Delhi High Court
Dinesh Saini vs Uoi And Ors on 23 July, 2013
Author: V. K. Jain
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 23.07.2013
+ W.P.(C) 9003/2011
DINESH SAINI ..... Petitioner
Through Mr. Tanuj Khurana, Advocate
versus
UOI AND ORS ..... Respondents
Through Ms. Inderjeet Sidhu, Adv. for UOI/R-1 and 2
Ms. Shalini Kapoor, Adv. for R-3
CORAM:
HON'BLE MR. JUSTICE V.K.JAIN
JUDGMENT
V.K.JAIN, J. (ORAL)
1. Section 210 of the Companies Act, 1956 to the extent it is relevant for our
purpose requires a company to hold its Annual General Meeting for considering
profits and loss account and balance sheet, within six months of the close of the
financial year. The said section also permits the company to extend the financial
year by upto three months. The period can be further extended by upto 6 months
with the special permission of the Registrar of Companies.
2. In the case before this Court, in terms of Section 210 of the Companies Act,
respondent no. 3 which is a company registered under the Companies Act, 1956
was required to hold its Annual General Meeting on or before 30.09.2011, its
financial year being 01.04.2010 to 31.03.2011. No decision prior to 11.08.2011
was taken by respondent no. 3 company to extend the accounting year. It was only
by way of resolution dated 11.08.2011 that the company decided to extend the
accounting year 2010-11 by three months so as to end the said year on 30.06.2011.
Consequently, it became eligible to hold the Annual General Meeting, for the
purpose of considering the account and balance sheet, on or before 31.12.2011.
3. The contention of the learned counsel for the petitioner is that the decision to
extend the accounting year for a period upto three months can be taken by the
company before the end of the financial year or at best before the period by which
the financial year is to be extended, expires and not thereafter. In other words,
according to the learned counsel, the decision to extend the accounting year ought
to have been taken on or before 31.03.2011 or at best by 30.06.2011whereas in the
present case it was taken on 11.08.2011 after the aforesaid three months had
already expired.
4. The learned counsel for the respondent no. 3, on the other hand, submits that
the decision to extend the financial year could be taken by the company even after
expiry of the period by which the financial year is sought to be extended and there
is no requirement of law that such a decision has to be taken before expiry of the
financial year or the period by which the financial year is sought to be extended.
5. The learned counsel appearing for respondent nos. 1 and 2 i.e. Registrar of
Companies also supports the contention of learned counsel for respondent no. 3 in
this regard. She has in this regard drawn my attention to para 4 of the reply filed
by respondent nos. 1 and 2, which reads as under:-
"That when it came in the notice of the ROC, that the aforesaid
company has not filed Annual Return and Balance Sheet for the year
2010-11, the office of respondent issued the show cause notice dated
23.12.2011. In response to that the company vide its letter dated
2.1.2012 replied that they have extended the financial period (from
1.4.2010 to 31.3.2011) to (from 1.4.2010 to 30.6.2011) and hence the
company could hold AGM by 31st December, 2011. The company did
hold the AGM on 21st December, 2011 and the accounts of a period of
15 months from 1.4.2010 to 30.06.2011 were approved at the AGM.
Accordingly, the company was to file its balance sheet and P&L
account by 19th January, 2012 i.e. within 30 days from the date on
which the balance sheet and P&L account were laid in the AGM and
annual return by 18th February, 2012 i.e. within 60 days from the day
on which AGM held."
6. I have carefully examined the provisions of Section 210 of the Companies
Act. The said provision does not require the company to take decision to extend
the financial year, either by the end of the financial year or within the time period
by which the financial year is to be extended. The decision to extend the financial
year, therefore, can be taken at any time though the period cannot be extended by
more than three months without special approval of the Registrar of Companies.
To take an example, if an company is expecting to finalize its accounts and balance
sheet in time and towards the fag end of the financial year, it finds that for some
reason or the other, it shall not be in a position to finalize the accounts and balance
sheet by the end of the financial year, in case the contention of the learned counsel
for the petitioner is extended, it will have to convene a Board meeting on or before
the end of the financial year. Considering that, sometimes, there may be a last
minute glitch in finalization of accounts and balance sheet, the need to extend the
accounting year may arise say on 29th or 30th of the March in a case where the
financial year ends on 31st March, 2013. It may not be possible for every company
to convene the Board Meeting at such a short notice. Therefore, it would be
unrealistic to take a view that in every case, the company must take decision to
extend the financial year, before the financial year or the period by which the
financial year is sought to be extended, expires. Neither there is such requirement
laid down in Section 210 of the Act nor there is any necessity to read such a
requirement in the provisions of the Act.
7. Considering that the time available to the company is only three months and
thereafter, it will necessarily have to go to Registrar of Companies seeking a
special approval for extending the financial year beyond three months and
obviously, the Registrar of Companies would not accord such an approval unless
he is satisfied that there are sufficient reasons for granting such an extension, I find
no illegality in the decision taken on 11 th August, 2011, to extend the financial year
by 3 months.
I find no merit in the present writ petition and the same is dismissed as such.
No order as to costs.
V.K. JAIN, J
JULY 23, 2013
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