Sh. R.K. Narayan And Ors., Sh. K.K. ... vs Registrar Of Companies
2004 Latest Caselaw 1471 Del

JUDGMENT

A.K. Sikri, J.

1. The legal issues involved in these petitions are of similar nature. The background in which show cause notices were issued by the Registrar of Companies (ROC) to the petitioners in these cases, although they were the directors of the companies are thesame. The three companies involved are public sector companies. In all these petitions filed under Section 633(2) of the Companies Act, 1956 (for short `the Act') , the petitioners have prayed for quashing of those notices. In view of these similarites, these petitions were heard together and are disposed of by this common order. However, facts of all the three cases and the nature of show causes notices would be taken note of CP No. 19 of 1995

2.The petitioner No. 1 in this case was acting Chairman and Managing Director/Director (Finance) at the time of filing of the petitioner. The petitioner Nos. 2 and 3 were the Directors, the petitioner No. 4 ex-director, the petitioner No. 5 Company Secretary of petitioner No. 6 Company, i.e. Gas Authority of India Limited (GAIL). They have impugned the show cause notice dated 20th October 1994 issued by the ROC, NCT of Delhi and Mariana. In this notice, it is alleged that the petitioner contravened provisions of Section 211/Schedule-VI, Sections 292 and 370 of the Act. The contraventions which are alleged are as under:

"1. Contravention of Section 211/Schedule-VI of the Act. The company has deposited Rs. 10 crores with Citi Bank under the Investment Management Account Scheme on 22.7.91 for a period of one year at an assured yield of 18.7% per annum on quarterly basis. This Deposit was extended for a further period of 6 month. There was some delay in recovery of this amount. However, the principal amount along with the assured yield till date of the payment was realised by the company on 19.3.93. This transaction is in the nature of PMS Transaction and RBI guidelines in this behalf have not been complied with, has been disclosed under the head `Investment' as `Under Portfolio Management Scheme with Bank' (unquoted). However, nature of securities in which investments were made by the Bank on behalf of the company have not been disclosed in the annual accounts in terms of Schedule VI to the Companies Act.

2. Contravention of Section 292 of the Act. In the board meeting held on 12.11.87, Director (Finance) and CMD were authorised to deploy funds on short term basis as inter-corporate deposits with PSUs and in scheduled banks under different Portfolio Management Schemes for investment. However, in terms of Section 292(3), of the Act, the resolution passed by the Board delegating these powers has not specified the total amount up to which the funds may be invested by the delegatee. As per procedure adopted by the company, at the end of year, the Board approves up to date deployment of funds post-facto. As per Board Resolution dated 13.8.93 for the first time, the limit of Rs. 100 crores was prescribed for investment. In view of the aforesaid, till 13.8.93, the company had not complied with the provisions of Section 292(3) of the Act punishable under Section 629A of the Act.

3. Contravention of Section 370 of the Act. The company has been making deposits with various Govt. companies, besides Infrastructure Leasing and Financial Services Ltd. (non-banking financial company promoted by several financial institutions). This is wholly owned Govt. company and as per notification GSR No. 309 dated 20.3.78 (issued under Section 620 of the Act), the provisions of Section 370 do not apply to it., provided that it shall obtain the approval of the Central Govt. (Administrative Ministry) before making any loan under this section. Under the provisions of Section 370 read with the notification, the approval of the Administrative Ministry is required if the company exceeds the limits (30%). The said limit has exceeded during the year ended 31.3.93 (loan made aggregating Rs. 443.10rores against the 30% limit of about Rs.,315 crores.). The company has sought approval of the Administrative Ministry on 23.1.92 based on the exceeding limit of 20% requiring passing of the special resolution. In this connection, it is stated that theaid limit of 20% will be applicable only in case of loans given to companies under the same management, which does not appear to be the case here. However, the Administrative Ministry has not yet given its approval. In respect of exceeding the limits during the year ended 31.3.93 the company has not sought any approval of the Administrative Ministry so far. To this extent the company has contravened the provisions of Section 370 of the Act."

