1993 (10) TMI 267 - HC - Companies Law

Summary

Issues:
1. Non-compliance with requirements of section 454 of the Companies Act, 1956.
2. Duty of ex-directors to file a statement of affairs of the company in liquidation.
3. Allegation of offense under sub-section (5) of section 454 of the Act.
4. Legal procedure for trial of summons cases by magistrates.

Analysis:
The judgment pertains to a company application filed under subsections (5) and (5A) of section 454 of the Companies Act, 1956, seeking to summon and punish the respondent for non-compliance with the statutory requirements. The court noted that the duty to file a statement of affairs under sub-section (2) of section 454 arises only for individuals who were directors of the company on the relevant date of winding up. In this case, the affidavit did not establish that the respondent was a director on the specified date, thus creating a crucial gap in the allegation of offense under sub-section (5) of section 454.

Furthermore, the court highlighted that the official liquidator failed to demonstrate that any direction was given to the respondent to file the required statement, as mandated by sub-section (2) of section 454. Despite issuing a notice, the official liquidator did not serve it on the respondent, raising doubts about the validity of the complaint. Consequently, the court found that the official liquidator did not establish the commission of an offense under sub-section (5) of section 454, leading to the dismissal of the company application.

The respondent, in his defense, asserted that he had resigned as a director of the company prior to the winding up order and had fulfilled the necessary formalities regarding his resignation. The court considered the uncontroverted fact of his resignation and concluded that no case was made out against the respondent concerning his obligation to submit the statement of affairs of the company. As a result, the court dropped the proceedings against the respondent and dismissed the company application.

Regarding the legal procedure for trial of summons cases by magistrates, the court referred to a Supreme Court ruling emphasizing that if no offense is disclosed in the complaint, the magistrate has the discretion to drop the proceedings. Applying this principle, the court determined that the facts alleged against the respondent did not amount to an offense under sub-section (5) of section 454. Consequently, the court exercised its discretion to drop the proceedings and dismiss the company application.