1997 (10) TMI 327 - HC - Companies Law

Summary

Issues:
Application under section 454 of the Companies Act, 1956 to punish ex-Directors for failing to submit company affairs statement within stipulated period.

Analysis:
The Official Liquidator filed an application seeking punishment for ex-Directors of a company in liquidation for not submitting the statement as to the company's affairs within the prescribed time. The ex-Directors were required to submit this statement within 21 days from the appointment of the provisional liquidator. The Managing Director, a non-applicant, had filed a winding-up petition and claimed not to be a Director at the relevant date. However, he later submitted the company's records to the Official Liquidator and filed the statement based on those records. Other non-applicants claimed they couldn't prepare the statement as the records were with the Managing Director, who eventually submitted them. The court considered whether the non-applicants should be punished under section 454(5) for defaulting without a reasonable excuse.

The court noted that the liability to submit the statement lies with the person holding a specific position in the company at the relevant date. In this case, the Managing Director ceased to be a Director before the relevant date, and he submitted the records and statement later. The other non-applicants also faced difficulties due to the Managing Director withholding the records. They submitted the statement once the records were made available. The court found that there was a reasonable and sufficient cause for the delay in filing the statement, considering the circumstances and the disputes within the company.

Ultimately, the court dismissed the application, concluding that there was no case for punishing the non-applicants under section 454(5) as they had valid reasons for the delay. The non-applicants were discharged from any liability in this matter.