3. The petitioners were accordingly called upon to show cause, within 15 days from the receipt of the aforesaid letter, as to why penal action as may be deemed, be not initiated against the company and its directors. Since this notice was addressed to the company, it sent reply dated 10th January, 1995 after seeking few extensions. In the reply, the very basis for issuing such a show cause notice is questioned. Adverting to the first contravention mentioned in the show cause notice, it is stated that the impugned notice proceeds on the basis that deposit of Rs. 10 crores with Citibank under the Investment Management Account is in the nature of PMS transaction and, therefore, alleges that the RBI guidelines in this behalf have not been complied with according to the petitioners, this deposit does not amount to Portfolio Management Scheme (PMS) and therefore there was no question of application of RBI guidelines or violation thereof. It is stated that by the very nature, PMS was evolved by the RBI for the scheduled banks and, therefore, it is the banks who are required to adhere to such guidelines. It was not applicable to other non-banking companies and, therefore, deposit of this amount with the bank would not be in the nature of PMS transaction and would not ipso facto become investment under PMS. Explaining the transaction, the answer to show cause notice further states that Rs. 10 crore was given to the Citibank on 22nd July, 1991 by way of deposit for a period of one year, bearing interest athe rate of 18.7% p.a. to be calculated on quarterly Installment. The period of deposit was extended by six months. The said amount of Rs. 10 crores along with interest was repaid by the Citibank on 17th and 19th March, 1993. Thus it was a deposit simplicitor interest bearing transaction and the entire amount was received back. Not only this, while depositing this amount with the bank, it was clearly stipulated with the bank that this amount should be used by the bank for making its own investment as my be deemed expedient, but only in Government securities, public sector bonds and units of UTI. Therefore, there was no contravention of Section 211 readwith Schedule -VI as alleged in the notice.

4. In respect of purported contravention No. 2 alleging violation of Section 292 of the Act on the ground that there was no delegation of powers by the Board of Directors in favor of the officers specifying the total amount up to which the funds may be so invested and such a Resolution was passed only on 13th August, 1993 for the first time prescribing the limit of Rs. 100 crores, and that there could not be any post facto sanction, the explanation offered by the petitioner was that such post facto approval would be recorded as proper and sufficient compliance of the requirements of Section 292(3) of the Act. It is stated that in the absence of a specific approval for `prior approval' explicitly provided in Section 292, post facto approval could be take at the end of financial year approving such investment post facto. In support of this submission, sustenance was drawn from the judgment of the Calcutta High Court in the case of Mathura Dass Saraf v. Company Law Board reported in (1979) 49 Com. Case 371. It was also clarified that the Board of Directors of the company on 13th August, 1993 passed a Resolution laying down limit of Rs. 1,000 crores for investment pursuant to Sub-section (3) of Section 292 to obviate any possible technical objection in the future. Further the Board of Directors in its 80th meeting held on 9th January, 1995 had passed the Resolution enhancing this limit to Rs. 1,500 crores with effect from 12th November, 1997 for investment of surplus funds under Section 292 of the Act, for employment of these funds as Inter-corporate Deposits (ICDs) with other public sector undertakings or in various scheduled banks under different schemes, on mutual fund scheme of LIC, UTI, CANBANK tc., and Government securities, public sector bonds, units of UTI.

5. In respect of third contravention relating to provision of Section 370 of the Act as stated in the show cause notice, the contention raised in the reply was that it was based on the ground that the Administrative Ministry had not yet given its approval in terms of GSR No. 309 dated 20th February, 1978 but the same was no longer relevant as the Ministry of Petroleum and Natural gas vide its order No.1-11015/2/90-GF dated 7th January, 1995 had exempted the company from the provisions of Section 370 of the act readwith Notification No.GSF 309 dated 20th January, 1990.

6. As, inspite of this reply, the show case notice was not withdrawn, apprehending that the ROC may file criminal proceedings before the Metropolitan Magistrate on the basis of contraventions alleged in the show cause notice, present petition was filed on20th January, 1995 for quashing of the said show cause notice and for relieving the petitioners of the offences alleged in the show cause notice. Prayer is also made in the petition that in case this court comes to the conclusion that there is an accidntal or unintended default the same may kindly be condoned by the court and the petitioners be excused and relieved of any liability as permissible under the provisions of Section 633 of the Act.

