committed over a span of time and the last act of the offence will control the commencement of the period of limitation and need be alleged. The offence consists of a course of conduct arising from the singleness of thought, purpose of refusal to deliver up or refund which may be deemed a single impulse. Considered from another angle, it consists of a continuous series of acts which endures after the period of consummation on refusal to deliver up or refund the property. It is not an instantaneous offence and limitation begins with the cessation of the criminal act, i.e. with the delivering up or refund the property. It will be a recurring or continuing offence until the wrongful possession, wrongful withholding or wrongful application is vacated or put an end to. The offence continues until the property wrongfully obtained or wrongfully withheld or knowingly misapplied is delivered up or refunded to the company. For failure to do so sub section (2) prescribes the punishment. This, in our view, is sufficient ground for holding that the offence under Section 630 of the Companies Act is not one time but a continuing offence and the period of limitation must be computed accordingly, and when so done, the instant complaints could not be said to have been barred by limitation.
21. Hence, in view of the above case law, I am satisfied that the present complaint is within limitation as offence U/s 165 of the Companies Act, 2013 is a continuing offence.
Therefore, the argument of Ld. Counsel that complaint is barred by limitation is humbly rejected.
22. Whether the accused Roop Kishore Madan is/was Director in more than 20 companies on the date of filing of the complaint: The onus is upon the complainant to prove that accused Roop Kishore Madan was Director in more than the number of companies which is permissible under Section 165 of Companies Act, 2013. CW-1 has proved Ex. CW-1/1 & Ex. CW-1/2 to show the Directorship of accused. I have perused the documents. The Ex. CW-1/1 was taken from the MCA portal which reflects name and address details of the accused along with DIN No. Ex. CW-1/2 shows a list of companies in which the DIN number of accused is used for his appointment as Director.
23. At this stage, it is noted that The Companies (Appointment and Qualification of Directors) Rules 2014 came into force on 01.04.14.
24. As per Rule 16 of The Companies (Appointment and Qualification of Directors) Rules 2014, whenever a director resigns from office, he shall within a period of thirty days from the date of resignation, forward to the Registrar a copy of his resignation along with reasons for the resignation in Form DIR-11 along with the fee as provided in the Companies (Registration Offices and Fees) Rules, 2014:
[Provided that in case a company has already filed Form DIR-12 with the Registrar under rule 15, a foreign director of such company resigning from his office may authorise in writing a practicing chartered accountant or cost accountant in practice or company secretary in practice or any other resident director of the company to sign Form DIR-11 and fle the same on his behalf intimating the reason for the resignation]
25. Under the Rule 16, the accused has the responsibility being Director to forward to the Registrar copy of resignation along with the applicable fees in Form DIR-11 within 30 days of such resignation. The claim of accused that the company had not filed form DIR-12 and therefore, he was not liable is rejected. It is admitted position that accused has not filed the said Form DIR-11. No reason has been adduced for such non filing which may save the accused from the present prosecution. It has come on record that accused was the Director in more than 20 companies as reflected in Ex. CW-1/2.
26. No evidence has been led to show submission of resignation before 01.04.15 by the accused.
27. In view of the evidence on record and testimony of witness, I am satisfied that complainant has proved the allegations against the accused beyond reasonable doubt.
28. Accordingly, accused Roop Kishore Madan is convicted for the offence under Section 165(6) for contravention of Section 165(3) of the Companies Act, 2013.
29. Copy of the judgment be uploaded on the server with digital signatures.