# THE STATE OF BOMBAY v. BANDHAN RAM BHANDANI AND OTHERS

- **Citation:** [1961] 1 S.C.R. 801
- **Court:** Supreme Court of India
- **Decided:** 1961
- **Bench:** Jafer Imam, l'.\.. K. SARKAR, K. c. DAS GUPTA
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-state-of-bombay-v-bandhan-ram-bhandani-and-others-2170
- **Pages:** 8

## Headnote

Company-General meeting not called wilfully-Whether it
can be a defence-Indian Companies Act, I9I3 (VII of r9r3). as
amended by Companies Act, I9J6 (22 of I9J6), ss. 5, 32(5), IJI and
I33(3).
The respondents, directors of a company, were prosecuted
under ss. 32(5) and 133(3) of the Companies Act, r913, for
breaches of ss. 32 and 131 of that Act for having knowingly and
wilfully authorised the failure to file the summary of share capital for the year 1953 and being knowingly and wilfully parties
to the failure to lay before the company in general meeting the
balance sheet and profit and loss account as at March 31, 1953·
The respondents contended that there was no default in complying with the requirements of the section as no general meeting had been held in the year concerned.
Held-A person charged with an offence cannot rely on his
default as an answer to the charge and so, if the respondents
were responsible for not calling the general meeting, they cannot be heard to say in defence to the charges brought against
them that the general meeting had not been called.
The company and its officers were bound to perform the
conditions precedent, if they could do that, in order that they
might perform their duty.
St/>lember 23.
Tlit Slate of
Bombay
v.
BaPJdhan Ram
Bhandani
& Others
802
SUPREME COl.iHT J{El'OHTS
L1961 J
It is no less neces.ary to call a mer ting for performing the
obligations imposed by s. 32 because s . .-76 creates an obligation
to call a meeting and imposes an ir~Jepciide:nt penalty for breach
of that obligation.
Liability under s. 32(5) or s. 133(3) would
be incurred where the officer has wrongfully assisted in the
meeting not being held though he might also be liable at the
same time to the pe:1alty under s. 76.
Sub-section (5) of s. :i2 b)' imposing a <laily fine during the
continuance of the default does not in<l1cate that the default is
not committed till a meeting has been held.
The default occurs
after the expiry of twenty-one days from the day when the
meeting should ha \'e been held.
lmperator v. The Pio11eer Clay and Ind11stri11l Works Ltd.,
l.L.R. 1948 Born. 86, Q11w1 v. Nndo11, (1879) 48 Law J. Rep.
M.C. 77 and Dork v., 50111/i Africa11 S1tter-Aerrtion Ltd., I 1904) 20
T.L.R. 425, d1st1ngu1shed.
Gibso11 v. Barton, (1875) L.K 10 Q.B. 32<), Edmo11ds '" Foster,
(1875) 45 Law j. l{ep. :11.C. 41 ancU'urk v. Lmvto11, [1911] 11\.B,.
588, approved.
Dorie v. South African S1tper-Aaaiio11 Ltd., (1904) 20 T.L.I«
425, not applicable.
CRIMI!IAI,
APPELLATE
JURISDIC'l'ION:
Criminal
Appeals Nos. 93 & 94/1958.
Appeals by Hpecial leave from t lw judgmrnt aud
order dated April 9, 1956, of the furml'r ll<J111bay High
Court iu Criminal Appeals .Nos. 41!l and 420 of 1956,
arising out of the judgment and ord"r datecl Oetubcr
15, l!J55, of the Chief Prnsidency Mu.gist rat«, Bomhay,
in Cases Nos. 370/S a.nd 371/S of 1955.
C. K. Daphtary, Solicitor-General of India, N. S.
Bindra and R. H. Dhebar, for the appellant (iu hoth
the appeals).
S. /'. Varma, for respondents i'<us. I, 2 and 3 (In
hoth tho appeals).
A. N. Goyal, for respondent No. 4 (In both the
appeals).
N. P. Nathwani, S!'N. Andley, J. B. Dadachanji,
Rameshwar Nath and P. L. Vohra, for respondent~
Nos. 5 to 7 (In both the n.ppcals).