7. In the reply filed by the ROC, preliminary objections are raised to the maintainability of the petition. It is stated, in the first instance, that GAIL is not an officer as defined under Section 2(31) readwith Section 5 of the Act and therefore so far as the petitioner No. 6 is concerned, this petition is not maintainable. It is also stated that such a petition could be preferred before and proceedings are commenced and when a criminal complaint is pending, the petition under Section 633(2) would not be lie which is the view taken by this court in the case of Shri Krishna Prasad v. RO reported in (1978) 48 Com. Cases 397 as well as Punjab and Haryana High Court in P.L.Seth v. Registrar of Companies reported as 1985 (2) Company law Journal 224. Its also stated that the present petition is filed on the basis of show cause notice on the plea that no offence has been committed and such a plea could be taken by the petitioners in the criminal proceedings and the petition should not be entertained asthere is an alternative efficacious remedy available to the petitioners. It is further submitted that power to drop the proceedings can be exercised only by the trial court which is trying the complaint filed by the ROC. Therefore, according to the ROC the petitioners must first approach the trial court before filing such a petition. On merits, it is submitted that the averments made in the show cause notice are correct. Annexure A is filed with the reply which is Schedule-VI of the Balance Sheet a sat 31st March, 1992, wherein the company itself has given the nomenclature of investment under Portfolio Management Scheme with bank (unquoted)' and therefore it is stated that explanation given now that it was only a fixed deposit is an after thought. Reliance is also placed on sub-sections (10) and (12) of Section 372 of the Act. Section 372 deals with purchase by company of shares, etc., of other companies. Sub-section (10) states that every investing company shall annexe in each balance sheet statement showing the bodies corporate in the shares of which investments have been made and it is stated that pursuant to this provisions Schedule-VI was annexed. It is also submitted that Section 211 of the Act mandates that every balance sheet of a company shall give a true and fair view of the state of affairs of the company as at the end of the financial year and therefore it cannot be said today that nature of transaction as reflected in the balance sheet i.e. investment under PMS was not actually PMS transaction as that would amount to violation of Section 211 of the Act. Learned counsel for the ROC also referred to page 2086 of the Act by A. Ramaiya.

8. Referring to second charge, it is stated that violation of Section 292 of the Act is made out as admittedly there was no delegation of the power to the officers at the time of making the investment. If steps were taken by the petitioners as alleged by them, then why the Board approval was taken on 13th August, 1993 is queried by the ROC. The prior approval of the Board of Directors was the requirement of Articles of Association which was not followed. There was no question of ex post facto approvals that principle is alien to the company law which may be applicable in service jurisprudence was the submission of learned counsel. As regards third violation alleged in the show cause notice, it is stated that the approval was applied for only on 22nJanuary, 1999 as per letter of that date written by the petitioners to the Joint Secretary although the decision was taken earlier.

9. What is noted above were precisely the submissions of counsel for both the parties as well. Therefore, these are not spelled out again to avoid repetition.

10. In so far as objection of the Registrar of Companies to the maintainability of this petition is concerned, I am unable to sustain the same. Section 633 is couched in the following terms :

"S. 633. Power of Court to grant relief in certain cases-

1) If in any proceeding for negligence, default, breach of duty, misfeasance or breach of trust against an officer of a company, it appears to the Court hearing the case that he is or may be liable in respect of the negligence, default, breach of duty, misfeasance or breach of trust, but that he has acted honestly and reasonably, and that having regard to all the circumstances of the case, including those connected with his appointment, he oughtfairly to be excused, the Court may relieve him, either wholly or partly, from his liability on such terms as it may think fit:Provided that in a criminal proceedings under this sub-section , the Court shall have no power to grant relief from any civil liability which may attach to an officer in respect of such negligence, default, breach of duty, misfeasance or breach of trust.

2. Where any such officer has reason to apprehend that any proceeding will or might be brought against him in respect of any negligence, default breach of duty, misfeasance or breach of trust, he may apply to the High Court for relief and the High Court of such application shall have the same power to relieve him as it would have had if it had been a Court before which a proceeding against that officer for negligence, default, breach of duty, misfeasance or breach of trust had been brought under sub-section (1).

3. No court shall grant any relief to any officer under sub-section (1) or sub-section (2) unless it has, by notice served in the manner specified by it, required the Registrar and such other person, if any, as it thinks necessary, to show-cause why suchrelief should not be granted. "

11. Reading of this section, in no uncertain terms, demonstrate that the petition can be filed by any such officer who apprehends that any proceedings will or might be brought against him in respect of any negligence/default/beach of trust. He can apply to this court for relief and this Court, while considering such an application, has the same power to relieve him as it would have had it been a Court before which a proceeding against such officer for negligence, default etc. had been brought under sub section (1). Therefore this Court has the power to examine the proceedings as a Court before whom such proceedings would have been brought. In other words, this Court has same powers as that of a CMM while dealing with the proceedings filed by the registrar of Companies.

