BELL HOUSE ASSOCIATES PRIVATE LIMITED v. THE ASSISTANT REGISTRAR OF COMPANIES

R.BASANT, J------------------------------------Crl.M.C.Nos. 713, 790, 806, 817, 833 & 834 of 2006-------------------------------------Dated this the 6th day of February, 2007ORDERThe petitioners are accused 1 and 2 in six prosecutions, allinitiated under the provisions of the Companies Act. The petitionersare a Company and its Director. Six complaints have been filedagainst the petitioners. They relate to alleged culpable conduct forthe calendar years of 2002, 2003 and 2004. Three prosecutions relateto contumacious failure to file annual returns within the stipulatedtime. Three others relate to the contumacious failure to file balancesheets within the stipulated period. The prosecutions are underSections 159 and 220(3) of the Companies Act, both read with Section162 of the said Act. The complaints were filed on 28.7.05.Cognizance has been taken. The petitioners have rushed to this Courtwith a prayer that the proceedings against them in these six casesmay be quashed invoking the powers under Section 482 Cr.P.C.2.What is the reason ? The learned counsel for thepetitioners relies on two specific grounds. He first of all contends thatthere was a scheme called “Simplified Exit Scheme-2005”, which wasin force till 31.08.2005 as subsequently extended. The prosecution,ie. Government of India, Ministry of Company Affairs had offered the Crl.M.C.Nos. 713, 790, 806, 817, 833 & 834 of 20062facility of the Simplified Exit Scheme-2005 to all defunct companies.Such companies could avail of the benefits of the Simplified ExitScheme and relieve themselves of all consequences of non complianceby applying for striking off the name of the defunct company underthe scheme. Annexure-1 produced in all cases is the intimation to thepetitioners by the Assistant Registrar of Companies inviting them toavail the benefits of the scheme. The petitioners allegedly wanted toavail of the scheme and accordingly they submitted the requisiteapplication. Annexures-2 & 3 are relied on to show that suchapplications had been received by the authorities and they didcontemplate acceptance of the petitioners' application to avail of thebenefits of the Simplified Exit Scheme.3.It is admitted at all hands that the petitioners ultimatelydid not succeed in availing the benefit of the scheme. The companycontinues even now without being struck off as a defunct company.4.The first ground of challenge is that under the scheme,which was originally in force till 31.7.05 and later extended till31.08.05, the company could have avoided all further prosecution till31.08.2005. The complaint was filed on 28.07.05 and this is contraryto the assurance given in Annexure-1 that if persons avail the benefitsof the scheme, they can avoid further prosecution proceedings. Thatscheme was open till 31.08.05 and therefore the complaint filed on28.07.05 is legally unsustainable. Crl.M.C.Nos. 713, 790, 806, 817, 833 & 834 of 200635.I do not find any merit in this first contention. A readingof Annexure-1 shows that really what is intended is that a defunctcompany who successfully avails of the Simplified Exit Scheme-2005can avoid further prosecution proceedings. The petitioners did notsucceed in availing the benefits of the said scheme. Such a personwho did not succeed in availing the scheme cannot according to meinsist that the prosecution initiated against him on 28.07.05 is bad forthe reason that the same has been initiated prior to 31.08.2005. Nofailure of justice is shown to result. Of course, if the petitioners hadsuccessfully availed the scheme, the prosecution initiated on 28.07.05could have been quashed. But that is not the case. The petitionersadmittedly did not succeed in availing the benefits of the SimplifiedExit Scheme-2005. The promise in Annexure-1 is evidently only tothose who successfully avail the Simplified Exit Scheme-2005. Themere fact that the scheme remained in force till 31.08.2005 cannotpersuade this Court to quash the proceedings initiated by complaintdated 28.07.05. The challenge on the first ground must in thesecircumstances fail.6.The next contention is that the petitioners had paid allamounts which are payable under Section 611(2) of the CompaniesAct. According to the petitioners, actually for these six instances forwhich he is prosecuted, the maximum amount that would be payableunder Section 611(2) of the Act read along with relevant entry in Crl.M.C.Nos. 713, 790, 806, 817, 833 & 834 of 20064Schedule X is only Rs.33,000/- [(5,000 + 500) X 6]. The petitionershad in fact deposited an amount of Rs.32,000/- initially and asubsequent amount of Rs.18,000/- as directed by the authorities.Thus in all, an amount of Rs.50,000/- has been paid. This according tothe petitioner is more than the maximum that is leviable underSection 611(2) of the Companies Act. An amount of Rs.17,000/- inexcess of the maximum having been collected from the petitioners,the petitioners are entitled to get the present proceedings quashed,urges the learned counsel for the petitioners. 7.I extract Section 611(2) of the Companies Act below:Section 611(2): Any document required orauthorised by this Act to be filed or registered, or any factrequired or authorised by this Act to be registered, withthe Registrar on payment of the fee specified therefor inSchedule X, may, without prejudice to any otherliability, be filed or registered after the time, if any,specified in this Act for its filing or registration onpayment of such additional fee not exceeding ten times theamount of the fee so specified as the Registrar maydetermine.”(emphasis supplied)The language of Section 611(2) thus makes it very clear that thepayment of the amounts under Section 611(2) is without prejudice toany other liability which the defaulter has. The defaulter exposeshimself the liability to be prosecuted for breach of the stipulation ofSection 159 and 220(3) read with 162 of the Act and the paymentsmade under Section 611(2) cannot absolve the petitioners of the Crl.M.C.Nos. 713, 790, 806, 817, 833 & 834 of 20065liability to be prosecuted in these six prosecutions. Payment of theamount under Section 611(2) of the Act by itself cannot in thesecircumstances persuade this Court to quash the proceedings. Thedecision in Pylo Luka Muricken v. Registrar of Companies,Kerala State [1977 Volume 47 Company Cases 291] is relied on bythe complainant as authority for the proposition that payment underSection 611(2) of the Companies Act is in addition to the liability to beprosecuted. I accept the said contention.8.The learned counsel for the petitioners submits that theremittance of extra amount of Rs.17,000/- by him as directed by theauthorities must persuade this Court to quash the proceedings. I findno reason or logic in this request. There is no contention that the saidamount of Rs.17,000/- has been paid as price for withdrawal ofprosecution or for composition. Even assuming that an error hasbeen committed in computing the maximum amount leviable underSection 611(2) of the Act, I am unable to accept the contention thatthe prosecution is liable to be quashed on that ground. The fact thatexcess amount that has allegedly been paid, if true, may be pressedinto service to claim reduction of liability for penalty/punishment inthe prosecutions.9.I do not in these circumstances find either of the twocontentions acceptable. The prosecutions cannot be quashed for thesaid reasons. Crl.M.C.Nos. 713, 790, 806, 817, 833 & 834 of 2006610.These Crl.M.Cs are, in these circumstances, dismissed.(R.BASANT, JUDGE)rtr/-