1960. September 2J. The Judgment of the Court
wae delivered by
_,
1 S.C.R. SUPREME COURT JtEPORTS
803
SARKAR J.-The respondents were Directors of
Hirjee Mills Ltd. They were prosecuted before the
Chief Presidency Magistrate, Bombay, for two offences
under the Companies Act,, 1913, as amended by Act
XXII of 1936. The first offence was that they knowingly and wilfully authorised the failure to file the
summary of share capital for the year 1953 and thereby became punishable under sub-s. (5) of s. 32 of the
Act, for a default in carrying out the requirements of
that section. The second offence was that t.hey were
knowingly and wilfully parties to the failure to lay
before the Company in general meeting the balance
sheet and profit and loss a

## Text

I S.C.R. SUPREME COURT REPORTS
801
s. 46(1) of the Income.tax Act and th~ amount of tax
'960
and penalty due from him would be "an arrear" E. M. Muthappa
within s. 46(2).
Chettiar
We therefore hold that the proceedings for the
v.
recovery of the Excess Profits Tax could properly be The Income-tax
taken and that the order of the High Court dismissing .officer. s_pccial
the appellant's petition for the issue of a writ ofCmle, c_oimbatore
prohibition was correct.
Ayyanga• J.
The appeal fails and is dismissed with costs. The
petition is also dismissed but as these two have been
heard together there will be no order as to costs in the
petition.
Both the Appeal and the Petition dismissed.
THE STATE OF BOMBAY
v.
BANDHAN RAM BHANDANI AND OTHERS.
(JAFER IMAM, l'.\.. K. SARKAR and
K. c. DAS GUPTA, JJ.)
Company-General meeting not called wilfully-Whether it
can be a defence-Indian Companies Act, I9I3 (VII of r9r3). as
amended by Companies Act, I9J6 (22 of I9J6), ss. 5, 32(5), IJI and
I33(3).
The respondents, directors of a company, were prosecuted
under ss. 32(5) and 133(3) of the Companies Act, r913, for
breaches of ss. 32 and 131 of that Act for having knowingly and
wilfully authorised the failure to file the summary of share capital for the year 1953 and being knowingly and wilfully parties
to the failure to lay before the company in general meeting the
balance sheet and profit and loss account as at March 31, 1953·
The respondents contended that there was no default in complying with the requirements of the section as no general meeting had been held in the year concerned.
Held-A person charged with an offence cannot rely on his
default as an answer to the charge and so, if the respondents
were responsible for not calling the general meeting, they cannot be heard to say in defence to the charges brought against
them that the general meeting had not been called.
The company and its officers were bound to perform the
conditions precedent, if they could do that, in order that they
might perform their duty.
St/>lember 23.
Tlit Slate of
Bombay
v.
BaPJdhan Ram
Bhandani
& Others
802
SUPREME COl.iHT J{El'OHTS
L1961 J
It is no less neces.ary to call a mer ting for performing the
obligations imposed by s. 32 because s . .-76 creates an obligation
to call a meeting and imposes an ir~Jepciide:nt penalty for breach
of that obligation.
Liability under s. 32(5) or s. 133(3) would
be incurred where the officer has wrongfully assisted in the
meeting not being held though he might also be liable at the
same time to the pe:1alty under s. 76.
Sub-section (5) of s. :i2 b)' imposing a <laily fine during the
continuance of the default does not in<l1cate that the default is
not committed till a meeting has been held.
The default occurs
after the expiry of twenty-one days from the day when the
meeting should ha \'e been held.
lmperator v. The Pio11eer Clay and Ind11stri11l Works Ltd.,
l.L.R. 1948 Born. 86, Q11w1 v. Nndo11, (1879) 48 Law J. Rep.
M.C. 77 and Dork v., 50111/i Africa11 S1tter-Aerrtion Ltd., I 1904) 20
T.L.R. 425, d1st1ngu1shed.
Gibso11 v. Barton, (1875) L.K 10 Q.B. 32<), Edmo11ds '" Foster,
(1875) 45 Law j. l{ep. :11.C. 41 ancU'urk v. Lmvto11, [1911] 11\.B,.
588, approved.
Dorie v. South African S1tper-Aaaiio11 Ltd., (1904) 20 T.L.I«
425, not applicable.
CRIMI!IAI,
APPELLATE
JURISDIC'l'ION:
Criminal
Appeals Nos. 93 & 94/1958.
Appeals by Hpecial leave from t lw judgmrnt aud
order dated April 9, 1956, of the furml'r ll<J111bay High
Court iu Criminal Appeals .Nos. 41!l and 420 of 1956,
arising out of the judgment and ord"r datecl Oetubcr
15, l!J55, of the Chief Prnsidency Mu.gist rat«, Bomhay,
in Cases Nos. 370/S a.nd 371/S of 1955.
