2009 (6) TMI 588 - HC - Companies Law

Statement of affairs under section 454 of the Act - application filed by the official liquidator under section 454(2) of the Companies Act, 1956, to seek the statement - Held that - Even if a person has been a director of the company at any point of time and he has ceased to be so on the relevant date, i.e., the date of winding up order or within one year prior to the relevant date, such a person can be held responsible for not submitting and verifying the statement of affairs in view of the provisions of section 454(2)(a) read with section 2(30) of the Companies Act, 1956, though he is absolved of his responsibility under section 454(1) of the Act. Therefore, it is held that the application filed under section 454(2) of the Act is maintainable. If the stand of the respondent is that consequent to his resignation he had nothing to do with the affairs of the company, then he ought not to have taken part in any of its proceedings post-winding up order being made by this court. On the other hand, the material furnished would make it evident that he participated in the proceeding initiated by the official liquidator subsequent to the winding up order and particularly annexure C makes clear the intention of the respondent herein to be present on June 2, 2003 and on account of the reasons mentioned therein, he could not personally be present and had therefore, sent his representative. The said letter would indicate that the respondent herein was a key person amongst the other directors of the company who were also present and that though he contended that he had no statutory duty as per section 454(1) on account of his resignation, but in view of his participation in the post-winding up proceeding which is evident from the said material, other directors not being there, the direction sought to the respondent to furnish the statement of affairs in terms of section 454(2) of the Act. Application allowed.

Summary

Issues Involved:
1. Maintainability of the application under section 454(2) of the Companies Act, 1956.
2. Sufficiency of material placed by the official liquidator to seek a direction under section 454(2).

Detailed Analysis:

Issue 1: Maintainability of the application under section 454(2) of the Companies Act, 1956

The official liquidator filed an application under section 454(2) of the Companies Act, 1956, seeking a direction to the respondent to file a statement of affairs. The respondent contended that he had been deleted from earlier proceedings under section 454(5) due to his resignation as a director before the winding-up order, and thus, the application was hit by res judicata.

The court analyzed section 454 of the Act, emphasizing the distinction between sections 454(1) and 454(2). Section 454(1) imposes a statutory duty on directors and other officers to file a statement of affairs on the relevant date, while section 454(2) allows the official liquidator to seek a direction to certain categories of persons, including ex-directors, to file the statement of affairs. The court noted that the two provisions are mutually exclusive and independent. Therefore, an application under section 454(2) is maintainable even if a person has been deleted from proceedings under section 454(5) for not complying with section 454(1).

The court referenced relevant case law, including Mother Care (India) Ltd. v. Prof. Ramaswamy P. Aiyar and Official Liquidator, High Court, Allahabad v. B.K. Modi, to support its conclusion that the application under section 454(2) is maintainable. The court held that the official liquidator can seek a statement of affairs from a person who does not have a statutory duty under section 454(1) provided they belong to one of the categories mentioned in section 454(2) and sufficient material is presented.

Issue 2: Sufficiency of material placed by the official liquidator to seek a direction under section 454(2)

The respondent argued that no sufficient material was provided to warrant a direction to file a statement of affairs. The official liquidator contended that the respondent, despite resigning as a director, was actively involved in the company's affairs during the post-winding-up proceedings.

The court examined the material on record, including minutes dated January 13, 2003, a mahazar drawn on June 2, 2003, and a letter from the respondent dated June 2, 2003. These documents indicated that the respondent participated in post-winding-up activities, suggesting he had relevant knowledge about the company's affairs.

The court concluded that sufficient material was placed before it to justify a direction to the respondent to file a statement of affairs under section 454(2). The court emphasized that the respondent's involvement in post-winding-up proceedings contradicted his claim of having no obligation to comply with section 454(1) due to his resignation.

Conclusion:

The application under section 454(2) of the Companies Act, 1956, is maintainable against the respondent, and sufficient material has been presented to warrant a direction for the respondent to file a statement of affairs. The court allowed the application and directed the respondent to comply with the requirements of section 454(2).