JUDGMENT 1. Official Liquidator Report No.29 of 2006 is filed by the Official Liquidator on or about 25.02.2006 seeking ratification of his action of taking possession of six shops at Yash Plaza Complex, Surat in view of provisions of Section 531 / 531-A of the Companies Act, 1956. The Official Liquidator has stated while making this prayer that the present occupants of shops No. A-301, A-302, A-303, A-304, A-305 and A-306 have moved to this Court by filing Company Application Nos.364 to 366 of 2005 and 376 to 378 of 2005. The Official Liquidator has further prayed for the direction to the Secured Creditors to produce the documents before this Court regarding mortgaged property as well as registered office of the Company. The Official Liquidator has lastly prayed for the direction to the Ex-Directors of the Company in liquidation to remain present before him for recording of their statement under Rule 130 of the Companies (Court) Rules, 1959 and to give complete details of properties of M/s. Pushpa Synthetics Private Limited (In Liquidation). 2. The Official Liquidator has also filed Criminal Case No.05 of 2006 against the Ex-Directors of the Company in liquidation requesting this Court to take cognizance of the default committed under Section 454 (5) of the Companies Act, 1956 and to issue process against accused Nos.1 & 2 for trying and punishing them in accordance with the provisions of law and in view of the facts stated by him in the complaint. He has also prayed for the direction to accused Nos.1 & 2 to submit forthwith the statement of affairs before him, as on the date of winding up order dated 24.08.2005 with full details. He has further prayed for the direction to accused Nos.1 & 2 to attend to his office for recording their statements under Rule 130 of the Companies (Court) Rules, 1959. 3. Company Application No.241 of 2006 is filed by two unsecured Creditors, namely, M/s. Gayatri Corporation and M/s. IPB Enterprise seeking direction to the Official Liquidator to take over the possession and charge of all the movable and immovable assets and properties of the Company in liquidation as per the order passed by this Court on 24.08.2005 in Company Petition No.240 of 2003. They have also prayed for the direction to the Official Liquidator to take necessary action for obtaining the statement of affairs from the Ex-Directors of the Company in liquidation as per the order of this Court dated 24.08.2005. They have also prayed for the direction to the Official Liquidator to submit a compliance report under Section 455 of the Companies Act, 1956 before this Court. Lastly, they have prayed for the direction to the Official Liquidator to take all necessary steps to dispose of the properties of the Company in liquidation and to disburse the amounts of claims of all the creditors of the Company in liquidation in accordance with law. 4. So far as OLR No.29 of 2006 is concerned, this Court has passed an order on 18.04.2006 wherein on the basis of the statement made by the Official Liquidator, it is recorded that the persons who are holding possession of Shop Nos. A-301 to A-306 had filed various applications in this Court which have been allowed by this Court vide its order dated 29.03.2006 and the Official Liquidator had been asked to restore the possession to the said persons. In view of the said statement, this Court has not granted the prayer No.1 made by the Official Liquidator in his report. With regard to prayer Nos.2 & 3, the Court has issued notice to the respondents making it returnable after 8 weeks. 5. In Criminal Case No.5 of 2006, this Court has passed an order on 21.06.2006 observing therein that inspite of notice issued on 30.03.2006, service could not be effected. Hence, bailable warrants in the sum of Rs.5,000/- were issued against accused Nos. 1 and 2. The Court has also directed the Registry to send the warrants to the Commissioner of Police, Surat, with a specific direction that warrants be served by the concerned police personnel and service report thereof be sent to the Court on or before 3rd July 2006. The Court has also made it very clear that if the warrants are not served, then the concerned police personnel shall submit his personal report in the matter showing the cause for which the warrants could not be served. 6. The Court has also made it very clear that if the warrants are not served, then the concerned police personnel shall submit his personal report in the matter showing the cause for which the warrants could not be served. 6. Since the warrants could not be executed on accused Nos.1 & 2, the Court passed further order on 25.09.2006 issuing fresh bailable warrants upon the accused Nos.1 & 2 and directing the Official Liquidator to take necessary steps in the matter. 7. Since the bailable warrants were served on accused Nos.1 & 2, this Court has passed an order on 20.11.2006 and issued fresh bailable warrant to Shri Rajendra Natvarlal Dilkhush after joining him as accused No.3, on the basis of the information furnished by the accused No.2 since he has not been joined as party to the present proceedings despite the fact that he was also one of the Ex-Directors of the Company in liquidation. 8. So far as Company Application No.241 of 2006 is concerned, this Court has directed the Official Liquidator to file his report and this application was ordered to be heard along with OLR No.29 of 2006 filed by the Official Liquidator. Pursuant to the Court's direction, the Official Liquidator has filed his report on 28.06.2006. Based on the averments made in the said report, this Court has passed an order on 04.08.2006. This Court has issued directions to M/s. M. Kantilal Exports to hand over possession of land and building constructed at Final Plot no.251; to M/s. Creamy Fashions, to hand over the machineries to M/s. Pushpa Synthetics Private Limited and also to Shri Natvarlal R. Dilkhush, Ex-Director and Shri Prashant Natvarlal Dilkhush to furnish details about the company's assets, properties and claims to the official liquidator. Since the names of Rajendra Natvarlal Dilkhush and Prasant Natvarlal Dilkhush have been mentioned in the rent agreement executed with M/s. Gayatri