2010 (8) TMI 773 - HC - Companies Law

Cognizance of offence under section 454(5) but from the complaint in these circumstances to continue proceedings against respondent-2 who is aged about 70 years under section 454(5) or (5A) will neither be justified nor in the interest of justice.

Issues:
1. Application filed by Official Liquidator under section 454(5) & (5A) of Companies Act, 1956 against respondents.
2. Deletion of names of certain respondents from the array of party respondents.
3. Possession of unit and records by Rajasthan Finance Corporation and subsequent sale.
4. Notices served for submitting statement of affairs to Ex-Directors.
5. Statutory duty of Ex-Directors to file statement of affairs under section 454(1).
6. Legal obligations of Ex-Directors under section 454(2) of the Companies Act.
7. Requirement for Ex-Directors to furnish statement of affairs even after ceasing to be Directors.
8. Legal sustainability of seeking directions against respondent-2 under section 454(2).
9. Obligation of Directors to comply with statutory requirements under section 454(1) and section 454(2).
10. Disposal of the complaint against respondent-2 aged about 70 years.

Analysis:
1. The Official Liquidator filed an application under section 454(5) & (5A) of the Companies Act, 1956 against certain respondents, seeking cognizance of offenses and further directions to file statements of affairs. One respondent passed away, and the names of other respondents were deleted from the array of party respondents during the proceedings.

2. The possession of the unit and records by Rajasthan Finance Corporation, subsequent sale to M/s IG Telcom Ltd., and M/s Ganpati Resitors (P.) Ltd. were detailed in a status report. The State Bank of Bikaner & Jaipur also sold some spare parts belonging to the company in liquidation.

3. Notices were served for submitting statements of affairs to Ex-Directors, with one respondent providing details regarding the possession of the unit and records by a secured creditor, Rajasthan Finance Corporation.

4. The statutory duty of Ex-Directors to file statements of affairs under section 454(1) was highlighted, emphasizing the importance of complying with the prescribed format within the specified timeline.

5. The legal obligations of Ex-Directors under section 454(2) of the Companies Act were discussed, indicating that even if a Director ceased to hold office, they might still be required to furnish statements of affairs if called upon to do so.

6. The court examined the requirement for Ex-Directors to furnish statements of affairs, even after ceasing to be Directors, emphasizing the statutory duty imposed by the Companies Act.

7. The legal sustainability of seeking directions against a specific respondent under section 454(2) was evaluated, considering the individual's association with the company's day-to-day activities and knowledge of its affairs.

8. The obligation of Directors to comply with statutory requirements under section 454(1) and section 454(2) was reiterated, emphasizing the importance of fulfilling these obligations even after ceasing to be Directors.

9. The disposal of the complaint against a specific respondent, aged about 70 years, was detailed, with the court concluding that continuing proceedings against the individual would not be justified or in the interest of justice based on the available facts and circumstances.

10. The judgment ultimately disposed of the complaint, with no order as to costs, after considering the arguments presented by both parties and examining the material on record thoroughly.

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