JUDGMENT Kapur, J.
1. On 20th July, 1966, the petitioners, who are the directors of Swastic Benefit's Private Limited (hereafter referred to as " the company ") made a petition under Section 633(2) of the Companies Act, 1956, being Company Petition No. 55-D of 1966, praying inter alia that they be exonerated of the default under Section 220 of the Companies Act. In the said petition it was stated that the books of the company were seized by the police with the result that they were disabled from getting their accounts audited, preparing the balance-sheet and profit and loss account and placing them before the shareholders in the annual general meeting held on 31st March, 1965. For this default the petitioners were prosecuted and sentenced to pay a fine of Rs. 50 each or in default undergo simple imprisonment for ten days. It was further alleged in the petition that since the books continued to be in the custody of the police, the petitioners could nto comply with the said provision in spite of their conviction. They, therefore, made the said petition for relief under Section 633.
2. The matter was disposed of on January 6, 1967, by Khanna J. who condoned the default and allowed three months' time to the petitioners to comply with the provisions of Section 220. The perusal of Company Petition No. 55-D of 1966 shows that relief was claimed only with respect to default under Section 220 of the said Act which, inter alia, requires that "after the balance-sheet and the profit and loss account have been laid before a company at the annual general meeting as aforesaid, there shall be filed with the Registrar within thirty days from the date on which the balance-sheet and the profit and loss account were so laid ". No relief was claimed for default under Section 210 which deals with laying of the balance-sheet etc., before the company at every annual general meeting, but I am nto in this petition concerned with that. The present petition has been made under Rules 7 and 9 of the Companies (Court) Rules, 1959, for further extension by three months of the time granted by Khanna J. for complying with the provisions of the Act. This petition was made on 10th April, 1967, and the learned counsel for the petitioners stated that the petitioners have since complied with the provisions of the said Act. In the written statement filed by the Registrar it has been pointed out that the company did file copies of the balance-sheet and profit and loss account as on September 30, 1964, but they did nto file the auditor's report with the result that there was no proper filing of the balance-sheet. In the affidavit in rejoinder filed on behalf of the petitioners it is said that the balance-sheet and the profit and loss account were filed with the Registrar on July 7, 1967, but inadvertently the auditor's report was nto enclosed and on the Registrar pointing out the said omission the auditor's report was also filed. It is, however, nto disputed that a complete balance-sheet with profit and loss account and the auditor's report has since been filed with the Registrar.
3. The petitioners have claimed extension of time on the following grounds:
(1) The books of the company were nto returned by the police till January 29, 1967, so that the petitioners lost about one month out of the three months allowed by this court by order dated January 6, 1967 ;
(2) the son-in-law of B.D. Tandon, petitioner No. 1, and sister's husband of petitioners Nos. 2 and 3 expired on February 2, 1967, and the petitioners, had to look after the deceased's family and remained busy during the mourning period of 13 days. It is only after 15th February, 1967, that the petitioners could attend to the office work ;
(3) the business of the company had virtually come to a stand-still in view of the seizure of books and the entire staff of Delhi office had been retrenched. On receipt of the books, arrangement had to be made to re-employ an accountant which took considerable time and in spite of the best efforts of the directors the accounts, which were extremely lengthy, could nto be completed ; and (4) after the completion of the accounts 21 days' ntoice had to be given to the shareholders for convening the meeting.
