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2013 DIGILAW 73 (KER)

OFFICIAL LIQUIDATOR v. N. K. ACHUTHAN

2013-01-31

ANTONY DOMINIC

body2013
JUDGMENT : Antony Dominic, J. This criminal complaint has been filed by the Official Liquidator alleging that accused Nos. 1 to 4 are the directors of the company in liquidation. It is stated that the company was ordered to be wound up by order passed by this Court on 4.1.2010 and that the Official Liquidator was appointed as the Liquidator of the company. This orders were passed in CP. 16/09. It is stated that accused Nos. 1 to 4. being directors of the company on the relevant date, were issued Ext. A2 notice, calling upon them to file statement of affairs as required u/s 454 of the Companies Act. The accused did not file the statement of affairs. However, the other three directors of the Company filed the statement of affairs. On the failure of accused Nos. 1 to 4 to comply with the requirements of Section 454, this criminal complaint has been failed by the Official Liquidator. Summons was issued. The accused entered appearance and were enlarged on bail. Their plea of not guilty was recorded. Thereafter, CW1 was examined in support of the prosecution. Exts.A1 to A4 were marked on behalf of the prosecution and Exts.D1 to D9 were marked on behalf of the accused. 2. According to the complainant, the accused were the directors of the company as on 4.1.2010, the date of winding up. It being the relevant dale as contemplated in Section 454(2). this fact is sought to be proved by Ext. A1, the annual return of the company for the year 2006-07. It is also stated that being directors of the company on the relevant date, the accused had statutory liability u/s 454 to file statement of affairs. The Liquidator also states that the documents of the company were initially available with the company and were thereafter available with the Liquidator. Therefore, the accused had opportunity to peruse those documents and file the statement of affairs. It is stated that the accused failed to file the statement of affairs without any reasonable cause and therefore, have committed offence punishable u/s 454(5) of the Companies Act. 3. However, the case of accused Nos. 1 to 4 is that though they were initially directors of the company in liquidation, they retired from the Board of Directors at the end of 2006-07. 3. However, the case of accused Nos. 1 to 4 is that though they were initially directors of the company in liquidation, they retired from the Board of Directors at the end of 2006-07. In support of this contention, they relied on the annual report for the year 2007-08, copies of which are marked as Ext.D6. It is also their case that in reply to Ext. A3 show cause notice, they stated that they were not directors of the company as on the relevant date. 4. In the light of these contentions raised, the first question that arises to be considered is whether, as on the relevant date as prescribed in Section 454(2), accused were directors of the company in liquidation. Counsel for Liquidation states that the basis on which the accused have been prosecuted is the annual return obtained from the office of the Registrar of Companies. The annual return so obtained is Ext.A1, which is for the year 2006-07. Since the company was ordered to be wound up on 4.1.2010, it being the relevant date, what is to be examined is whether the accused were directors of the company as on that date. To prove that question, Ext. A1 may not be of any assistance. Ext.D6 annual return of the company shows that the accused have retired from the Board of Directors and that subsequently, the Board was reconstituted also. Therefore, with their retirement, the accused have ceased to be in the Board of Directors and if that be so, one will be justified in concluding that the accused were not directors of the company as on the relevant date, viz., 4.1.2010. 5. It was contended by the learned counsel for the Liquidator, there was failure on the part of the company in filing form No. 32 before the Registrar of companies. However, the duty to tile Form No. 32 is primarily with the company and any failure to do so cannot, at any rate, make the accused herein penalty liable for an offence u/s 454 of the Companies Act. 6. Therefore, I am of the view that on the materials available before this Court, it is not proved that the accused were directors of the company as on the relevant date, 4.1.2010. 7. 6. Therefore, I am of the view that on the materials available before this Court, it is not proved that the accused were directors of the company as on the relevant date, 4.1.2010. 7. I also find force in the contention of the counsel for the 4th accused that there is noncompliance of Rule 124 of the Companies Rules. Rule 124 of the Rules prescribe that the Liquidator shall issue individual notice to the persons liable to file statement of affairs as provided in Section 454, It is also provided that such notice shall be in form No. 55. Ext. A2 is the notice issued. This notice is neither in Form No. 55 nor is it addressed individually to each of the accused and hence, Rule 124 is also not complied with. In any case, having regard to the fact that the accused are not found to be directors of the company as on the relevant date, I am unable to hold that any offences have been proved against them. Therefore, the accused are entitled to be exonerated. Accordingly, this criminal complaint will stand dismissed and the accused will stand exonerated of the offences alleged against them.