2012 (5) TMI 115 - HC - Companies Law

Company in liquidation - The statement of affairs has not been filed by the respondents within the period of 21 days. Condonation of delay - Held that an application under Section 454 has been pending from the year 2005, the records were perused by this Court in depth to find out as to whether any purpose would be served in retaining the main application in C.A. No. 672/2005 on file without proceeding further in the matter when the statement of affairs has been filed subsequently. The said application though not listed in the cause-list today, on the perusal of the subsequent order sheet, it is found that the same has not been disposed of. a perusal of the reasons assigned in the application supported by an affidavit seeking condonation of delay would indicate that apart from the amount which was due and payable to the creditors who had initiated the winding up petition in Co.P.No. 91/2002, the Company-in-liquidation was also due certain amounts to KSIIDC. The manner in which the statement of affairs has been filed on 30.05.2007 and the revised statement on 23.10.2007 would indicate that immediately on C.A. No. 869/2005 being disposed of, necessary steps have been taken by the respondents for filing statement of affairs. As already noticed, the deficiencies in the statement of affairs in any event would entail its consequence in accordance with law and this proceedings cannot be held on, as it would have to conclude with its consequences. Delay is condoned

Summary

Issues:
Delay in filing statement of affairs under Section 454 of the Companies Act.

Analysis:
The judgment pertains to an application filed under Section 454 of the Companies Act regarding the delay in filing the statement of affairs by the erstwhile Directors of a Company in liquidation. The Court noted that the statement of affairs was not filed within the stipulated 21 days after the order of winding up. The Official Liquidator initiated proceedings, and after framing charges and examining witnesses, the matter was set for recording the respondents' statements. However, due to non-availability of all respondents, the matter was adjourned. The Court considered the pending application seeking condonation of delay in filing the statement of affairs, emphasizing the need to address this issue first before proceeding further.

The Court observed that the Official Liquidator had pointed out discrepancies in the statement of affairs, specifically regarding bank balance, loans, debtors, and securities, which were not rectified by the respondents. The judgment highlighted that non-compliance with these deficiencies should not impede proceedings under Section 454, as the primary concern is timely filing of the statement of affairs and providing a sufficient cause for any delay. The respondents had filed an application seeking condonation of delay, acknowledging the delay and providing reasons for it. The Court considered the efforts made by the respondents to revive the company post-winding up order, leading to a reasonable cause for the delay in filing the statement of affairs.

Consequently, the Court decided to condone the delay subject to certain terms. The first respondent, being in charge of the company's affairs, was directed to pay costs of Rs. 10,000 within four weeks to the Official Liquidator. Failure to comply with this payment condition would allow the Official Liquidator to seek revival of proceedings against the respondents. The Court allowed the application seeking condonation of delay and discharged the respondents, thereby disposing of the main application regarding the delay in filing the statement of affairs under Section 454 of the Companies Act.