Corporation, the Court has ordered them to be joined as parties in these proceedings. Hence, fresh notice was issued on them. On 18.12.2006, this Court has passed further order in Company Application No.241 of 2006 recording the submissions made on behalf the applicants, namely, 'unsecured creditors' that plants and machineries of the company in liquidation have been sold after the Company Petition was filed. Hence, fresh notice was issued on them. On 18.12.2006, this Court has passed further order in Company Application No.241 of 2006 recording the submissions made on behalf the applicants, namely, 'unsecured creditors' that plants and machineries of the company in liquidation have been sold after the Company Petition was filed. It was, right from the beginning, the case on behalf of the applicants that some boiler was sold to M/s. Creamy Fashions and the partners of the said M/s. Creamy Fashions were the sons of Ex-Director of the company in liquidation. After the order of winding up was passed by this Court, the Official Liquidator approached for getting the possession and thereafter issued the summons upon M/s. Creamy Fashions to hand over the possession of the boiler by letter dated 10.7.2006 and the said M/s. Creamy Fashions informed the Official Liquidator that they are not in possession of any properties/ machineries of the company in liquidation and they have never purchased any properties/machineries from the Ex-Directors of the said company. Hence, there was no question to produce any documentary evidence. In this connection, the Court's attention was drawn by the learned advocate appearing for the applicants to the letter dated 11.2.2004 written by the Ex-Director of the Company in liquidation to the Boiler Inspector, Surat by which the said office was informed that some boiler has been sold to M/s. Creamy Fashions. Initially, a submission was made before the Court that the boiler has been sold as a scrap. However, when one of the Directors was confronted with the letter dated 11.2.2004, he was constrained to concede that it was sold to M/s. Creamy Fashions. The Court was, therefore, of the prima facie view that the partners of M/s. Creamy Fashions have tried to mislead the Court as well as the Official Liquidator. The Court, therefore, directed to join M/s. Creamy Fashions through its partners Shri Mihir Prashant Dilkhush and Shri Krishna Rajendra Dilkhush as party - respondents in the present proceedings and notice were issued on them. The Court has further observed in the order on the basis of the submissions made on behalf of the Ex-Directors of the Company in liquidation that certain other plants and machineries were also sold in scrap. The Court has further observed in the order on the basis of the submissions made on behalf of the Ex-Directors of the Company in liquidation that certain other plants and machineries were also sold in scrap. The Court, therefore, directed the Ex-Directors of the Company in liquidation to file affidavit pointing out therein that all the plants and machineries sold after the filing up of the winding up petition and the amount realized by them. The Ex-Directors and also the partners of M/s. Creamy Fashions were directed to personally remain present before this Court. 9. On 27.12.2006, the Court passed further order in Company Application No.241 of 2006 when partners of M/s. Creamy Fashions as well as the Ex-Directors remained present before this Court. A pointed question was asked to them as to what consideration has been paid to Pushpa Synthetics Pvt. Ltd. for purchase of boiler and whether any Books of Accounts and/or income tax returns of Creamy Fashions were there to know that if the boiler in fact were purchased by them, then it must have been reflected in the Books of Accounts and/or the income tax returns. The Court was informed by the learned advocates of the Ex-Directors and partners of Creamy Fashions that no consideration has been paid to Pushpa Synthetics Pvt. Ltd. towards the aforesaid boiler. The Court was further informed that the said boiler has been sold to one Salim Silk for Rs.1,20,000/-. This Court was, therefore, of the view that the alleged transaction between the Creamy Fashions and said Salim Silk was in breach of RBI Rules and guidelines and the Court was also of the view that the ex-Directors as well as the partners of the Creamy Fashions have not come before the Court with clean hands and the entire transaction of selling the boiler is mala fide. Considering the market value of the Boiler, the Court has directed the ex-Directors to deposit an amount of Rs.3 lacs towards value of the boiler which was sold by them after the presentation of the winding up petition before this Court. The Court has also directed to deposit an amount of Rs.25,000/- towards exemplary costs. The Court further directed the Ex-Directors to comply with the earlier orders passed by the Court dated 18.12.2006 and to file a detailed affidavit with regard to the properties sold by them. 10. The Court has also directed to deposit an amount of Rs.25,000/- towards exemplary costs. The Court further directed the Ex-Directors to comply with the earlier orders passed by the Court dated 18.12.2006 and to file a detailed affidavit with regard to the properties sold by them. 10. On 09.02.2007, a submission was made on behalf of the Ex-Directors that they are in a position to deposit Rs. 1,20,000/- towards valuation of Boiler and the said amount could be deposited by them on or before 12.02.2007. The Court has, therefore, permitted them to deposit the said amount of Rs.1,20,000/- making it clear that the same would not affect any order passed by this Court directing them to deposit the higher amount. 