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Issues Involved:
1. Compliance with Section 454(2) of the Companies Act, 1956. 2. Liability under Section 454(2) of the Companies Act, 1956. 3. Reasonable excuse for default under Section 454(5) of the Companies Act, 1956. Issue-wise Detailed Analysis: 1. Compliance with Section 454(2) of the Companies Act, 1956: The Official Liquidator of Bharat Electric Company Ltd. filed a complaint under sub-section (5) of section 454 of the Companies Act, 1956, alleging that the accused failed to submit and verify the statement of affairs of the company as required by sub-section (2) of section 454. Despite being notified on March 16, 1970, and an order from the court on October 23, 1970, granting one month's time, the accused did not comply. The first accused argued that he and his wife ceased to be directors more than one year before the winding-up date of February 19, 1970, and thus were not obligated under section 454(2). 2. Liability under Section 454(2) of the Companies Act, 1956: The court examined whether the accused were liable under section 454(2), which mandates submission and verification of the statement of affairs by directors, managers, secretaries, or other chief officers at the relevant date, and by persons who have been officers of the company. The accused argued they ceased to be directors by November 28, 1964, as per an affidavit (exhibit D-1) from the Registrar of Companies. However, the court noted that section 454(2) also includes "persons who are or have been officers of the company" without a one-year limitation, unlike clauses (b), (c), and (d), which specify a one-year period before the relevant date. Since the official liquidator had obtained an order on October 23, 1970, directing the accused to submit the statement, the requirements of clause (a) were satisfied. Thus, the accused could not escape liability based on their cessation as directors over a year before the winding-up. 3. Reasonable Excuse for Default under Section 454(5) of the Companies Act, 1956: The first accused claimed a reasonable excuse for default, stating that the company's office was raided, and all records were removed by the Kerala Government on July 3, 1962. He supported this with a judgment (exhibit D-4) from a Magistrate acquitting him in a related case due to the non-availability of records. However, the court found this story "too good to be believed" and rejected it as "absolutely fantastic." The court noted that the company's last general meeting was on August 19, 1961, and it had ceased operations, with its office and movables attached by revenue authorities for arrears of rent. Despite rejecting the raid story, the court acknowledged the practical impossibility of submitting a statement of affairs after nearly a decade of the company's cessation. Thus, the court held that the default was not without reasonable excuse and acquitted the accused of the offence. Conclusion: The court concluded that although the accused were liable under section 454(2) of the Companies Act, 1956, they had a reasonable excuse for not submitting the statement of affairs due to the practical impossibility of doing so after the company's cessation. Therefore, the accused were acquitted of the charges.
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