Gulmohar Ltd., a company registered under Indian law owns a factory

Calcutta, wherein it manufactures jute products. By a notification of the State Govemment;issued during October, 1996, due to a strike and lock-out, it was declared a relief undertaking. After four months, in February, 1997, the lock-out was lifted. However, during the said period the company’s directors defaulted in payment of Provident Fund (PF) and other ancillary dues. During the month of December, 1997, the Regional PF Commissioner initiated criminal proceedings against the company and its directors under the Employees PF and Miscellaneous Provisions Act, 1952, for default and delay in payment of PF dues.

Immediately the directors of the company applied to the High Court for relief under Section 633 of the Companies Act, 1956, praying for relief from liability under the PF law. The petition is now pending before a single judge. The company and its directors desire to know from you, as to the tenability of their claim for relief at the High Court, and as to whether they would be excused and exonerated by the High Court, in respect of the contraventions committed under the PF law.

Briefly discuss the law on the subject and state whether the petition filed by the

directors would be admitted or not under the Companies Act.

(b) Explain the meaning and significance of “public examination” by the court

under the Companies Act, 1956. fC.A. (Final) Nov., 1998J

.9L1h5. (a) The crux of the matter involved in the above case, is whether the word “any proceeding” against an officer of a company, would mean only a proceeding under the Companies Act or any Criminal proceeding under any other law. The provisions of the Companies Act, define” officer” and” officer in default” but there is no definition for the word “proceeding”. In the present case, the proceeding has not resulted from or has not been brought about as a consequence of default, refusal, contravention, non-compliance or failure under the Companies Act, 1956, but has come about as a result of certain acts and omissions committed by the directors of the company Gulmohar Ltd. under the Employees PF and Misc. Provisions Act, 1952. The Court has powers under Section 633 to grant relief only to a director/officer of a company, and not to the company. But the significance of the words “in any proceeding”’-mployed in Section 633 (1) require to be understood. I

The facts of the case bear resemblance to those which came up before their Lordships of the Supreme Court in Rabindra Chamaria and others Vs. Registrar of Companies, West Bengal and others, 1992 (73) Compo Cas. 257 (SC).

Going by the tenor of section 633 and the Supreme Court ruling the directors of Gulmohar Ltd., cannot avail of relief under Section 633 of the Companies Act, 1956 and their petition is not likely to succeed. It is liable to be dismissed