11. After 09.02.2007, the matter could not be listed for quite some time and when for the first time, it was listed on 11.02.2008, the Court has directed the Registry to place Criminal Case No.05 of 2006 along with OLR No.29 of 2006 and Company Application No.241 of 2006. The Court has also directed all the three accused, namely, (1) Mr. Natvarlal R.Dilkhush, (2) Mr.Prasant Natvarlal Dilkhush and (3) Mr.Rajendra Natvarlal Dilkhush to remain personally present before this Court on 15.02.2008. The Court has also restrained M/s.Creamy Fashions from transferring, alienating, selling and otherwise disposing the assets and/or creating any charge thereon of the firm. 12. On 15.02.2008, Mr. Mr. Prasant Natvarlal Dilkhush, one of the Ex-Directors was personally present. The Court was informed that Mr. Rajendra N. Dilkhush is not traceable for the last six months and Mr. Natvarlal R. Dilkhush has expired on 21.09.2003 i.e. prior to the date of filing criminal complaint. A copy of death certificate of Natvarlal R. Dilkhush was produced on record. The Court has, therefore, deleted the name of the accused Shri Natvarlal R. Dilkhush from the proceedings of OJCR No. 05 of 2006. The Court was also informed that it was practically impossible for Prasant Natvarlal Dilkhush to file statement of affairs. A copy of death certificate of Natvarlal R. Dilkhush was produced on record. The Court has, therefore, deleted the name of the accused Shri Natvarlal R. Dilkhush from the proceedings of OJCR No. 05 of 2006. The Court was also informed that it was practically impossible for Prasant Natvarlal Dilkhush to file statement of affairs. With regard to the order passed by this Court on 11.02.2008 restraining respondent No.4 i.e. M/s. Creamy Fashions from transferring, alienating, selling and otherwise disposing the assets and/or creating any charge thereon of the firm, the Court was informed by the learned advocate appearing for the Ex-Directors and the Partners of M/s. Creamy Fashions that the said firm was virtually closed and even the premises which was rented one was given back to the original owner. All these facts were stated by Mr. Prasant Natvarlal Dilkhush who was personally present in the Court and possession receipt dated 26.11.2007 was shown to the Court whereby rented premises of M/s. Creamy Fashions was handed over to the original owner. The Court, therefore, directed the said Prasant Natvarlal Dilkhush to state all these facts on affidavit. The said affidavit should also contain the detail as to where the assets of M/s. Creamy Fashions have gone and if they were sold to any one, necessary details about the persons to whom the assets were sold and how the sale proceeds were utilised by the partners of M/s. Creamy Fashions should also be indicated. The Court has made it clear that if the statement of affairs is not filed, the Court would proceed with the hearing of the criminal case and appropriate order would be passed. 13. On 28.02.2008, Prashant Natvarlal Dilkhush was personally present before the Court and he has filed an affidavit as per the directions issued on 15.02.2008. The Court, therefore, directed him to place all details with regard to insurance claim lodged by the Company as a result of fire took place on two different occasions. 14. On 18.03.2008, the Court was informed by the learned advocate appearing for the Ex-Directors and the Partners of M/s. Creamy Fashions that there was some quarrel on 17.03.2008 and attack was made on the respondent No.3 i.e. Prashant Natvarlal Dilkhush by certain persons and he was under police protection. 14. On 18.03.2008, the Court was informed by the learned advocate appearing for the Ex-Directors and the Partners of M/s. Creamy Fashions that there was some quarrel on 17.03.2008 and attack was made on the respondent No.3 i.e. Prashant Natvarlal Dilkhush by certain persons and he was under police protection. It was further stated before the Court that some settlements were taken place between the parties and an amount of Rs.50,000/- was paid by the respondent No.3 to the applicant of Company Application No.241 of 2006. However, this fact was denied by the learned advocate appearing for the applicant. One certificate issued by the Oriental Insurance Company Ltd., City Branch Office No.2 (171602), 2nd Floor, Tamakuwala Chambers, Navapara wherein it is stated that the amount of claim settled was Rs.4,93,440/- and Rs.1,26,000/- and the said amount has been paid by the Insurance Company to M/s.Pushpa Synthetics Pvt. Ltd., on 16.1.2004 and 23.2.2005. However, in the said letter, it was nowhere stated that against the claim of how much amount, the present claim was settled. The Court, therefore, directed the Insurance Company to produce the entire claim papers of these two claims furnished by M/s.Pushpa Synthetics Pvt. Ltd. 15. On 08.04.2008, the Court passed further order and observed therein that till this date, Statement of Affairs was not filed and the respondent No. 3 was not present before this Court. The Court, therefore, issued non-bailable warrant on the respondent No. 3. With regard to Company Application No.241 of 2006, an affidavit was filed by respondent No.2 and the entire burden was shifted on respondent No.3. Even at that stage, Mr. Utkarsh Jani, learned advocate appearing for the respondents had indicated his desire to withdraw his appearance. On 28.04.2008, the Insurance Company has placed on record the survey report. A statement of Mr. Prashant N. Dilkhush under Rule 130 of the Companies (Court) Rules, 1949 was recorded. The same was produced on record on 30.04.2008. 16. In the above factual background, all the three matters are taken up for final hearing. 17. Mr. Utkarsh Jani, learned advocate appearing for the Ex-Directors and the partners of M/s. Creamy Fashions has submitted that all allegations levelled against them are absolutely baseless and because of the circumstances beyond their control, they could not make the timely compliance of the Court's order. However, there was no malafide intention on their part. 17. Mr. Utkarsh Jani, learned advocate appearing for the Ex-Directors and the partners of M/s. Creamy Fashions has submitted that all allegations levelled against them are absolutely baseless and because of the circumstances beyond their control, they could not make the timely compliance of the Court's order. However, there was no malafide intention on their part. On the contrary, they have tried to settle with all the Creditors of the Company in liquidation and even after liquidation, they have made all their sincere efforts to pay their creditors. There was a major fire in the Company on 15.10.2002 wherein