1976 (8) TMI 121 - HC - Companies Law

Summary

Issues Involved:
1. Applicability of Section 454 of the Companies Act, 1956, to directors who resigned before the winding-up order.
2. Requirement for directors to submit a statement of affairs.
3. Interpretation of Section 454(2) and its sub-clauses.
4. Determination of liability and responsibility for submitting the statement of affairs.

Issue-wise Detailed Analysis:

1. Applicability of Section 454 of the Companies Act, 1956, to directors who resigned before the winding-up order:
The court examined whether directors who had resigned prior to the winding-up order could still be held liable under Section 454 of the Companies Act, 1956. The respondents claimed they had resigned as directors well before the winding-up order, with some resignations dating back to 1965 and others to 1969. The court concluded that the resignation of directors prior to the winding-up order does not render the court powerless to pass an order under Section 454. The court emphasized that an order could be passed against directors who were in office even before one year of the winding-up order.

2. Requirement for directors to submit a statement of affairs:
The court discussed the necessity for a statement of affairs to be submitted and verified by persons who were directors or officers of the company at the relevant date. The relevant date, as defined in Section 454(8), is the date of the appointment of the provisional liquidator or the date of the winding-up order. In this case, the winding-up order was passed on November 6, 1974. Despite the directors' resignations, the court found it necessary to direct them to submit a statement of affairs, as no other individuals were available to provide the required information.

3. Interpretation of Section 454(2) and its sub-clauses:
The court analyzed Section 454(2), which outlines two groups of persons required to submit a statement of affairs: those who were directors or officers at the relevant date and those whom the official liquidator, subject to a court direction, may require to submit the statement. The court noted that directors fall within the definition of officers under Section 2(30) of the Companies Act. The court further clarified that the second category of persons in Section 454(2) includes those who have been officers of the company, even if they resigned before the relevant date. The court found no contradiction between the first and fourth sub-classes of persons mentioned in the section.

4. Determination of liability and responsibility for submitting the statement of affairs:
The court emphasized that the official liquidator sought a direction from the court to require the respondents to submit a statement of affairs. The court determined that it was necessary to direct all respondents to file the statement, given the absence of any other persons capable of providing the required information. The court rejected the argument that a detailed investigation into the possession of books of account was necessary before passing an order. The court concluded that any one of the respondents filing the statement would suffice for compliance, but if none complied, all would risk prosecution.

Conclusion:
The court directed all respondents to file the statement of affairs, clarifying that it was not necessary for all to file individually, but any one filing would suffice. The court's decision aimed to avoid delays and ensure compliance with Section 454, emphasizing the importance of obtaining the statement of affairs for the liquidation process.