1978 (4) TMI 161 - HC - Companies Law

Winding up - Power of registrar to strike defunct company off register, Powers of court to grant relief in certain cases

Issues Involved:
1. Obligation of a voluntary liquidator to file statements of accounts.
2. Explanation for defaults in filing accounts by the voluntary liquidator.
3. Application of Section 509 of the Companies Act, 1956.
4. Entitlement to relief under Section 633 of the Companies Act, 1956.
5. Pending prosecutions and possible relief.

Issue-Wise Detailed Analysis:

1. Obligation of a Voluntary Liquidator to File Statements of Accounts:
The petition under section 633(2) of the Companies Act, 1956, concerns the voluntary liquidator of M/s. Shri Chhatarsal Films & Finance Ltd., who defaulted in filing statements of accounts. Section 551 of the Companies Act, 1956, mandates that a voluntary liquidator must file accounts after one year and subsequently at six-month intervals. Rule 327 of the Companies (Court) Rules, 1959, modifies this requirement. Non-compliance results in prosecution under section 551(4), with fines extending up to Rs. 500 for each day of default.

2. Explanation for Defaults in Filing Accounts by the Voluntary Liquidator:
The liquidator explained that no assets, money, or documents of the company were available to him, and no claims were made by creditors or shareholders. The only creditor, M/s. Columbia Films & Finance Ltd., had also gone into liquidation without making any claims. The liquidator asserted that there was nothing to account for and that the obligation to file accounts was unending without any material to proceed. Despite calling a final meeting in 1963, no one attended, leaving the liquidator helpless and forced to continue the liquidation.

3. Application of Section 509 of the Companies Act, 1956:
Section 509(3) requires the liquidator to send a copy of the account and a return of the meeting to the Registrar and the official liquidator. If the meeting lacks a quorum, per section 509(4), the liquidator must return a statement that the meeting was duly called but lacked quorum. Compliance with these provisions would have facilitated the dissolution of the company. The liquidator was unaware of these requirements, and the company's books were unavailable. The court noted that the liquidation continued due to non-compliance with section 509, necessitating adherence to section 551(4) and rule 327.

4. Entitlement to Relief under Section 633 of the Companies Act, 1956:
Section 633 provides relief to company officers who acted honestly and reasonably. Although the definition of "officer" in section 2(30) does not explicitly include liquidators, courts have granted relief to liquidators under this section. The court acknowledged that the liquidator acted as the manager and director during the winding-up process. Given the small size of the company, the absence of complaints from creditors or shareholders, and the liquidator's reasonable actions, the court found the liquidator entitled to relief. The court emphasized that the liquidator's failure to understand section 509 was the primary default, and he had acted reasonably under the circumstances.

5. Pending Prosecutions and Possible Relief:
Several prosecutions were pending against the liquidator for defaults in filing returns. The court could not grant relief for these pending prosecutions but suggested that the Registrar of Companies might consider not pressing these prosecutions in the interest of justice. The court noted that the liquidator could have resigned but did not realize this option. The court granted relief for the default in filing the statement of account for the period ending 29th July, 1977, upon payment of Rs. 100 as costs. The liquidator was advised to call a final meeting to dissolve the company and not file statements for the intervening period, as no further actions had been taken.

Conclusion:
The court allowed the petition, granting relief to the voluntary liquidator for the default in filing the statement of account, and provided guidance on dissolving the company. Pending prosecutions were acknowledged but not directly addressed by the court, suggesting potential leniency from the Registrar of Companies.

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