the Company suffered tremendous financial jolt and the entire stock-cum-trade was destroyed. A substantial part of the machinery was also destroyed due to this fire. Immediately after one year, the Company further suffered one more set back whereby the said factory premises were burnt due to the devastating fire which took place on 03.05.2003 whereby the entire stock in trade, raw materials, documents of the Company lying at the registered office, payment vouchers made to the secured and unsecured creditors and substantial part of the machinery were destroyed. The most expensive machines used in the factory were destroyed during the said fire and only some machineries were to be salvaged. Even the said machineries were not in the best condition since they were installed before 10 to 15 years and they were very old and depreciated the value of the same. He has further submitted that after the said two incidents of fire, the factory was never once again started. On the one hand, the Company in liquidation had to face mounting pressure from the unsecured and secured creditors to make their monetary payment and on the other hand, there were many trade creditors whose stock in trade was as on date of fire lying in the factory premises of the Company. The Company in liquidation had no other alternative but to start making payment to all the creditors due to mounting pressure from the Banks as well as financial institutions. One of the Secured Creditors had also taken possession of substantial part of the properties and had also sold the said properties by enforcing their right as a secured creditor. 18. Mr. One of the Secured Creditors had also taken possession of substantial part of the properties and had also sold the said properties by enforcing their right as a secured creditor. 18. Mr. Jani has further submitted that the Company had to pay Rs.3,20,000/- to the workmen of Gujarat General Textile Labour Union who were the employees of the Company in liquidation and an amount of Rs.2,80,000/- was paid to the members of the Jaybharat Labour Union who were also workmen of the Company in liquidation. Thus, the amount of Rs.6,00,000/- was paid in the month of June, 2003 to the workmen in satisfaction of their dues. The said payments were made during the course of business and the machineries had to be sold due to tremendous pressure applied upon the Ex-Directors of the Company by the workmen as well as the trade Creditors. An amount of Rs.3,49,400/- were also paid to the trade creditors amongst whom the present applicant M/s. Gayatri Corporation had also received some amount which was evident from the receipts annexed along with the affidavit-in-reply dated 22.11.2006. The Ex-Directors of the Company in liquidation had no other alternative but to pay workmen as well as the trade creditors as well as the secured creditors the amounts due to them respectively in satisfaction of their dues. It was very unfortunate that knowing fully well that the Ex-Directors of the Company had made every attempt to pay the trade creditors their amounts, the present applicant has made a deliberate and malafide misstatement before this Court by saying that they have not received any single amount from the Company in liquidation. After making payments to the workmen by way of settlement arrived on through their respective Unions, whatever cash on hand was remaining was also paid to the trade creditors. Pursuant to the said affidavit, the Company had also vacated the premises wherein it was functioning and hence, whatever machinery, documents, stock etc. were lying at the factory premises were to be removed by the Company and handed over the possession of the factory premises to the lessor of the said property. There was nothing left in the factory premises except the Boiler as well as certain documents containing the receipts of payments made to the workmen as well as to the trade creditors. The Boiler was also shifted to other premises on temporary basis. There was nothing left in the factory premises except the Boiler as well as certain documents containing the receipts of payments made to the workmen as well as to the trade creditors. The Boiler was also shifted to other premises on temporary basis. He has further submitted that the Boiler which was sold to M/s. Salim Silk Mills and the amount realised there from was also deposited with this Court. The Ex-Directors of the Company did not have any personal property in their name. There was only one vehicle in the house which was also in the name of the one of the Ex-Director. After devastating flood in the city of Surat, the said vehicle was also damaged. Certain important documents were also destroyed. The Ex-Directors were facing multiple litigations amongst which there were criminal complaints under Section 138 of the Negotiable Instruments Act. The statement of affairs could not be filed due to the fact that the record is not available with them. 19. In support of his submissions, Mr. Jani relied on the decision of the Punjab & Haryana High Court in the case of Official Liquidator V/s. Surjit Singh and others, (1998) 94 Company Cases 679 wherein it is held that the respondents were not in possession of any of the particulars referred to in sub-section (1) of Section 454, regarding which the statement of affairs had to be filed. The assets of the Company, cash balance in hand and in the bank, debts and liabilities, names, residences and occupations of the creditors of secured and unsecured debts and debts due to the company along with the names, residences and occupations of the persons from whom they were due and the amount likely to be realised could only be furnished by a person who had the knowledge at the relevant date. The winding up order was passed on July 1, 1988, and on the relevant date, the respondents were not in charge of or in any way concerned with the affairs of the Company. Under the circumstances, the respondents' failure to file the statement was not malafide and they had a reasonable excuse therefor. They were not, therefore, liable to be punished. 20. Mr. Under the circumstances, the respondents' failure to file the statement was not malafide and they had a reasonable excuse therefor. They were not, therefore, liable to be punished. 