1995 (2) TMI 292 - HC - Companies Law

Summary

Issues:
Violation of section 454 of the Companies Act, 1956 - Failure to submit statement of affairs in prescribed form.

Detailed Analysis:

The petition was filed under section 454(5) of the Companies Act, 1956, seeking to summon the accused-respondents for not preparing, verifying, and submitting the statement of affairs as required by the Act. The company in liquidation was unable to pay its debts, leading to its winding up, and the official liquidator appointed by the court requested the ex-directors to file the statement of affairs, which they failed to do, resulting in the petition. The accused denied the charges and opted to produce evidence in their defense. Witnesses were presented by both parties, and arguments were heard extensively.

One of the accused, S.P. Bansal, had resigned as a director before the winding up order was passed, so the charges against him were dropped. The main contention revolved around the duty of directors or officers of a company, as per section 454 of the Act, to submit and verify the statement of affairs. The accused directors argued that the company's assets had been taken over and sold by the Punjab Financial Corporation before the winding up order, making it impossible for them to provide the required information for the statement.

The court analyzed the requirements of section 454, emphasizing that the statement of affairs must be filed by individuals in control of the company's affairs at the relevant date. It was noted that the accused directors were not in charge of the company at the time of the winding up order, as the assets had already been sold. The court considered this a reasonable excuse for their failure to file the statement and cited a previous case where a similar reasonable excuse was accepted for not filing the statement of affairs.

The court further examined the prescribed forms and rules related to filing the statement of affairs, emphasizing the need for verification through an affidavit and the specific details to be included in the statement. Given the circumstances and the fact that the accused directors were not in control of the company's affairs when the statement was required to be filed, the court concluded that there was a reasonable excuse for their non-compliance. Consequently, the petition was dismissed, and the accused were acquitted as no case was made out for awarding any punishment to them.