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TMI Blog2012 (10) TMI 551X X X X Extracts X X X X X X X X Extracts X X X X ..... our of appellant. - CRL.O.(CO.) 5 OF 2008 and co. a. no. 2137 of 2010 - - - Dated:- 4-7-2012 - Ms. INDERMEET KAUR, J. JUDGMENT CO. A. No. 2137/2010 in CRL.O.(CO.) 5/2008 1. This is an application filed under Rule 9 of the Companies (Court) Rules, 1959 (hereinafter referred to as the 'said Rules') read with Section 482 of the Code of Criminal Procedure by Ms. Radhika S. Minocha seeking a discharge in complaint i.e. Crl. O. (CO.) 5/2008 wherein she has been summoned under the provisions of Section 454 of the Companies Act, 1956 (hereinafter referred to as the 'said Act) for not filing a statement of affairs. The contention of the applicant is that being an employee of the ICICI Bank Ltd. (hereinafter referred to as the 'Bank') she had been appointed as a nominee director on the Board of M/s Daewoo Motors (India) Ltd. (in liquidation) (hereafter referred to as the 'Company') to watch and secure the interest of the Bank who was a lender to the Company. Her contention is that in 1999 she had resigned from the company and had consequently migrated to the USA where she is presently residing. 2. Certain dates are relevant which are also undisputed. The applicant had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irs (general circular No 08/2011) No. 2/13/2003/CL-V which is addressed to the ROC and the Official Liquidator wherein the ROC's have been directed to make a proper application of mind in deciding whether a person can be implicated as 'an officer in default' within the meaning of Section 5 of the said Act. Subsequent circular dated 29.07.2011 of the Government of India, Ministry of Corporate Affairs (Master Circular No. 1/2011) No. 3/57/2011/CL-II had also noted that penal actions which are initiated against the directors who are not charged with the responsibility including nominee directors nominated by Financial Institutions and Banks to the Board of certain companies have to be examined; this circular has again reiterated that there should be a proper application of mind on the part of the ROC in deciding whether a person to be implicated 'as an officer in default' and this can be answered after examining the annual return, Form 32(s) and DIN Database available in the Registry; wrongful prosecutions should be avoided. 6. Learned counsel for the petitioner has placed reliance upon a judgment of the Karnataka High Court in Mother Care (India) Ltd. v. Prof. Ramaswamy P. Aiyar [2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the person who is at that date the manager, secretary or other chief officer of the company, or by such of the persons hereinafter in this sub- section mentioned, as the Official Liquidator, subject to the direction 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." 10. The object of this Section is to facilitate the speedy administration in winding up and to enable the liquidator to get himself apprised without any delay of all the relevant facts relating to the affairs of the company. The statement of affairs is undoubtedly an important document for the Official Liquidator to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er name called." 14. The ratio of the aforenoted judgment as also as is evident from the definition of a director, no distinction has been made between a nominated director or any other director. Thus the first argument propounded by the learned counsel for the petitioner that the applicant was only a nominee director will not by itself be a ground to absolve the said person from the liability of complying with the directions contained in Section 454(2) of the said Act. 15. In this context, the judgment relied upon by the learned counsel for the petitioner in K. Subromani (supra) and Mother Care (India) Ltd. (Supra) would be inapplicable. While the later judgment has not dealt with the provisions of Section 454(2)(a) of the said Act which by itself is a provision independent of the other clauses i.e. clause 454(2)(b)(c) (d), the former judgment has returned a finding largely based upon the immunity granted to a nominee director under Section 27 of the State Financial Corporation Act, 1957 (hereinafter referred to as SFC Act); as noted earlier the Companies Act has made no such distinction in this legislation i.e. no distinction has been drawn between a nominated director or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersons to submit a statement of affairs, subject to the directions of the court, as are in a position to give relevant information. This postulates that the Court would apply its mind and decide in each case whether such direction should be given. It is not contemplated that the court would give direction to the official liquidator to require any and every person to file a statement of affairs merely as an academic exercise. The purpose of getting the statement of affairs is to enable effective and proper winding up of the company. The court is not required to give a direction which in effect would be infructuous. We are in entire agreement with this submission. Indeed, our learned brother has noticed that the appellant was not in a position to know anything about the affairs of the company ever since he was ousted from the management, way back in December, 1966. He had ceased to have approach or access to the books and papers of the company. He did not take part in its management. He even refused to sign the provisional balance-sheet for being submitted to the Punjab National Bank in December, 1966. In this view of the matter, asking such a person to file a statement of affairs is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver her husband had asked to do so; she did not understand the details in the balance-sheet; during this period of 2001-2004, the affairs of the company were being looked after by managers and chartered accountants. The Court was of the view that this defence could only be established and examined in trial. Facts of the present case are distinct. Admittedly in this case, the applicant was a nominee director; Form 32 submitted before the ROC (admitted document) clearly described her as such; this fact is also evident from the queries raised by the Official Liquidator in her statement which was recorded under Rule 130 of the said Rules; questions No. 3 4 have been put to her in her capacity as a nominee director; in this statement she had admitted that she had never signed any document on behalf of the company; she was only watching the financial interest of the ICICI Bank which was a lender to the company; she had hardly attended any board meeting; she was not aware about the knowledge and affairs of the company; significantly no question has also been put to her that she being in possession of the books and accounts of the company was evading her statutory duty. It has also come ..... X X X X Extracts X X X X X X X X Extracts X X X X
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