20. Mr. Jani further relied on the decision of the Punjab & Haryana High Court in the case of Pawanta Sahib Cement Works (P.) Limited (In Liquidation) V/s. Anil Saini and others, (1998) 94 Company Cases 674 wherein it is held that under sub-section (5) of Section 454 of the Act, a mere default in complying with the requirements of this section is by itself not punishable and the term default has been qualified with the words without reasonable excuse . It means that only a default made without reasonable excuse is punishable. The onus of proving that a default was committed and that too without reasonable excuse lies on the prosecution. In the present case, the prosecution had failed to prove that the books were available to the directors for submitting the statement of affairs, especially in face of the defence that the records had been lost in 1990 and the loss reported to the police. The accused were, therefore, not guilty of having committed any offence under Sub-section (5) of Section 454 of the Act. 21. Mr. Jani further relied on the decision of the Delhi High Court in the case of C.R.E. Wood Company Private Limited (In Liquidation) V/s. Sardar Iqbal Singh and another, (1986) 59 Company Cases 978 wherein it is held that since the records of the Company had been completely spoiled, the Directors had reasonable excuse for not filing the statement of affairs. 22. Mr. Jani has also relied on the decision of this Court in the case of Official Liquidator, Trimurthy Agro-Chemical Limited (In Liquidation) V/s. Niranjan Jayantilal Tolia and others, (1984) 56 Company Cases 380 (Guj.) wherein the Official Liquidator of the Company in liquidation had issued notice to the accused to file statement of affairs. On their failure to file statement of affairs, complaint was filed against them under Section 454 (5) and 454 (5-A) of the Companies Act, 1956 for not submitting statement of affairs of the Company. The third accused was not in a position to submit the statement of affairs of the Company. The Court, therefore, held that prosecution failed to prove that the third accused committed default in complying with Section 454 without reasonable excuse. The third accused was not in a position to submit the statement of affairs of the Company. The Court, therefore, held that prosecution failed to prove that the third accused committed default in complying with Section 454 without reasonable excuse. The Court, however, held that other accused did not comply with the requirements of Section 454 and hence, they were liable to be convicted under Section 454 (5) of the Act. 23. Considering the above facts and legal submissions, Mr. Jani has strongly urged before the Court that criminal proceedings initiated against the accused are liable to be dropped. Application filed by the unsecured creditor deserves to be rejected and the report filed by the Official Liquidator is also required to be disposed of. 24. Mrs. Swati Soparkar, learned advocate appearing for the applicant of Company Application No.241 of 2006 has submitted that pursuant to the winding up order passed by this Court, the applicants had filed their claim for outstanding dues from the respondent company before the Official Liquidator in the form of affidavit of proof of debt on 15.10.2005. The applicants were of the view that substantial assets of the company in liquidation have been disposed off or were being disposed off. The applicants, therefor, wrote, two letters dated 1.10.2005 and 29.3.2006 to the Official Liquidator and yet no action was taken. The Company had not filed its financial statements with the Registrar of Companies since 2001 as the last audited accounts were filed as on 31.3.2001. An inaction on the part of the Official Liquidator had caused grave prejudice to the creditors and hence the applicants were constrained to file the present application. She has further submitted that the Ex-directors have filed several affidavits in Company Petition No.312 of 2003 and in Company Petition No.240 of 2003. It has been stated on oath in these affidavits that the Company was a going concern, employing about 400 workmen, had substantial turn over, sufficient assets and sound financial condition. There was mention of fire and damage caused to the administrative office but no reference was made to the damage caused to the machinery. It has been stated that records pertaining to the employees and the excise details were not produced on record. There was mention of fire and damage caused to the administrative office but no reference was made to the damage caused to the machinery. It has been stated that records pertaining to the employees and the excise details were not produced on record. In total contravention to the averments made in the said affidavits, the Ex-Directors have taken contention in the affidavits filed on 20.12.2006, 25.01.2007, 29.01.2007 and 09.02.2007 in the present proceedings that substantial part of the machinery was damaged due to fire and the Company had to sell the same a scrap to salvage the same. She has produced on record letters from the so-called purchasers which indicate that the said machinery was sold during January to May 2003 and May 2003 to June 2003. However, letter from one of such purchasers, namely, M/s. Gomti Sales Corporation dated 13.02.2007 confirms that the details given in the previous letters are not true. 25. Mrs. Soparkar has further submitted that two affidavits filed by the respective General Secretaries of Gujarat General Textiles Labour Union and New Jay Bharat Labour Union confirmed that the Company was closed in 2003 and the Directors of the Company have paid the outstanding dues of the workers in June, 2003. This statement is, however, contrary to the affidavits filed in winding up petitions where the Company confirmed that about 400 employees were working for the Company in November 2003 and March, 2004. 