12. Sub-section (1) of Section 633 provides that if such an officer against whom these proceedings may be brought or has been brought has acted honestly and reasonable and having regard to all the circumstances of the case he ought fairly to be excused, the Court may relieve him from his liability on such terms as it may think fit.

13. What follows from the conjoint reading of sub sections (1) and (2) of Section 633 is ;

a) In any proceedings for negligence/default/beach of duty, misfeasance or beach of trust against an officer of the company, it would be a valid defense that he has acted honestly and reasonably and that having regard to all the circumstances of the case he should be excused from the liability.

b) Such exercise can be done even by this Court and person need not be relegated to the Court where the proceedings are filed.

14. It is a unique provision introduced in the Act with the objective to provide relief against undue hardship, in deserving cases. The purpose is to give relief from liability to persons who though technically guilty of negligence, default, breach of duty etc, are able to convince the conscious of the Court that they have acted honestly and reasonably and thus having regard to the circumstances of the case they ought fairly to be excused from the charges against them.

15. In P.S. Bedi v. Registrar of Company, Delhi 1985 2 Company Law Journal 122 DE Act this court has taken the view that:-

"Even when the Registrar of Companies filed a criminal plaint despite notice of petition for relief under Section 633(2) of the Act, the petition was maintainable and could be disposed of by the Court with appropriate order."

16. The application can be filed even when action is apprehended. No action had been initiated till the filing of the present petition. While issuing notice, this Court directed maintenance of status quo which order is still operative. Therefore, itcan not be said that the present petition is not maintainable. Of course, while exercising its discretion, the court has to keep in mind that the same should not be exercised in favor of a Director who has grossly neglected his ordinary duties over a log period or who deliberately spent money on ultra virus activities.

17. It may however, be added that this Section 633 is not available to the Companies but only the officers. Therefore this petition is entertained qua officers and not the companies.

18. Thus, I reject the submission of the ROC that this petition is not maintainable. Admittedly, at the time when the petition was filed, the complaint had not been filed by the ROC with the Metropolitan Magistrate which came to be filed only subsequently. It may be mentioned that the ROC has not disclosed as to on which date the criminal complaint was filed but at the time of arguments, it was conceded that such a complaint was filed later.

19. Let me now revert to the charges levelled in the show cause notice. It is clear from the aforesaid discussion, that the first charge is based on the foundation that deposit of Rs. 10 crores by the petitioners with the Citibank was investment under PMS. No doubt, in the balance sheet of the petitioners also it is described a such. But if it was an error in describing the transaction and the real transaction turns out to be other than investment under PMS, mere statement to this effect in the Balance Sheet would not be a factor to still hold it against the petitioners or to record a finding of contravening Section 211 of the Act read with Schedule-VI. It is trite law that what is to be seen is the real nature of the transaction and not the nomenclature which may be an erroneous description. Moreover, we are dealing with a case where the ROC has alleged violation of certain provisions of the Act and on that basis filed a criminal complaint. Before fastening the petitioners with criminal liability, to has to be established by the ROC that such a contravention has taken place and for this ROC cannot simply rely upon the nomenclature of the transaction but one will have to determine the real nature of the transaction. As far as PMS is concerned, learned counsel for the ROC could not dispute the nature of the scheme as explained by the petitioners. It is more than obvious that such guidelines issued by the RBI in respect of PMS are meant for scheduled banks as that is the province of RBI which is empowered to regulate the functioning of such banks to issue such guidelines. Further guidelines are issued in exercise of such powers and are directed towards the scheduled banks only. These guidelines are dated 2nd May, 1989 which are confidential in nature and are addressed to all scheduled commercial banks. It is pointed out that the banks are committing certain irregularities by providing PMS to their clients and it is clarified as to what these banks are required to do. Sub-paras (ii) and (iii) of para 3 of the guidelines dated 18th January, 1991 which may be relevant are reproduced below:

"(ii) `PMS' should be in the nature of investment consultancy/management, for a fee, entirely at the customer's risk without guaranteeing, either directly or indirectly, a pre-determined return. The bank should charge a definite fee for the services redered independent of the return to the client.