C. K. Daphtary, Solicitor-General of India, N. S.
Bindra and R. H. Dhebar, for the appellant (iu hoth
the appeals).
S. /'. Varma, for respondents i'<us. I, 2 and 3 (In
hoth tho appeals).
A. N. Goyal, for respondent No. 4 (In both the
appeals).
N. P. Nathwani, S!'N. Andley, J. B. Dadachanji,
Rameshwar Nath and P. L. Vohra, for respondent~
Nos. 5 to 7 (In both the n.ppcals).
1960. September 2J. The Judgment of the Court
wae delivered by
_,
1 S.C.R. SUPREME COURT JtEPORTS
803
SARKAR J.-The respondents were Directors of
Hirjee Mills Ltd. They were prosecuted before the
Chief Presidency Magistrate, Bombay, for two offences
under the Companies Act,, 1913, as amended by Act
XXII of 1936. The first offence was that they knowingly and wilfully authorised the failure to file the
summary of share capital for the year 1953 and thereby became punishable under sub-s. (5) of s. 32 of the
Act, for a default in carrying out the requirements of
that section. The second offence was that t.hey were
knowingly and wilfully parties to the failure to lay
before the Company in general meeting the balance
sheet and profit and loss account as at March 31, 1953
aud. thereby became punishable under s. 133(3) of the
Act .for a default.in complying with the requirements
of s. 131. There was a separate trial in respect of
each offence;
The learned Magistrate fo1md that no general meeting of the company had been held iμ the year concerned. Following lmperator v. The Pioneer Glay and
Industrial Works Ltd. (1) he acquitted the respondents,
being of the view that no offence under either section
could be committed till the general meeting had been
held. The learned Magistrate did not go into the
merits of the cases on the facts.
Appeals by the
appellant to the High Court at Bombay from the
orders of the learned Magistrate were summarily dismissed. It has preferred the present appeals from the
decisions of the High Court ~t Bombay with special
leave granted by this Court. The appeals have been
heard together and are both disposed of by this judgment.
It appears that respondent No. 7, N. K. Firodia,
was discharged by the learned Magistrate because it ·
was conceded at the trial that he was not a director
of the Company at any material time.
He has been
made a respondent to the present appeals clearly
through some misapprehension. The appellant, the
State of Bombay, doe8 not and cannot proceed against
him.
The name of respondent Firodia should there.
fore be struck out from the records of this appeal.
(•) l.L.R. [•948] Bom. 86.
r960
The State of
lloniba~,i
v.
Bandhan Ram
Bhanda11i
~Others
Sarkar ] .
•
The Stott tJj
v.
JlandJran Ram
Rhandani
& Otlitrs
S!'rkar j.
804
SlJPHE~lE COL'HT REPORTS
[l\J61)
Respondent Ko. 5, l''a.teh Chand J hunjhunwala, died
while this appeal wa.s pnnding in thi8 Court. The
appeal is therefore concerned with the rorna.ining five
respondents only.
Sub-section (l) of o. 32 requires a eompa11y (•nce at
least in every year to ma.kc a list of its shareholders
as on the dat{l of tho first or only ordinary gen~ral
meeting in the year.
Sub-~ection (2) reguireR that tho
list shall contain a summary specifying various particulars mentioned in it. Sub.section (3) states that the
list and summary sha.11 be completed within twenty.
one days after the day of the first or only ordinary
genera.I meeting in the year and the company shall
forthwith file a copy with the registrar together with
a certificate from a director or the manager or the
secretary of the company that the list and summary
state the facts as they stood on the day aforesaid.
Sub-section (5) contains the penal provision, that " If
a company makes default in complying with the
requirements of this section, it shall be liable to a fine
not exceeding fifty rupees for every da.y during which
the default continues, and every officer of the company who knowingly a.nd wilfully authorises or
permits the default shall be liable to the like penalt.y ".
It is said on behalf of the respondents that there is
no default in comp!) ing with the requirements of the
section until a general meeting is held. That, it is
said, follows from the language of the section, for it
requires certain things a.s at the date of the meeting
to be stated in the list and summary and also requires
these to be filed within a. cert.a.in time of the meeting.
So, it is said, that, the section requires certain things
to be done only after the meeting has been held and
no question of performing those things a.rises till the
meeting bas b1,-en held.