26. Mrs. Soparkar has further submitted that the Ex-Directors have not filed the complete list of the machinery owned by the Company and their respective values. It is unbelievable that the Ex-Directors of the Company did not know which machinery they had with which the business was conducted for years. The Ex-Directors have repeatedly submitted that due to the two consequent fires in the month of October 2002 and May 2003, the entire machinery of the Company was destroyed and hence, could be salvaged as security only. However, in case of first fire of October 2002, the said Ex-Directors have chosen to produce only the certificate from the Fire Department and no Panchnama is produced to indicate the details of the machinery damaged or the estimated value of the damage. The Ex-Directors have also contended in their affidavit dated 29.01.2007 that the entire stock in trade and substantial part of the machinery was destroyed. The Ex-Directors have also contended in their affidavit dated 29.01.2007 that the entire stock in trade and substantial part of the machinery was destroyed. However, the details have not come forth in any form. No document is produced to indicate the claim that the Company must have raised with the Insurance Company which would establish the loss of machinery and/or their values. 27. Mrs. Soparkar has further submitted that in case of second fire of May 2003, the Panchnama is produced along with the certificate from the Fire Department and the FIR filed on 03.05.2003. A close perusal of the same indicates that major damage was done to the administrative office whereby the furniture, fixtures, the books of accounts, books pertaining to Excise, computers etc. were completely destroyed. The only machine mentioned in the said Panchnama is the computer design Plotter. There is not even a word about damage to any other machinery of the said Company. The total damage was estimated to the extent of Rs.16 Lacs only. The said Panchnama can be corroborated with the newspaper report dated 04.05.2003 which confirmed that the fire could be stopped from extending to the machine department and the estimated damage as per the Ex-Director himself was approximately Rs.15 Lacs. This shows that the Ex-Directors now claim to have sold as scrap were not the machinery damaged by the fire. Considering the claim being put up by the Company before the Insurance Company, it is difficult to believe that the survey undertaken by the Insurance Company was also over in the month of May itself so as to enable the Company to sell it as scrap in the month of May itself. The said statements are obtained by the Ex-Directors with a view to avoid the legal consequences as the said transactions are actually undertaken during the pendency of the winding up petitions. 28. Mrs. Soparkar has further submitted that the Company was operating its manufacturing activities from the premises that were rented. A copy of the rent note dated 11.09.1992 is produced and the copy of the registered sale deed dated 11.02.2004 entered into between the original landlords and purchasers M/s. M. Kantilal Exports is produced on the record of the present proceedings. Mrs. Soparkar has further submitted that the Company was operating its manufacturing activities from the premises that were rented. A copy of the rent note dated 11.09.1992 is produced and the copy of the registered sale deed dated 11.02.2004 entered into between the original landlords and purchasers M/s. M. Kantilal Exports is produced on the record of the present proceedings. Clause 10 of the said sale deed confirms that the Company was the sitting tenant in the said premises and it was the responsibility of the purchaser to get the vacant possession of the property from the said tenant. The said tenancy right was also one of the valuable property of the Company and since the said right is given up after the commencement of the winding up, the said realisation has to be taken into custody by the Official Liquidator and be utilized in the interest of the Creditors. 29. Mrs. Soparkar has further submitted that the Ex-Directors have admitted in the affidavits and vide statements made before this Court that Boiler was transferred to M/s. Creamy Fashions without any consideration and the same was in turn sold to M/s. Salim Silk Mills by the said M/s. Creamy Fashions. M/s. Creamy Fashions should not have sold the said Boiler as it had no right or interest in the same. The apprehension, therefore, is that a large part of the machinery has been transferred to M/s. Creamy Fashions unauthorizedly without any consideration and all these transfers have taken place after the commencement of the winding up proceedings. The Partnership firm, namely, M/s. Creamy Fashions which is admittedly a concern of the sons of one of the Ex-Directors, is a camouflage under which business is carried on with all the machineries transferred by the Company in liquidation with the only objective of defrauding the Creditors of the Company in liquidation. She has, therefore, submitted that under Section 456 of the Companies Act, the Official Liquidator should take into his custody or under his control, all the properties, effects and actionable claims to which the Company is or appears to be entitled. 30. She has lastly submitted that the common winding up order was passed by this Court on 24.08.2005 in Company Petition Nos.240 of 2003, 312 of 2003 and 160 of 2004. 30. She has lastly submitted that the common winding up order was passed by this Court on 24.08.2005 in Company Petition Nos.240 of 2003, 312 of 2003 and 160 of 2004. Under Section 441 of the Companies Act, 1956, the commencement of winding up has to be related back to the date of filing of the first petition which is 01.10.2003 in case of Company Petition No.240 of 2003. Considering the provisions of law under Section 536 (2), 531 & 531-A, all the said transfers of property of the Company either after the commencement of winding up or made during the six months prior to the commencement of winding up are void and amounts to nullity. She has, therefore, submitted that the Official Liquidator be directed to take immediate possession of the said M/s. Creamy Fashions and make a complete inventory of its assets and specifically its machineries. The Official Liquidator should further be directed to undertake the valuation of all the properties of the Company so acquired and take necessary action to release the said assets in favour of the unpaid Creditors of the Company in liquidation. She has further requested this Court to appoint a Court Commissioner and/or Special Investigator to look into the matter and carry out complete investigation in the affairs and transactions of the Company since March, 2002. 