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2016 (7) TMI 767 - RAJASTHAN HIGH COURT

2016 (7) TMI 767 - RAJASTHAN HIGH COURT - TMI - Default of Director of the company in liquidation - non filing of statement of accounts of the company in liquidation within 21 days of the winding up order - Held that:- The respondents, the ex-directors of the company in liquidation are guilty of breach of their obligation under Section 454 of the Act of 1956 to file a statement of accounts of the company in liquidation within 21 days of the winding up order dated 17- 10-2003. The default is inte .....

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efective and incomplete, and hence no compliance in the eye of law. - The respondents having been found guilty of contravention of Section 454 of the Act of 1956, the question of sentence remains. The respondents have been in default/ non compliant with the provisions of section 454 of the Act of 1956 for a period over 4380 days from the date of winding up order dated 17-10-2003. Section 454(5) of the Act of 1956 provides for a fine of ₹ 1000/- per day till the currency of the default. .....

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deposited in the Common Pool Fund with the Official Liquidator within a period of six months from today. However, in the event of non payment of the amount of fine as aforesaid, the respondents directors of the company in liquidation shall be liable, in the alternative, to serve simple imprisonment for a period of six months. - S.B. Company Application No. 100/2010 in (S.B. Company Petition No. 4/1999) - Dated:- 19-2-2016 - Alok Sharma, J. For the Applicant OL : Sonal Singh For the Official Liq .....

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ntly vide order dated 30-9-2005, on an application made the Official Liquidator was allowed by this court to exercise the powers under Section 457(1) of the Act of 1956 qua the company in liquidation. This conferment inter alia allowed him to institute any suit/ prosecution in the name and on behalf of the company in liquidation. The Official Liquidator moved an application No.15/2006 for permission of this court to prosecute the respondents under Section 454(5) of the Act of 1956, which permiss .....

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e Act of 1956 the date of winding up) or within such extended time not exceeding three months from that date as the Official Liquidator or the court may for special reasons grant. Sub section 5 of the section 454 of the Act of 1956 provides that if any person without reasonable excuse is non compliant with the requirement of timely filing of the statement of affairs of the company in liquidation he shall be punishable with imprisonment for a term of two years or with fine which may extend to one .....

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that as per the last annual return filed on 30-9-1997 by the company before the Registrar of Companies prior to order of winding up, the respondents No.1 and 2 Mr. Pawan Kumar Lath and Bimal Kumar Lath were the promoter directors of the company in liquidation and continued to be so till the date of winding up order on 17-10-2003. Following the winding up order, notice was sent to respondents No.1 and 2 on 28-11-2003 under Rule 124 of the Rules of 1959. The respondents vide their letter dated ni .....

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accessing the records/ accounts with RIICO such that the respondents may be in a position to file the statement of affairs before the Official Liquidator. It has been submitted that the Official Liquidator, pursuant to the letter received from the respondents, sent a letter dated 7-2-2006 to RIICO requiring it to provide the records/ accounts of the company in liquidation. RIICO, instead, vide letter dated 18-2-2006 informed the Official Liquidator that it had taken over possession only of the f .....

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of the notice dated 28-11-2003, ex-directors letter received on 28-12-2005, letter dated 7-2-2007 sent by Official Liquidator to RIICO, RIICO s letter dated 18-2-2006, 17-4-2006 and letter dated 19-4-2006 sent by Official Liquidator to respondents are enclosed with the application as annexure-A,B,C,D,E,& F. On these facts, it has been submitted by counsel for the Official Liquidator that the respondents are clearly in breach of their statutory obligation to file the statement of affairs wit .....

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d hence they be punished under section 454(5) of the Act of 1956. Reply to application has been filed as also has been an affidavit in evidence in support thereof. It has been submitted that the statement of affairs could not be prepared and submitted as per Section 454 of the Act of 1956 owing to the records and accounts of the company in liquidation being at the company s factory at SP-9B Kukhera Industrial Area District Alwar which was taken possession of by RIICO on 25-11-2003 by resort to S .....

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er the order of the winding up on 17-10-2003 could not be filed. It has been submitted that the circumstances aforesaid constitute a reasonable cause for the respondents not being able to comply with the provisions of Section 454 of the Act of 1956-no offence is thus made out and the application be dismissed. Heard. Considered. From the facts on record it is evident that the two respondents were promoter directors of the company in liquidation and continued so till the date of winding up order d .....

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454 to inter alia mean to the date of winding up order and/ or appointment of the Official Liquidator. The dual defence set up by the respondents noted above is both contradictory and untenable. On the one hand, it has been stated that the statement of affairs could not be filed because the promoter directors had a running dispute with their Chartered Accountant, which was allegedly exacerbated by the fact that the petitioner in the winding up petition had a connection with the Chartered Account .....

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tory at SP-9B Kukhera Industrial Area District Alwar was taken over by RIICO in exercise of powers under Section 29 of the Act of 1951. The falsity of this contention is evident from the fact that in the correspondence with RIICO by the Official Liquidator it was established that no record or books of account of the company in liquidation were found at SP-9B Kukhera Industrial Area District Alwar when it was taken in possession. The taking over of possession of the fixed assets of the company in .....

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ise) have an obligation to control and preserve the records/ accounts of the company as they work as trustees in a fiduciary capacity and except for reasons beyond their control are obliged to comply with the various statutory provisions of the Act of 1956 including section 454 of the Act of 1956 following an order of winding up. In the instant case, it is the case of respondents themselves that the commercial production of the company at SP-9B Kukhera Industrial Area District Alwar was closed o .....

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he ex-directors of the company in liquidation are guilty of breach of their obligation under Section 454 of the Act of 1956 to file a statement of accounts of the company in liquidation within 21 days of the winding up order dated 17- 10-2003. The default is intentional or in any event for reason of their recklessness negligence and disregard of the statutory provisions of law. The defence set up by the respondents for not filing a full and complete statement of affairs for 12 years is wholly un .....

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ment for a salutary purpose. The statements of affairs to be furnished by the director/ manager/ secretary/ a responsible officer of the company is intended to facilitate the winding up process of the company in liquidation-for identifying its assets and liquidating them and recovery of amounts due from the debtors of the company in liquidation to facilitate payment to creditors of the company in liquidation, primarily the workers, the secured/ unsecured creditors, and finally the dissolution of .....

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se the application under Section 454 of the Act of 1956 was filed in the year 2010. The respondents could be served only when the jurisdictional Superintendent of Police was directed to ensure the service on them by pasting notice of the application at their residence in terms of Section 65 of CrPC. They were quite obviously playing truant with the court. The respondents having been found guilty of contravention of Section 454 of the Act of 1956, the question of sentence remains. Section 454(5) .....

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