1995 (5) TMI 230 - HC - Companies Law

Summary

Issues Involved:
1. Failure to submit the statement of affairs under Section 454 of the Companies Act, 1956.
2. Reasonable excuse for the failure to submit the statement of affairs.
3. Resignation of a director prior to the winding-up order.

Detailed Analysis:

1. Failure to Submit the Statement of Affairs Under Section 454 of the Companies Act, 1956:
The official liquidator filed a criminal complaint against the accused for failing to submit the statement of affairs of the company as required under Section 454 of the Companies Act, 1956. The official liquidator took charge of the company on February 9, 1986, but did not prepare any inventory. Notices were issued to the ex-directors on July 28, 1989, to file the statement of affairs, but they failed to comply. The prosecution alleged that the accused committed an offence punishable under subsection (5) of Section 454 of the Act.

2. Reasonable Excuse for the Failure to Submit the Statement of Affairs:
The court noted that under subsection (5) of Section 454, a default is punishable only if it is made without reasonable excuse. The burden of proving the absence of a reasonable excuse lies on the prosecution. The official liquidator did not prepare an inventory when he took possession of the company, and there was no evidence that the books and records were available or accessible to the accused. The court emphasized that the prosecution must prove that the books were accessible to the directors and that they failed to file the statement of affairs without reasonable excuse. In this case, the prosecution failed to discharge this burden, as there was no evidence showing the whereabouts of the books and records.

3. Resignation of a Director Prior to the Winding-Up Order:
Accused Kuldeep Parkash claimed that he had resigned as a director on December 28, 1983, prior to the winding-up order. Although the letter of resignation was not on record, letters written by the accused to the Registrar of Companies before the winding-up petition was filed indicated that he had resigned. The court found it reasonable to conclude that the accused had indeed resigned, as there was no reason for him to write about his resignation unless he had actually resigned.

Conclusion:
The court held that the prosecution failed to prove that the accused committed a default without any reasonable excuse. Consequently, both accused were acquitted.