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TMI Blog2008 (10) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 454(5) of the Companies Act, 1956 (for short 'the Act'). 2. M/s. Kanippayyur Hire Purchase Co. (P.) Ltd., was incorporated on 7-12-1976, under the Indian Companies Act. The company went into liquidation and the liquidator of the company was appointed on 25-1-2002, in C.P. No. 41 of 1999. The complainant issued notice under section 451 of the Companies Act, 1956, to the accused demanding them to file statement of affairs within 21 days from the date of winding up order. According to the official liquidator, there were nine ex-directors of the company including accused Nos. 1 to 7. Two of the directors expired. The company court exonerated accused Nos. 6 and 7. First we will deal with Company Appeal Nos. 30 and 33 of 2003. Appeal filed by the second accused is dealt with separately. 3. Exhibit P3 is the copy of the annual return filed by the company before the Registrar of Companies. It shows that all these accused were directors as on 16-12-1994. The technical assistant dealing with the affairs of the company under liquidation gave evidence on behalf of the official liquidator that the winding up order was passed on 25-1-2001 and on 15-2-2001 the official liquidator sent let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )he fails to obtain within the time specified in sub-section (1) of section 270, or at any time thereafter ceases to hold, the share qualification, if any, required of him by the articles of the company ;" 4. In any event, after April, 1998, they did not participate in any of the business or any of the activities of the company. It is their case that they have informed their resignation to the Registrar of Companies. According to them, immediately on receipt of notice, they informed the Registrar that they have not in the possession of any of the records of the company and they resigned three years prior to the receipt of notice and they also personally met the official liquidator and informed the same. It is their defence that no documents were in their possession after their resignation and the company continued business till it was wound up. It is also submitted by them that since they were not directors of the company, notice under rule 55 cannot be issued to them without direction from the company court. The contention of the official liquidator that even though they were not directors at the time when the company went into liquidation, being ex-directors, they can be issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Court, may require to submit and verify the statement, that is to say, persons- (a)who are or have been officers of the company; (b)who have taken part in the formation of the company at any time within one year before the relevant date; (c)who are in the employment of the company, or have been in the employment of the company within the said year, and are, in the opinion of the Official Liquidator, capable of giving the information required; (d)who are or have been within the said year officers of, or in the employment of, a company which is, or within the said year was, an officer of the company to which the statement relates. (3) The statement shall be submitted within twenty-one days from the relevant date, or within such extended time not exceeding three months from that date as the Official Liquidator or the Court may, for special reasons, appoint. (4) Any person making, or concurring in making, the statement and affidavit required by this section shall be allowed, and shall be paid by the official liquidator or provisional liquidator, as the case may be, out of the assets of the company, such costs and expenses incurred in and about the preparation and making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section (2) of section 454 has two parts. First part deals with officers of the company as on the relevant date and second part deals with the case of ex-officers. A close reading of section 454(2) shows that no order of the court is necessary for demanding a statement of affairs from the persons who are at the relevant time directors or chief executive officers of the company, but, persons mentioned in clauses (a) to (d) of section 454(2) (ex-officers) can also be demanded statement of affairs if directed by the court. In other words, apart from the directors and chief officers of the company on the relevant date, official liquidator can demand statement of affairs from the officers or ex-officers as mentioned in clauses (a) to (d) of section 454(2) by getting orders from the court. The resignation, etc., by itself will not absolve former officers from the obligation of filing statement of affairs. The official liquidator can obtain appropriate direction against them from the winding up court as held in Registrar of Companies v. Bihar Investment Trust Ltd. [1978] 48 Comp. Cas. 579 (Pat.). An officer includes a director as defined in section 230. Therefore, ex-officers like the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Form No. 55. Rule 125 reads as follows : "125. Application by official liquidator under section 454(2).-The official liquidator may apply by summons to the court for an order directing any person who, in his opinion, is liable to furnish a statement of affairs under section 454, to prepare and submit such a statement or concur in making the same. Notice of the application shall be served on the person against whom the order is sought. Where the court makes the order, such order shall be in Form No. 56 with such variations as may be necessary." 8. A reading of section 454(2) shows that with regard to ex-officers who are mentioned in clauses (a) to (d) in the latter part of section 454(2) should be issued notice under rule 125 in Form No. 56 and the official liquidator has to apply for summons to the court for an order directing any persons liable to furnish statement under section 454(2). It is true that time-limit of sub-section (3) applies only to persons who are directors of the company on the relevant date. It does not apply when ex-directors are called upon to submit a statement as held by the Andhra Pradesh High Court in Official Liquidator v. Koganti Krishna Kumar [1997] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liquidator, PW1, gave evidence that ex-directors did not give any documents to the second accused who was elected as the managing director. As held by this court in Official Liquidator v. Smt. K. Indira [1983] 54 Comp. Cas. 644, mere default in complying with the requirements of the section is not enough. The onus is on the prosecution to show that the default was without reasonable cause. In Official Liquidator, Trimurthy Agro-Chemical Ltd. v. Niranjan Jayantilal Tolia [1984] 56 Comp. Cas. 380 (Guj.), it was held that penal provisions must be strictly construed. The prosecution has to prove (1) that the accused is statutorily liable to submit the statement; (2) that he was called upon to do so; (3) that the circumstances showed that he was in a position to do so; and (4) that he did not do so within the prescribed period without a reasonable excuse. The burden of proof rests upon the prosecution. To cast liability to the accused Nos. 1 to 3 and A7 ex-directors, the official liquidator adduced evidence to show that no documents were handed over by them to the second accused. The company court considered the evidence of the official liquidator and observed as follows : "It was true ..... X X X X Extracts X X X X X X X X Extracts X X X X
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