31. In Criminal Case No.05 of 2006, Shri Rajendra N. Dilkhush, the accused No.3 who is not now traceable has filed an affidavit on 09.02.2007 wherein it is stated that the Official Liquidator has wrongly joined accused No.1 as a party who is father of accused Nos.2 & 3 who has already expired and was only a Director of the Company in liquidation. He has further stated in the said affidavit that the Company in liquidation has faced true and genuine difficulties time and again. There was a major fire in the Company in liquidation on 05.10.2002 which is clear from the certificate of the Surat Mahanagarpalika, Fire Brigade department. During this fire, the Company had incurred tremendous financial loss to the tune of Rs.25 Lacs whereby the entire stork-in-trade was destroyed along with huge amount of machinery which had been established. The applicant has deliberately tried to conceal this particular facts from this Court as well as from the Official Liquidator so as to create a false situation against the ex-Management of the Company in liquidation. The applicant has deliberately tried to conceal this particular facts from this Court as well as from the Official Liquidator so as to create a false situation against the ex-Management of the Company in liquidation. During this fire, substantial amount of important machinery used for dying and printing was burnt and destroyed which was also claimed from the Insurance Company. However, the Insurance Company did not pass the entire claim resulting into a substantial loss to the Company in liquidation. 32. It is further stated that the said fire had created in the factory of the Company in liquidation and the Company could not come of the major substantial jolt and had to try hard to sustain itself from further losses and mounting pressure from Secured and Unsecured Creditors for making the payments on their respective due debts. It is further stated in the affidavit that some of the papers which were available with the Directors were also damaged and destroyed due to devastating flood at Surat wherein some of the invoices of the administering payments made to the Creditors as well as the workmen were also destroyed which were lying in the residential premises of one of the Directors of the Company in liquidation. It is, therefore, stated that the Directors were unable to file the statement of affairs due to such natural disaster. The requirement under Section 454 of the Companies Act with respect to filing of the statement of affairs is only that the motive of ascertaining as to whether any property, book debts, assets etc. are available with the Company in liquidation so as to satisfy the Secured and Unsecured Creditors of the Company. It is further stated that even the registered office of the Company was a rented premises and the Company in liquidation had to hand over possession immediately on demand by the landlord who had in turn sold the said property to some other third party for full consideration. The Company in liquidation was in possession of Shop Nos. A/301 to A/306 situated in Surat which were attached and sold by the administrator of the Diamond Jubilee Co-operative Bank Limited, Surat in satisfaction of its dues. The Company in liquidation was in possession of Shop Nos. A/301 to A/306 situated in Surat which were attached and sold by the administrator of the Diamond Jubilee Co-operative Bank Limited, Surat in satisfaction of its dues. This fact was well within the knowledge of the Official Liquidator as the said properties were taken in possession by the Official Liquidator which were later on released due to the order of this Court on 29.03.2006 directing the Official Liquidator to remove the seal and hand over the possession of the offices to the respective parties. 33. In the above view of the matter, it is requested to the Court that the explanation tendered by the Ex-Directors should be considered as reasonable explanation for not being able to comply with the provisions of Section 454 of the Companies Act, 1956 upon the notice issued by the Official Liquidator to the accused. Lastly, it is assured that the accused are ready and willing to submit the statement of affairs to the Official Liquidator with full details and also are ready and willing to attend to the meeting with the Official Liquidator under Rule 130 of the Companies (Court) Rules, 1959 and for that purpose, 8 weeks time was sought for by the accused. 34. The Official Liquidator has filed his report on 29.04.2008 wherein it is submitted that the accused No.2, namely, Prashant N. Dilkhush remained present in his office on 08.04.2008 and his statement was recorded under Rule 130 of the Companies (Court) Rules, 1959. Since the said statement was inadequate, a supplementary statement was recorded on 21.04.2008. The said statement was produced on the record along with his report. 35. Having heard the learned advocates appearing for the respective parties and having considered their pleadings and submissions made in light of the documents produced before the Court in all the three matters and having given conscious thoughts to the statutory provisions and the decided case law on the subject, the Court is of the view that the Company and its Directors and/or Partners of M/s. Creamy Fashions, have all attempted to dispose off the properties of the Company in liquidation. No accounts were properly maintained nor they were filed with the Registrar of Companies. Fire was committed in 2002 and 2003. No accounts were properly maintained nor they were filed with the Registrar of Companies. Fire was committed in 2002 and 2003. However, there is serious controversy about the extent of damage caused to the property and/or the destruction of datas, records, books of accounts etc. Accused No.3 was untraceable since 2007. Accused No.2 was