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Issues:
1. Interpretation of section 454 of the Companies Act, 1956 regarding the filing of a statement of affairs by directors. 2. Determining the liability of a director for non-compliance with the provisions of section 454(5) of the Act. 3. Evaluation of the Official Liquidator's practice of joining all persons served with a notice as accused in criminal proceedings. Analysis: Issue 1: The judgment revolves around the interpretation of section 454 of the Companies Act, 1956, specifically focusing on the requirement for directors to file a statement of affairs within a specified timeframe. The provision mandates that a statement must be submitted within 21 days from the "relevant date," which is defined as the date of appointment of a provisional liquidator or the date of the winding-up order. The court emphasized the importance of adhering to the statutory timelines and verifying the statement by relevant officers of the company. Issue 2: The case involved a director who sought discharge from criminal proceedings initiated for non-compliance with section 454(5) of the Act. The director argued that he had resigned from his position in October 1997, and his resignation was accepted in January 1998, well before the relevant date of February 16, 1999, when the Official Liquidator was appointed. The court examined the facts, including the submission of resignation, acceptance by the board of directors, and reflection in the company's annual report, concluding that the director could not be held liable for failing to file the statement of affairs as he was not a director on the relevant date. Issue 3: The judgment also delved into the Official Liquidator's practice of joining all individuals served with notices as accused in criminal proceedings. The court criticized this blanket approach, highlighting that the purpose of a show-cause notice is to allow the recipient to present reasons against prosecution. The court emphasized the need for a case-specific evaluation before initiating legal action, urging the Official Liquidator to discontinue the practice of automatically joining all notice recipients as accused. The court stressed the importance of upholding legal principles, sound judgment, and natural justice in such proceedings to prevent innocent individuals from facing unwarranted criminal charges. In conclusion, the court discharged the director from the criminal proceedings, emphasizing the need for a more judicious approach by the Official Liquidator in determining liability and initiating legal actions under section 454 of the Companies Act, 1956. The judgment underscored the significance of factual accuracy, individual culpability, and procedural fairness in such matters to uphold the integrity of corporate governance and legal proceedings.
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