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TMI Blog1996 (1) TMI 344X X X X Extracts X X X X X X X X Extracts X X X X ..... icial liquidator issued notices to the ex-directors of the company on May 15, 1990, and May 18, 1990, calling upon them to file the statement of affairs of the company as required by section 454 of the Act. The ex-directors failed to file the statement of affairs of the company in liquidation, even after a lapse of four months. It is averred in the complaint that the ex-directors did not move any application for extension of time for filing the statement of affairs with the official liquidator. They also did not move the High Court in that behalf. The further allegation is that the accused have without any reasonable excuse, knowingly and wilfully flouted the provisions of section 454 of the Act and have, therefore, committed the offence punishable under sub-section (5) of section 454 of the Act. On presentation of the complaint, the accused were summoned. They put in appearance and denied the commission of the offence alleged against them when their statements were recorded on January 17, 1991. The defence taken by Pardip Kumar, accused No. 3, was that he was not a director, manager or employee of Syp-Chem. (India) Pvt. Ltd. However, he had occasionally been helping the directors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d stated that he was the director of the company in liquidation but resigned as such on June 10, 1988, and an intimation in that behalf was sent to the Registrar of Companies on July 4, 1988, which was registered on August 14, 1988, with the Registrar of Companies and he posted a letter to Mukta Devi who was the chairman of the company on June 10, 1988, that he has resigned as a director. He stated that exhibit PW-1/1 is the original certificate issued by the Registrar of Companies indicating that Pardip Kumar Gupta was appointed as a director on the same day and his resignation was accepted and registered. In cross examination he denied the suggestion that he was withholding the account books because the same did not suit him. He did not attend any meeting of the board after submission of resignation. All the account books were lying in the house of Mukta Devi when he resigned and the day to day business was being conducted by Pardip Kumar Gupta. He denied the suggestion that he was the managing director of the company and was managing its affairs. The witness further stated that he did not remember when the meeting of the board of directors was called for the purpose of discussin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... witness as RW-3. She stated that she was the director of the company but was not associated with the day to day working of the company being a lady director. Surya Partap Singh was not related to her but was the class fellow of her son. She had full faith in him in view of his friendship with her son and that she was primarily a house wife. In the cross-examination she stated that she did not know that the possession of the factory was taken by the Haryana Financial Corporation in July, 1988, and whether the records of the company used to be in the factory premises or not. The records, however, never remained with her and it was only Surya Partap Singh who used to get her signatures on the resolutions. She was not aware if Surya Partap Singh wrote her a letter on June 10, 1988, wherein he mentioned that he resigned as a director. She wrote a letter to the Registrar of Companies that it was wrong to say that Surya Partap Singh has resigned and it was not in her knowledge that he resigned as a director on July 4, 1988. She admitted her signatures on letter, exhibit RW-3/1, dated July 12, 1990. She denied the suggestion that the company was being run either by her or by her son. She a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the default continues. A person as named in sub-section (2) of section 454 of the Act in order to escape from the rigour of sub-section (5) of the said section, has to show that he was prevented by reasonable cause in complying with the requirement of the section. The accused before me, therefore, in order to escape liability are required to show that they were prevented by reasonable cause from filing the statement of affairs of the company. In other words, if the accused show reasonable cause in making the default, they are not liable to be punished. It thus implies that the complainant has to establish that the accused persons committed the default without reasonable excuse, before they are dealt with and punished under the provisions of section 454 of the Act. Learned counsel for the complainant placing reliance on P. M. A. Nambudiripad v. Official Liquidator [1979] 49 Comp Cas 81 (Ker) submitted that under the first part of section 454(2) of the Act the persons who were the directors on the relevant date, i.e., the date of winding up in this case, viz., March 30, 1990, and the persons who on that date were the manager, secretary or other chief officers of the company are pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... July 4, 1988. He thus ceased to be a director of the company with effect from that date which is one year prior to the date of winding up order. Moreover, it has not been proved by the complainant that the books of account of the company in liquidation were in the possession of Surya Partap Singh on the relevant date. Exhibit PW-3/1 is an inventory of the mortgaged property prepared on July 27, 1988, when the property of the company had been taken over by the Haryana Financial Corporation after the latter had failed to pay the dues of the said Corporation. This inventory is signed by Surya Partap Singh at item No. 4, but as admitted by Anil Kumar, PW-3, the word "director" has been written in different ink and in a different way. He thus on the strength thereof cannot be said to be a director of the company at the time of passing of the winding up order or even within one year prior to the date of the winding up order. Even otherwise, this inventory was prepared on July 27, 1988, whereas the winding up order was passed on March 30, 1990, i.e., much after the expiry of period of one year of the signing of the inventory. Once it is not shown or established that Surya Partap Singh was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g under lock and key of the Haryana Financial Corporation. He made no effort to find out after contacting the officials of the Haryana Financial Corporation as to whether the record of the company was lying in the factory premises, possession of which had been taken over by it on July 27, 1988. Exhibit PW-3/1, the inventory prepared at the time of taking over possession of the company by the Haryana Financial Corporation though is signed by Pardip Kumar Gupta as a witness but it is clearly proved on the record that he signed the inventory not as a director but in the capacity of a guarantor and it is so recorded under his name. If the said accused was a director in the year 1988, the word "director" would have appeared under his signatures and not guarantor. Pardip Kumar Gupta, appearing as his own witness in unequivocal terms, stated that he was never the director of the company and he signed exhibit. PW-3/1 as a guarantor and that he was not aware about the whereabouts of the account books of the company and that he never gave in writing to the Registrar of Companies that he ever became director. He rather after coming to know that his name was included as an additional director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the initial burden to establish the said ingredient beyond any reasonable doubt. As already noticed, Mukta Devi, accused, was admittedly a director and obviously in charge of the affairs of the company. She has not led any evidence on the record which may slightly suggest that there was a reasonable excuse for her in not filing the statement of affairs. The other defence taken by Mukta Devi, accused, that primarily she was a housewife and thus was not actively engaged in the day to day affairs of the company, does not appeal to any reason that she was not liable to file the statement of affairs within the statutory period. Thus, the offence with which she has been charged stands fully proved against her and accordingly she is held guilty of the offence punishable under sub-section (5) of section 454 of the Act and convicted thereunder. However, having regard to the peculiar facts and circumstances of this case, I order Mukta Devi, accused, to pay a fine of Rs. 40,000. The fine shall be payable within six weeks from the date of this order and in the eventuality of default in the payment of fine, she will undergo simple imprisonment for a period of four months. As regards Surya Part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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