taking the shelter that the accused No.3 was maintaining books of account and he was to discharge all managerial functions. The statement of accused No.2 recorded under Rule 130 of the Rules clearly revealed that he was not giving correct answers. Even an answer to the question as to whether the Company was ordered to be wound up, he said 'no' to it. In answer to the question as to upto which year the auditor accounts were filed with the Registrar of Companies, he said that since his elder brother was looking after all the legal and account section activity of the Company, he was not aware about the same. In an answer to the question as to who was the person responsible for affairs of the company, he gave the name of Shri Rajendra Natvarlal Dilkhush, the accused No.3 herein residing at 56, Subhash Nagar Society, Surat. However, this accused No.3 is not found despite several summons and warrants issued on him. He is stated to be non-traceable. Initially he filed affidavit on behalf of the Company in winding up petitions. Thereafter, he filed affidavit in the present proceedings. But, thereafter, when the matters are on the verge of finalization, he disappeared from the scene. This shows the conduct of the accused Nos.2 and 3. There was a deliberate and systematic attempt to dupe the creditors, dispose off the assets of the company and commit a breach of discharging their statutory duties by non-filing of statement of affairs under the guise of reasonable excuse and facts and evidence found on record justifies this Court to take the view that the prosecution has discharged its burden to prove that there was no reasonable excuse which prevented the accused from filing the statement of affairs. The accused Nos.2 and 3 are, therefore, liable to be punished under Section 454(5) of the Companies Act, 1956. The judgments relied on by Mr.Jani would not render any assistance to the accused as they are distinguishable on facts. 36. The accused Nos.2 and 3 are, therefore, liable to be punished under Section 454(5) of the Companies Act, 1956. The judgments relied on by Mr.Jani would not render any assistance to the accused as they are distinguishable on facts. 36. In view of the above discussion, all the three matters are disposed off in the following terms:- 37. OLR No.29 of 2006 A. Prayer No.1 was not granted by this Court vide its order dated 18.4.2006. B. In view of the affidavit-in-reply filed on behalf of The Diamond Jubilee Cooperative Bank Ltd., Surat on 1.7.2006, and in absence of any details available on record establishing the charge of Punjab National Bank on any property of the Company in liquidation or even existence of the property itself, the prayer No.2 cannot be granted. C. Since the statement under Rule 130 of the Companies (Court) Rules, 1959 of Mr.Prashant Natvarlal Dilkhush was recorded by the Official Liquidator on 25.4.2008, prayer No.3 in part is treated to have been granted. 38. Company Application No.241 of 2006 i. In view of the finding given by the Court in OLR No.29 of 2006 in view of the fact that no other property is reported to be the property of the Company in liquidation, no directions are issued to Official Liquidator for taking possession of the properties of Company. Compliance report being OLR No.29 of 2006 is already filed by the Official Liquidator. With regard to controversy about boiler, appropriate directions are already issued by interim order of the Court and amount of Rs.1,20,000/- has already been deposited. The Official Liquidator has already taken steps such as recording of statement of the Ex-Director under Rule 130 of the Companies (Court) Rules, 1959 and also filed Criminal Case No.5 of 2006 requesting this Court to take cognizance of an offence under Section 454(5) of the Act and the accused are accordingly punished by this Court for non-filing of statement of affairs. Since no property belonging to the Company is available at present there is no question of sale of any such property or distribution of any amount amongst the creditors. Even otherwise, the applicants are unsecured creditors and hence their turn comes up only after satisfaction of the claims of secured creditors and workers, if any. 39. Since no property belonging to the Company is available at present there is no question of sale of any such property or distribution of any amount amongst the creditors. Even otherwise, the applicants are unsecured creditors and hence their turn comes up only after satisfaction of the claims of secured creditors and workers, if any. 39. Criminal Case No.5 of 2006 :- The Court is not satisfied with the explanation of the accused that in absence of books of accounts they are not in a position to file statement of affairs. Looking to the statement of Mr.Prashant Natvarlal Dilkhush Ex-Director recorded under Rule 130 of Companies (Court) Rules, 1959 and other contradictions in their pleadings and affidavits, it appears to the Court that they have intentionally not filed statement of affairs with an obvious motive of suppression of relevant details about properties, assets investments etc. and hence both of them are liable to be punished with imprisonment of three months and fine of Rs.25,000/- each. Both the accused are hereby directed to surrender themselves to the concerned Police Station within 15 days from today, failing which they would be arrested forthwith. Since accused No.1 expired during pendency of this Criminal Case before the Court his name is already deleted by an order dated 15.2.2008. Accused Nos.2 and 3 i.e. Shri Prashant Natvarlal Dilkhush and Rajendra Natvarlal Dilkhush are accordingly punished. 40. Operative portion of this order and judgment be sent to the District Court, Surat so as to see that accused Nos.2 and 3 be sent to jail as directed above. Amount deposited by the Ex-Directors with this Court towards realization of sale of Boiler be allowed to be withdrawn by the Official Liquidator and amount of cost deposited, if any be allowed to be shared by the Official Liquidator and the applicant of Company Application No.241 of 2006. 41. Subject to the aforesaid directions and observations, all the three matters are accordingly disposed off.