TMI Blog2005 (7) TMI 372X X X X Extracts X X X X X X X X Extracts X X X X ..... by the respondents, the official liquidator filed the present application to punish them. This court upon considering the rival contentions and upon hearing learned counsel appearing on behalf of the parties, came to the conclusion that respondents Nos. 1 and 5 did not show any reasonable cause nor reason for not filing the statement of affairs, and accordingly, by order passed as farback as on June 14, 2002, held that respondents Nos. 1 and 5 failed to comply with the provisions of section 454 of the Companies Act by filing the statement of affairs of the company in liquidation within the stipulated time, and as such, are liable for punishment for non-compliance with the provisions of section 454 of the Companies Act. The offence of failure to file the statement of affairs of being a continuous offence, while deferring the punishment to be imposed on respondents Nos. 1 and 5, directed them to file detailed statement of affairs within four weeks. Heard learned counsel for the official liquidator, learned counsel for respondent No. 1 and learned counsel for respondent No. 5. Learned counsel for the official liquidator submitted that respondents Nos. 1 and 5, who are the promo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r respondent No. 1 submitted that the hearing so contemplated under the said section, is not merely confined to oral submission, but also includes production of material bearing on sentence, and in support of this contention, he placed reliance on the judgment of the apex court in Santa Singh v. State of Punjab, AIR 1976 SC 2386. Learned counsel for respondent No. 5 submitted that though respondent No. 5 filed the statement of affairs, he could not comply with the objections raised by the official liquidator in their totality because respondent No. 1 who was looking after the sales and was in custody and possession of the records and books of account did not extend the necessary co-operation. He submitted that whatever information was in the knowledge and possession of respondent No. 5, he had furnished the same in the statement of affairs, and unless respondent No. 1 provides further information, he will not be able to comply with the uncomplied objections. At any rate, he submits that respondent No. 5 though was the managing director of the company since 1992, he had sold his interest therein to third parties, and now he has become bankrupt and penniless, and presently he i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1 in spite of lapse of more than two years and in spite of granting sufficient time, had not filed the statement of affairs, and in fact, has even now taken an adamant and obstinate stand that he was merely a promoter and consultant and that he had no access to the records, and more so when the company was taken over by the A.P.S.F.C. even before it went into liquidation. Though respondent No. 1 had contended that he was not a director and was not accessible to the records, the fact remains this aspect of the matter was considered by this court earlier, and by order dated June 14, 2002, came to the conclusion that the day-to-day affairs of the company were being looked after by respondent No. 1, and even according to his own version, he was in possession of some of the records, which were said to be with the auditor, and though respondent No. 1 preferred appeal against the said order, it is stated that the same was dismissed. Be that as it may, even though counsel for respondent No. 1 contended that mere was reasonable cause for respondent No. 1 not to file the statement of affairs, no reasonable excuse or cause was pleaded for his failure to file the statement of affairs, when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Before proceeding to quantify the quantum of sentence to be imposed on respondents Nos. 1 and 5, this court would like to place on records its displeasure that though this court is passing orders of winding up against the companies, in majority of the cases, the post-winding up process is moving at a snail's pace, leaving the investors, creditors and the financial institutions in the lurch. After the passing of winding up orders, when notices or summons are issued either by the official liquidator or the court, requiring the ex-managing director and other ex-directors, who were in charge of the day-to-day affairs of the companies prior to their winding up, to file the statement of affairs as required under section 454 of the Companies Act, 1956, they are successfully evading the service of the summons, and on some occasions they have even refused to receive the same. On the other hand, they are stealthily making constant efforts to alienate the valuable properties of the company. When bailable and non-bailable warrants are issued by the court, for securing the presence of the ex-managing director or ex-directors, who are on the run, it is unfortunate to note that they are remaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies, would be defeated. Now, coming to the question of imposition of sentence on respondents Nos. 1 and 5, it is required to notice that section 454(5) of the Companies Act deals with the punishment that can be imposed against a person who without reasonable excuse makes default in complying with the requirements of the section. The said provision reads as follows : "If any person, without reasonable excuse, makes default in complying with any of the requirements of this section, he shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to one thousand rupees for every day during which the default continues, or with both. From a reading of the above provision, it is clear that a person who defaults in complying with any of the requirements of the section, without any reasonable excuse would be punishable with imprisonment for a term which may extend to two years or with fine which may extend to one thousand rupees for every day during which the default continues or with both. Section 454(8) of the Companies Act defines "the relevant date" to mean in a case where a provisional liquidator is appointed, the date of his a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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