9911796707
TMI Blog1981 (11) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... ly of Krishna Vilasom Industries (P.) Ltd. (in liquidation), hereinafter referred to as "the company". The company was incorporated on September 20, 1943, with its registered office situated at Krishna Vilasom House, Manikath Road at Ernakulam. On an application filed in Company Petition No. 1 of 1976, by Kamala Devi, this court by its order dated April 7, 1977, appointed the official liquidator attached to the High Court as the official liquidator of the company. An order was passed on Application No. 794/1977, on January 27. 1978, by this court directing the accused herein to file the statement of affairs of the company within four weeks from the date of that order. But in spite of this order, the accused have failed to file the statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onable doubt that the accused persons have committed default in submitting the statement of affairs of the company as contemplated under section 454 of the Act without reasonable excuse and whether the accused are entitled to be relieved under section 633(1) of the Act. It was strongly contended by the learned counsel appearing for the accused that the initial burden of proving that the accused persons have failed to submit a statement as required under the Act without reasonable excuse is heavily cast on the prosecution, that they have failed to discharge this burden, that the materials on record clearly show that the relevant records and documents were not in the possession or custody of the accused persons at the material time, that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is clear from the express words of the above sub-section that mere default in complying with any of the requirements of the section is not an offence punishable under the sub-section. It is only when it is made out that the default was without reasonable excuse that sub-section (5) can be invoked. The word "default" in sub-section (5) of section 454 is qualified and the qualification is that the default must be without reasonable excuse. Under sub-section (5) of section 454, before punishing a person thereunder, the court has to give a finding whether the default committed by the person was without reasonable excuse. There is nothing in sub-section (5) or in section 454 as a whole which shows or indicates that there is any burden cast o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any excuse that would reasonably suggest that the accused could not comply with the provisions of law is a "reasonable excuse" within the meaning of section 454(5) of the Act and that if the books of the company were in a state of disorder and a number of records and files were with the police, it would be most difficult for the accused persons to prepare a statement of affairs and that the law does not impose an impossible liability on the directors. It was further held that what one has to see in such a case is whether a reasonable person placed in the same situation as the directors would be able to complete the statement of affairs without reference to the books with the police. I am in respectful agreement with the dictum laid down in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the period he was the manager. That there was no business conducted during this period was not disputed. On January 1, 1975, the first accused wrote another letter to the third respondent requesting to hand over the minutes books of the company. Exhibit D-3 is the reply received from the third accused that the minutes books had been taken away by K. Krishna Menon alias Unni and the same were with the advocate. It is not disputed that in the meanwhile proceedings under section 145 (Cr. PC) was initiated by the local Revenue Divisional Officer and some time in August, 1975, the property of the company, Krishnavilasom House, and the records and books therein were all placed in the custody of the village officer who was appointed as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the records and books of the company were available with him for inspection and preparation of the statements. In these circumstances, it cannot be said that the prosecution has succeeded in proving that the records and books have been made available to the accused persons for preparing and submitting statements in accordance with the Act. Various particulars have to be furnished in this statement to be submitted under s, 454. Unless the accused have had an opportunity to inspect the records and books carefully and conveniently they cannot prepare and submit a true statement in accordance with the Act. On the evidence, it cannot be said that the accused persons have not made any effort to recover the records and books of the company. Exhib ..... X X X X Extracts X X X X X X X X Extracts X X X X
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