2009 (4) TMI 461 - HC - Companies Law

Winding up - defendants did not submit the statement of affairs of the Company before the Official Liquidator within the time prescribed - Held that - The said Sri Mahendra Prasad, who had filed the Company Petition, has raised an absolutely frivolous claim merely with a view to mislead this Court with respect to the assets of Company under liquidation and in that effort, he is not alone, rather his brother, namely, Sri Naresh Kumar, has also made some contributions. Thus, it is held that Sri Mahendra Prasad was a Director of the Company on the relevant date and, hence, he was liable to file statement of affairs of the Company, but he was intentionally not done so for the reasons best known to him. Thus, the report petition, reply and supplementary affidavit at flags 20, 22, 22A and 22B are hereby disposed of accordingly.

Issues:
1. Failure to submit statement of affairs post winding up order.
2. Exoneration from filing statement of affairs and dropping prosecution.
3. Claim of resignation from the Board of Directors.
4. Allegations of misleading the Court regarding company assets.
5. Decision on liability to file statement of affairs and conclusion.

Issue 1: Failure to submit statement of affairs post winding up order
The Company Petition was filed under the Companies Act, 1956, seeking winding up of the Company under Liquidation. After the winding up order, the ex-directors failed to submit the statement of affairs within the prescribed time. The Official Liquidator reported the non-compliance and requested submission of account books and records. Subsequently, one of the ex-directors filed for exoneration from filing the statement of affairs and dropping the prosecution case against him.

Issue 2: Exoneration from filing statement of affairs and dropping prosecution
The ex-director claimed to have resigned from the Board of Directors much earlier and argued against the need to file the statement of affairs. However, the Court found discrepancies in the resignation claim, noting that no formal resignation was filed with the Registrar of Companies. The Court observed that the ex-director's actions seemed to mislead the Court regarding the company's assets, leading to a decision against the exoneration and dropping of the prosecution case.

Issue 3: Claim of resignation from the Board of Directors
The ex-director presented various letters and documents to support his claim of resignation, including letters to different authorities. However, the Court scrutinized the evidence and found inconsistencies in the resignation claim, emphasizing the lack of formal communication to the Registrar of Companies or the Managing Director. The Court highlighted the genuineness of the resignation claim as a crucial factor in determining liability to file the statement of affairs.

Issue 4: Allegations of misleading the Court regarding company assets
The Court noted that the ex-director's actions, along with his brother's involvement, appeared to be aimed at misleading the Court regarding the company's assets. The Court concluded that the ex-director's claim was frivolous and intended to mislead, leading to a decision against the ex-director in terms of liability and compliance with legal requirements post-winding up.

Issue 5: Decision on liability to file statement of affairs and conclusion
After thorough examination of the evidence and arguments presented, the Court held that the ex-director was liable to file the statement of affairs of the company under liquidation. The Court dismissed the claims of resignation and exoneration, emphasizing the importance of genuine compliance with legal obligations in such matters. The Court disposed of the petition, reply, and supplementary affidavit accordingly, and directed the continuation of the related criminal miscellaneous case.

In conclusion, the judgment addressed the failure to submit the statement of affairs post-winding up, the claim of resignation from the Board of Directors, and the allegations of misleading the Court regarding company assets. The Court's decision emphasized the importance of genuine compliance with legal requirements and held the ex-director liable for filing the statement of affairs, dismissing claims of exoneration and dropping of prosecution.

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