(iii) `PMS' should be provided by banks/their subsidiaries to their clients in respect of the latter's long term investible funds for enabling them to build up a portfolio of securities; in any case the funds should not be accepted for portfolio management for a period less than one year. In the case of placement of funds for portfolio management by the same client on more than one occasion, on a continuous basis, each such placement should be treated as a separate account and each such placement should be for a minimum period of one year."

20. Thus by the very nature of aforesaid guidelines, it would be apparent that directions are to the banks and their subsidiaries.

21. It cannot be comprehended that such guidelines would be applicable to the non-banking companies. As per the guidelines, if any bank undertakes a transaction and/or offer services to its clients of the nature or kind, which does not qualify as PMS in terms of the RBI guidelines, it would not constitute PMS transaction. Further for non-observance of RBI guidelines by a bank which offers PMS services to its clients, it is the bank alone who would be answerable or accountable to the RBI and not the company which makes a deposit with the bank. We may note at this stage the essential features of the aforesaid RBI guidelines on PMS. These are as under:

(a) PMS should be in the nature of investment consultancy/management, for a fee, entirely at the customer's risk and without guaranteeing, either directly or indirectly a pre-determined return. The bank should charge a definite fee for such services, independent of the return to the client.

(b) The bank providing service under PMS should maintain client-wise account of amounts received or funds accepted and the investments made there against. All credits (including realised dividend, interest etc.) and debits relating to the Portfolio account should be put through such account. The tax deduction at source in respect of interest or dividend on securities held by the Bank for the client in the Portfolio account should be reflected in the client's Portfolio account.

(c) Though, the Bank may hold the securities belonging to the client's Portfolio account in its own name, there should be a clear indication that the securities are held by it for and on behalf of the client."

22. Therefore, placement of aforesaid funds by the petitioners with the said bank would not ipso facto become investment under PMS. It is only when the bank invests such funds and makes certain investments, it will have to be ascertained whether such an investment is under PMS.

23. That apart, in the present case, Rs. 10 crores was deposited with the Citibank on 22nd July, 1991 which was to carry interest at the rate of 18.7% per annum. Such a transaction would clearly be in the nature of deposit made with the bank in so far as the petitioners are concerned. Further, it is not in dispute that the entire amount was received back by the company along with interest.

24. In view of the aforesaid legal position, I am convinced that the transaction in question was not under PMS and, therefore, the very foundation of the charge is misplaced.

25. As far as second charge is concerned, there is no dispute that post facto approval of the Board is available. Such an ex post approval is permissible as held by the Calcutta High Court in the case of Mathura Dass Saraf (supra) . In that case the petitioner company purchased the shares of another company. Due to shortage of time between the negotiation and completion of the purchase, it was not possible for the petitioner-company to obtain sanction in its annual general meeting or the approval of the Central Government. However, sanction was thereafter obtained in the annual general meeting of the petitioner-company regarding the purchase and an application was made for the approval of the Central Government regarding the investments. The Company Law Board rejected the application on the ground that it had no power to grant ex post facto approval under Section 372(4) of the Companies Act, 1956, read with Notification no.G.S.R.72 dated January 1, 1966, issued by the Government of India, Ministry of Finance, Department of Company Affairs and Insurance, and directed the petitioner-company to dispose of the investments. The Company Law Board also issued summons against the petitioners as directors and/or officers of the company for the alleged violation of Section 372(4) read with Section 374 of the Act. On a petition under Article 226 of the Constitution for quashing the order of the Company Law Board, it was held as under:

"(i) as the word "previous" has not been used in Section 372(4) of the Companies Act, 1956, whereas that word or a similar word has been used in Sections 295, 309, 310, 329 and 370 of the Act, where the legislature has clearly indicated that previous approval of the company in its annual general meeting or of the Central Government is necessary, the previous approval of the company in its annual general meeting or of the Central Government was not necessary under Section 372(4) of the Act and the contrary direction given by the Ministry of Finance was violative of Section 372(4) of the Act and it had no legal effect. The Company Law Board had also misdirected itself in law in rejecting the application of the petitioners by relying on the notification and also by pre-judge in the issue;

(ii) Since no previous approval of the company in its annual general meeting or of the Central Government was necessary under Section 372(4) of the Act, the petitioners did not commit any default under the provisions of Section 372(4) of the Act.

(iii) A company could be directed to sell its investments only under Section 373 of the Act and the Company Law Board had no power to direct the company to sell its investments."