4. With respect to the first of the grounds the learned counsel for the petitioners had at the time of the hearing of the first petition stated before this court that the petitioners would inspect the records in police custody and do the needful within three months from that day. The fact that the records remained in police custody till January 29, 1967, would be, in the circumstances, of no consequence unless the petitioners show that between 6th January, 1967 and 29th January, 1967, they made efforts to inspect the records in the police custody. The toher grounds, however, convince me that it is a fit case for extension of time. The only serious controversy raised on behalf of the Registrar of Companies was about the competence of this court to extend the time fixed by the order dated January 6, 1967. The learned counsel for the Registrar contended that Rules 7 and 9 did nto confer jurisdiction on this court to extend time fixed in exercise of powers under Section 633 of the said Act. The learned counsel for the petitioners, on the toher hand, mainly placed reliance on the said two rules. He, however, adumbrated an additional argument, which he did nto develop, that this court has inherent power to extend time. Under Section 633, the court may relieve officers of the company wholly or partly from liability on account of defaults on such terms as it may think fit. Acting under Section 633 of the said Act the courts grant time within which the default must be redeemed only by way of condition to the grant of relief. The Companies (Court) Rules, 1959, have been framed by the Supreme Court in exercise of powers under Section 643. Rule 7 empowers the court to "extend or abridge the time appointed by these Rules or fixed by an order of the court for doing any act or taking any proceeding, upon such terms (if any) as the justice of the case may require......" Rule 9 saves the inherent powers of the court.
Sub-section (1) of Section 643 reads :
" (1) The Supreme Court, after consulting the High Courts,--
(a) shall make Rules providing for all matters relating to the winding up of companies which, by this Act, are to be prescribed ; and may make Rules providing for all such matters as may be prescribed, except those reserved to the Central Government by Sub-section (5) of Section 503, Subsection (3) of Section 550, Section 552 and Sub-section (3) of Section 555 ; and
(b) may make Rules consistent with the Code of Civil Procedure, 1908,
(i) as to the mode of proceedings to be had for winding up a company in High Courts and in courts subordinate thereto ;
(ii) for the voluntary winding up of companies, whether by members or by creditors;
(iii) for the holding of meetings of creditors and members in connection with proceedings under Section 391 ;
(iv) for giving effect to the provisions of this Act as to the reduction of the capital; and
(v) generally for all applications to be made to the court under the provisions of this Act. "
5. The expression " prescribed " has been defined in Section 2(33) as under:
" 'prescribed' means, as respects the provisions of this Act relating to the winding-up of companies except Sub-section (5) of Section 503, Sub-section (3) of Section 550, Section 552 and Sub-section (3) of Section 555, prescribed by Rules made by the Supreme Court in consultation with High Courts, and as respects the toher provisions of this Act including Sub-section (5) of Section 503, Sub-section (3) of Section 550, Section 552 and Sub-section (3) of Section 555, prescribed by Rules made by the Central Government."
6. Sub-section (2) of Section 643 need nto be read as that does nto at all touch upon the subject. Even under Sub-section (1) of Section 643, the power of the Supreme Court to frame Rules is confined to the matters specified therein and extension of time fixed under Section 633 as a condition for grant of relief is nto one of such matters. Rule 7 of the said Rules must necessarily be construed in the light of the source from which it stems and since the Supreme Court has no power to frame a rule authorising abridgment or extension of time granted under Section 633, rule 7 cannto be construed to confer such a power on the High Courts. I am however, of the opinion that Section 633 itself confers powers on the High Court to extend the time fixed by it for redeeming the default. The words of Section 633 appear to be consistent with the court having power to make fresh orders with regard to the conditions imposed. In Badri Narain v. Sheo Koer, Section 549 of the Code of Civil Procedure, 1882, which corresponds to Order 41, Rule 10, of the Civil Procedure Code, 1908, fell for consideration. That Section reads :
" That the appellate court may, at its discretion, either before the respondent is called upon to appear and answer, or afterwards, on the application of the respondent, demand from the appellant security for the costs of the appeal, and if such security be nto furnished within such time as the court orders, the court shall reject the appeal."
7. There was no Section corresponding to Section 148, Civil Procedure Code, 1908, in the Civil Procedure Code of 1882. The Privy Council held that the court had power to make fresh orders with regard to time within which the security should be furnished and thus alter the time once fixed by the court. In my opinion, that decision applies equally to the construction of Section 633. The matter may be looked at from antoher point of view. If the default is nto redeemed within the time allowed by the court, there would be a fresh default of compliance with the provisions of the Act and the court has ample power under Section 633 of the said Act to grant relief against that default.
8. In the result, this application succeeds and is allowed. The time is extended by antoher three months from 6th January, 1967. There will, however, be no order as to costs.