A contrary view has been taken in England on the
corresponding provisions of the English Companies
Acts of 1862 and 1908: see Gibson v. Barton('),
Edmonds v. Foster(') and Park v. Lawton('). It was
iaid in these cases that a person charged with an
(1) (1875) L.R. lo Q.B. 329.
(2) (1873) 45 Law J. Rep. M.C. 4t.
(3} [191Jj I }.,:.B. 588.
,
1 S.C.R. SUPREME COURT REPORTS
805
offence could not rely on his own default as an answer
to the charge, and so, if the person charged was responsible for not calling the general meeting, he cannot
be beard to say in defence to the charge that the
general meeting had not been called. It was also
said that the company and its officers were borind, to
perform the condition precedent if they could do that,
in order that they might perform their duty. This
seems to us to be the correct view to take. If the
person charged with the failure to carry out the
requirements of the section could have called the
meeting, he cannot defeat the provisions of the sec-.
tion simply .by not calling the meeting wilfully.
It is true that under s. 76 of the Act a general
meeting of a company has to be held once at least in
every calendar year and if a default is made, the
company and every director or the manager of the
company who is knowingly and wilfully a party to
the default shall be liable to a fine not exceeding five
hundred rupees. That however is, in our opinion, no
reason for saying that a person charged with a failure
to filp the list and summary as required by s. 32
where a meeting had not been held, could only be
prosecuted under s. 76 and not under s. 32. Section
76 imposes au obligation to hold a meeting and
attaches a penalty to a failure to perform that obligation.
In the case of s. 32 it is necessary that the
meetilig should be held in order that the requirements
of that section may be carried out. It is no less
necessary to call a meeting for performing the obliga.
tions imposed by s. 32, because under s. 76 there is an
obligation to call a meeting the breach of which
entails an independent penalty. The two sections
deal with different matters and s. 76 does not interfere with the operation of s. 32. The effect of s. 32
must be derived from its terms: the terms cannot
have different effects depending on whether there is a
provision like s. 76 in another part of the Act or not.
Without a provision like s. 76 a delinquent officer of
the company may make s. 32 infructuons, and therefore, as already stated, it must be held that liability
103
The State of
Bombay
v.
Bandhan Ram
Bhandani
& Others
Sarkar ].
Tlst Stole of
Bombay
v.
Ba"dlsa" Rani'
BAandani
0- Oiiier$
SarAar ].
806
SCPRE:ME COURT REPORTS
[1961]
under s. 32 would be incurred where the officer has
wrongly assisted in the meeting not being held. The
result cannot be different because of the presence of a
provision like s. 76.
Nor do we think t.ha.t sub-sec. 5 of s. 32 by imposing a daily fine during the continua.nee of the default
indicates that the default is not committed till the
meeting has been held. Jn order that the default may
continue it has no doubt first to occur. In our view,
it occurs after the expiry of 2I days from the day
when the meeting should have been held within the
year.
The respondents referred to the case of Queen v.
Newton(') where it having been proved that the
general meeting was not held, the persons charged
with the default were acquitted. That case however
is clearly distinguishable, "hcca..use the decision proceeded on the ground that, the Hummons having alleged in terms that the default was ma.de after the
genera.I meeting had been held, it became essentia.1 to
prove when the meeting was held a.s a matter of fact,
and in the absence of proof the court held that the
summons
was rightly dismissed ". In this case
Cockburn, C. J., expressed some d•Jubts a.bout the correctness of the decision in Edmonds v. Foster (' ). In
Park v. Lawton (3) however, Lord Alverstone said that
he was unable to share those doubts, and with this
view, we agree.
We may add that such doubts have
not been shared by anyone upto now.
Another ease to which we were referred on beha.lf
of the respondents was Dorie v. South Afriron Super-
.Aeration Ltd.('). There a company was convicted for
a failure t-0 file the list and summary in a case where
the genera.I meeting had not been held and fined Id
and Id per day upto
certain day. Subsequently a
further summons against it was ta.ken out in respect
of the same default for further penalties from that day
to another later day. It was held that the word
"default" implied a wilful and continued neglect to
do an act required and that the company could not
(1) (1879) 48 Law J. Rep. M. C. 77.
(3) (1911] 1 K.B. 58A.
(1) (1875) 45 Llw J. Rep. M. C. 41.
(4) (1904) 20 T.L.R. 415.