26. In any case, in view of the facts disclosed, it cannot be said that means read on the part of the petitioners is established. In this backdrop, I am also inclined to accept the submission of the petitioners that Resolution dated 13th August, 1993 might have been passed to obviate any possible technical objection in the future. Many times, such steps are taken when it is noticed that there may be unnecessary controversies and in fact such controversy has erupted in the present case.

27. In respect of third charge, no doubt letter was written to the Ministry on 22nd January, 1999 but the approval of the Ministry which is contained in letter dated 7th January, 1995 would be of great significance as it permits the company to make ICDs in excess of 30% of its subscribed capital and free reserves subject to maximum Rs. 1500 crores effect from 20th January, 1990 until further orders. Thus, the permission is given retrospectively and covers the period in question. It is, therefore, amply clear that even the Ministry had no objection to such an investment made by the company and for this reason also it was not proper for the ROC to continue with such a show cause notice and/or file criminal proceedings.

28. The petition is allowed. The Impugned notice dated 20th October, 1994 is hereby quashed. Consequently, proceedings filed before the Additional Chief Metropolitan Magistrate are also dismissed.

CP NO. 215 OF 1995

29. In this petition, show cause notice dated 25th October, 1994 was issued for contravention of the provisions of Section 292(1)(d) readwith Section 211(7), 49(9) and 629A of the Act. The allegations are almost of similar nature. In this show cause notice which was issued to Bharat Heavy Electricals Limited, it is alleged that the company placed its surplus funds by way of deposits with the public sector undertakings, public sector financial corporations and subsidiaries of public sector banks and that the deposits made with all entities other than Can Bank Financial Services Limited (CANFINA) were in the nature of inter-corporate deposits and funds placement with CANFINA was under PMS. It is alleged that the investment in PMS has been shown by the company as deposits and income there from has been treated as interest income deposits in the books of accounts although the same should have been recorded under the head `investment' during the years 1990-91 and 1991-92 which according to the ROC, is contravention of Section 211/Schedule-VI of the Act. Some other violations are also alleged. Detailed reply to this show cause notice was given on 30th November, 1994. Nothing was heard for quite some time but identical show cause notice was issued bythe ROC again on 31st October, 1995 which was also replied on 14th November, 1995 and immediately thereafter this petition was filed on 15th November, 1995 in which interim stay against prosecution was granted on 2nd February, 1996.

30. The same reasons which have been given above while quashing show cause notice in CP No. 19/1995, shall apply in this case also as legal issues are identical. It may be mentioned that the petitioners here have stated that the company had earned interest of Rs. 33.50 crores by keeping its surplus funds as ICDs with public sector undertakings, public sector banks and their subsidiaries for a maximum period of three months at a time. It is clear that the ROC has wrongly assumed that some of the shortter deposits made by the company are investments under PMS. It is also explained, which could not be disputed, that the decision to invest in short term deposits had been taken by the Board of Directors of the company. The entire show cause notice foundedon the presumption that some of the ICDs were PMS is misconceived. The petition is allowed and the impugned show cause notice is quashed.CP NO. 216 OF 1994

31. In this petition, company in question is Power Grid Corporation of India Limited . Here again, primary allegations in the show cause notice dated 9th November, 1994 are based on the averment that what was kept in the deposit by the company with certain financial institutions was investment in the nature of PMS. Therefore, for the same reasons recorded above in CP No. 19/1995, this notice also is liable to quashed. There is an additional ground as well viz. decision dated 17th October, 1993 rendered by this court in Crl.M.M.No. 42 of 1996 entitled Power Grid Corporation of India Ltd. v. Registrar of Companies. In those proceedings the company had challenged the complaint lodged by the ROC before the court of the Additional Chief Metropolitan Magistrate, Delhi alleging offences committed by the company under Section 76(5), 17/291 readwith Section 629-A, Section 292(i)(d)/(e) r/w Section 629-A, Section 49(9) and Section 58-A read with Rule 2 (b) (x) read with Rule 3 (2) of the Companies (Acceptance of Deposits) rules, 1975 read with Section 58-A(6) of the Act. Those proceedings were quashed on the ground that there was no notification delegating powers of Central Government under Section 637 to the ROC and, therefore, ROC could not have filed suca complaint.32. This petition is also allowed and impugned show cause notice dated 9th November, 1994 is hereby quashed.