1942 (3) TMI 11 - HC - Companies Law

Winding up Power of company to appoint and fix remuneration of liquidator and Penalty for false statements

Summary

Issues:
1. Conviction under section 282 of the Indian Companies Act for sending a false periodical return.
2. Conviction under section 236 of the Indian Companies Act for falsifying the accounts.
3. Legal appointment as liquidator and authority to act in that capacity.
4. Interpretation of sections 236 and 282 of the Companies Act concerning the accused's role as a Director, Officer, or Contributory.
5. The validity of the accused's defense regarding the entries in the accounts and periodical returns.
6. Determination of the sentence and default imprisonment period for the accused.

Analysis:
1. The accused, acting as the liquidator of a company that went into voluntary liquidation, was convicted under section 282 of the Indian Companies Act for sending a false periodical return. He made entries in the accounts that were misleading and intended to conceal his own debt by falsely categorizing it as 'Bad debts written off.' The court found that these actions were done with a dishonest purpose to avoid payment of his debt, leading to the conviction by the Sub-Divisional Magistrate and subsequent affirmation by the Additional Sessions Judge.

2. Additionally, the accused was convicted under section 236 of the Companies Act for falsifying the accounts. The entries made by the accused, including writing off his own debt and manipulating share capital figures, were deemed false and dishonest. The court held that the accused's actions were aimed at concealing the true financial position of the company, leading to the conviction by the Sessions Judge, with the sentence reduced to the period already served.

3. The legal appointment of the accused as the liquidator was questioned, with the defense arguing that the accused was not properly appointed due to a lack of quorum at the extraordinary general meeting. However, the court opined that the accused acted as the de facto liquidator, having accepted the duties and responsibilities of the office, thus justifying his conviction under section 282 of the Act.

4. The interpretation of sections 236 and 282 of the Companies Act regarding the accused's role as a Director, Officer, or Contributory was analyzed. The court determined that the accused, having previously been a Director and a contributory, fell within the scope of these sections, making him liable for the offenses committed as the liquidator.

5. The defense presented by the accused regarding the entries in the accounts and periodical returns was scrutinized. The court found that while some entries may have corresponded with real transactions, the accused's actions, particularly in writing off his own debt as 'Bad debts,' were false and done with a dishonest motive, leading to his convictions.

6. Finally, the court deliberated on the appropriate sentence for the accused. Despite the seriousness of the offense and the dishonest motive behind the actions, the court considered factors such as the passage of time since the offense, the accused's previous trials and imprisonment, and the possibility of insolvency. The sentence was reduced to the period already served, with a remaining fine to be paid within a specified timeframe to avoid further imprisonment.