\
1 S.C.R. SUPREME COURT REPORTS
807
be lie.hie to a. continuing da.ily fine for an omission
which it wa.s impossible to remedy. The report does
not set out the arguments nor the judgment a.nd it is
not clear on what grounds the decision was given. It
appears, however, that Lord Alverstone was one of
the Judges who decided that caee. In Park v.
Lawton('), Lord Alverstone himself observed with
regard tor the Dorte' 8 case that there, " there was no
question of the defendant being also in default as to
the general meeting, and that decision, therefore, in .
no way conflicts with the earlier authorities." We do
not think, therefore, that Dorte's c,ase assists the
respondents at a.II. ·It is authority only for the proposition that a continuing daily fine will not be exacted where, owing to no meeting having been held, it is
impossible to remedy the default: see Buckley's Company Law (13th Ed.), p. 3H.
Turning now to s. 131, we find that it requires the
directors of a company, once' at least in every calendar
year, to lay before the company ,in .general meeting a
balance sheet and profit and lo~s account of the company.; Sub-section (3) of s .. 133 makes the company
and every officer of it who is knowingly and wilfully a.
party to the default in carrying out the provisions of
s. 131, punishable with fine which may extend to five
hundred rupees.
As in the case of s. 32 and for _the
same reasons, here also it is no defence to the charge
for breach of s. 131 to say that a meeting was not
called.
As regards Imperator v. Pioneer C/,ay and Industrial
Works Ltd. (2), on which tbA courts belciw held that
the respondents must be \:l.i;quitted, we find that
it turned on s. 134 of Me Companies Act, 1913.
The language of that section is to a. certain extent
different from the language used in ss. 32 and 131.
Section 134(1) says, "After the bale.nee sheet and
-
-profit and loss account ..... -. ............ have been laid
before the compa.ny at the general meeting, three
copies thereof ......... shall be filed with the Registrar."
Sub.section (4) of this section provides a penalty for
breach of s. 134, in terms similar to those contained
in sub-sec. (5) of s. 32. If the language of s. 134(1)
(1) [1911] 1 K.B. 588.
(z) I.LR. [1948] Bom. 86,
Ig6o
The State of
Bo~bay
v.
Bandhan Ram
Bhandani
b Others
Sarkar ].
The State of
Bombay
v.
Dandhan Rani
Bha11da11i
6 Others
Sarkar ].
808
Sl1PHE)IE COl'RT REPOitTS
[ 1961 J
/
makes any difference as to the principle to he applied
in ascertaini111! wheth~r a breach of it bas occurred or
11ot-as to which we say nothing in this ca8e-then
that ca.se can be of no assistancp to tho rPspondPnts.
If however no Ruch difference can bP made, then we
think that it was not correctly decided.
\\\, ohsen·e
that Chagla, C. J., who delivered thP judgment of the
Court in that case, did not question tlw c1)1Tectness of
the decision in Park v. Lawton (1) which be was asked
to follow.
All that he said with r(·gard to that case
was that the scheme and terms of the section on which
it turned were different from s. 134 of tLe Com panics
Act, 1913. That may or may not he so. There is howe.
ver no difference betweens. 26 of the English Cc1m.
panics Act, 1908, on which Parl:er's case turned and
which apparently through some mistake Chagla, CJ.,
cited s. 36, ands. :12 of the lndian Companies Act of
1913, except thM tbc English section required the
summary to inelud(, a statement in t.hc form of a
balanco sheet COlltaining certain particulars mPntioned, whereas our section does not n'quire that. Sect.ion
131 of our _\ct contains surne provision about the
laying of the balanco sheet before the general meeting.
Tliis provision was inserted in the Act by the amending Act of 1936.
The faet, that. one of tho require.
men ts of the Euglish section 26 is not present. iu s. :~2
of our Act caul!ot create an v material d ilfcrence
bt·t1reen :<. 32of oPr Aet ands. ·26 of the English Act..
If the principle that a fll'rson charged with an 11fl"encfl
cannot rely on his own default as an answer to the
charge is corrnct, as we think it is, and which we do
not find Chagla, C. J., saying it is not, then that principle would clearly apply when a person is charged
with a breach of s. 32 of our Act.
We think therefore that the appeal should be allowed. Tho case will now go back to the learned PreHidency :lfagistrato and be tried on the merits according
to the law as laid down in this judgment.
Appeal allowed. Case remanded.
(t) [19u] 1 K.B.;588.
•