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Issues Involved:
1. Compliance with Section 454(5A) of the Companies Act, 1956. 2. Reasonable excuse for not submitting the statement of affairs. 3. Examination of evidence and witnesses. 4. Legal precedents and their applicability. Issue-wise Detailed Analysis: 1. Compliance with Section 454(5A) of the Companies Act, 1956: The prosecution was initiated under Section 454(5A) of the Companies Act, 1956, which mandates directors to submit a statement of affairs within 21 days of a winding-up order, extendable to three months. R. S. Motors (P.) Ltd. was ordered to be wound up on 7th October 1969. Notices were sent to the directors on 15th December 1969, but no statement of affairs was filed by the extended deadline of 7th January 1970. The complaint was filed on 20th March 1970. 2. Reasonable Excuse for Not Submitting the Statement of Affairs: The directors argued that the company's records were seized by the C.I.D., Crime Branch in October 1967, which hindered their ability to prepare the statement of affairs. The court examined whether this constituted a "reasonable excuse." The directors had limited access to the records, as evidenced by letters and testimonies. The official liquidator's failure to retrieve the records from the police further complicated the situation. 3. Examination of Evidence and Witnesses: The official liquidator's witness, Shri Ram Nath, confirmed the seizure of records and the limited inspection allowed by the C.I.D. The defence witness, Shri R. C. Garg, corroborated the difficulties faced in inspecting the records. The court noted that the official liquidator himself struggled to access the records, as shown in his letter dated 5th June 1971 to the Superintendent of Police. 4. Legal Precedents and Their Applicability: The court considered the Orissa High Court's decision in Registrar of Companies v. Orissa China Clay Refinery Co. Private Ltd., which held that seizure of papers did not absolve directors from filing the statement of affairs. However, the court distinguished this case based on its peculiar facts, emphasizing that the present case involved the seizure of the entire records, making it impossible for the directors to comply. Conclusion: The court concluded that the directors had a reasonable excuse for not submitting the statement of affairs due to the seizure of records by the C.I.D., Crime Branch. The official liquidator's failure to retrieve the records further supported the directors' defence. Consequently, the accused, Shri Jagjit Singh Sawhney and Shri Gurcharan Singh Sawhney, were acquitted.
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