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2018 DIGILAW 994 (PNJ)

Indo Vanilon Chemicals Ltd. v. Jain Vikas

2018-02-23

RAKESH KUMAR JAIN

body2018
JUDGMENT : CA Nos. 354 and 356 of 2014 1. Applications are allowed as prayed for. CA Nos. 355 and 357 of 2014 2. This order shall dispose of two applications bearing CA Nos. 355 and 357 of 2014 qua respondent No. 1 as the stand taken by the respondent No. 1 in both the application is common. 3. CA No. 355 of 2014 is filed by the Official Liquidator under Section 454 (5) of the Companies Act, 1956 (hereinafter referred to as ‘the Act’) and CA No. 357 of 2014 is filed under Section 456 read with Section 468 of the Act. 4. In brief, M/s. Indo Vanilon Chemicals Limited (Company in liquidation) was ordered to be wound up on 13.05.2011 in CP No. 111 of 2006 in which an Official Liquidator was appointed for taking over the charge of the assets, records, effects and actionable claims of the company in liquidation. Since, the statement of affairs of the company in liquidation have not been handed over to the Official Liquidator, therefore, application bearing No. CA-355-2014 was filed by the Official Liquidator under Section 454 (5) of the Act for taking action against respondents No. 1 to 5 in terms of the aforesaid provisions of the Act and CA-357-2014 was also filed to take the custody of the company’s property through respondents. 5. After notice, respondent No. 1 has filed a reply in which it is averred that the complaint against him is misconceived because he had already resigned on 27.12.2000 whereas the company was ordered to be wound up on 13.05.2011. 6. Learned counsel for respondent No. 1 has referred to resignation of the respondent No. 1 dated 27.12.2000 (Annexure R-1/A) tendered to the Chairman of the Board of Directors of the company in liquidation in which he had requested that he should be relieved forthwith. Apropos, the company had submitted Form No. 32 in terms of Section 303 (2) of the Act to the Registrar of the Companies referring to the resignation of respondent No. 1 w.e.f. 30.12.2000. The said form was accepted by the Registrar of Companies which is evident from the endorsement dated 01.01.2001 made on Form No. 32 and from the seal of the Registrar of Companies. It is, thus, submitted that thereafter respondent No. 1 severed all his connections from the affairs of the company in liquidation. 7. The said form was accepted by the Registrar of Companies which is evident from the endorsement dated 01.01.2001 made on Form No. 32 and from the seal of the Registrar of Companies. It is, thus, submitted that thereafter respondent No. 1 severed all his connections from the affairs of the company in liquidation. 7. He has also raised an alternative argument that even otherwise the Director of the Public Limited Company is elected after every three years and there is no evidence brought on record by the Official Liquidator that respondent No. 1 had ever been elected again after his resignation. 8. He has further submitted that no doubt the Director is responsible for handing over of the statement of affairs to the Official Liquidator in terms of Section 454 (2) of the Act but he has to be the Director on the relevant date which is defined in Section 454 (8) of the Act to be the date on which Provisional Liquidator is appointed or the date on which order of winding up is passed. It is submitted that in both the cases, the said date was 13.05.2011 whereas respondent No. 1 had already resigned in the year 2000 i.e. 11 years back and had no concern with the affairs of the company in liquidation, therefore, he cannot be prosecuted for the alleged default on his part for not submitting the statement of affairs to the official liquidator in terms of Section 454 (5) of the Act and 456 read with Section 468 of the Companies Act, 1956. 9. It is further submitted that the punishment provided for the non-compliance under Section 454 (5) is of imprisonment for a term which may extend to two years, or with fine which may extend to one thousand rupees for every day during which defaults continues, or with both, therefore, the liability of respondent No. 1 is to be proved beyond any shadow of doubt. 10. In order to further support his arguments, he has referred to a decision of this Court rendered in M/s Pawanta Sahib Cement Works (P) Ltd. Vs. Anil Saini; 1994 (2) PLR 303, a judgment of the Gujarat High Court rendered in Official Liquidator of Mayo Hospital Ltd. Vs. Dwipa Yogesh Mankodi; 2005 (123) Comp Cases 253, another judgment of the Gujarat High Court in the case of Official Liquidator Trimurthy Agro-Chemical Ltd. Vs. Anil Saini; 1994 (2) PLR 303, a judgment of the Gujarat High Court rendered in Official Liquidator of Mayo Hospital Ltd. Vs. Dwipa Yogesh Mankodi; 2005 (123) Comp Cases 253, another judgment of the Gujarat High Court in the case of Official Liquidator Trimurthy Agro-Chemical Ltd. Vs. Niranjan Jayatilal Tolia and others; 1985 (1) CLJ 2 and a judgment of the Supreme Court of India in the case of Harshendra Kumar D. Vs. Rebatilata Koley etc; 211 (3) SCC 351. 11. Learned counsel for the complainant/Official Liquidator could not deny the fact that from the documentary evidence brought on record by respondent No. 1, it has been clearly proved that respondent No. 1 was not on the scene of the affairs of the company in liquidation on the relevant date as he had already resigned 11 years back and his resignation was accepted not only by the Company in liquidation but also by the Registrar of Companies when Form No. 32 submitted by the Company was accepted on 01.01.2001. 12. After hearing learned counsel for the parties and taking into consideration the aforesaid facts and circumstances, am of the considered opinion that there is no force in both the applications filed by the Official Liquidator for seeking prosecution of respondent No. 1 for having committed the alleged offence under Section 454 and 456 of the Act for not submitting the affairs of the company and also for not handing over the custody of the property of the company to the Official Liquidator after the company in liquidation was ordered to be wound up on 13.05.2011. The sine qua non in this case is the words “relevant date” which is defined under Section 454 (8) of the Act i.e. the date on which either the Provisional Liquidator is appointed or the company is ordered to be wound up. Section 454 (2) of the Act lays down the liability of the directors or the manager, secretary or other chief officer of the company on the relevant date. Section 454 (2) of the Act lays down the liability of the directors or the manager, secretary or other chief officer of the company on the relevant date. There is a logic about the enactment of this provision as a person who is not in the helms of affairs would not have any access of the record of company for the purpose of submitting the affairs of company in liquidation to the official liquidator and Section 454 (5) is also provided as an internal mechanism to check unscrupulous persons from denying the relevant information/statement of affairs of the company to the Official Liquidator after the company is ordered to be wound up and for that purpose, not only the legislature has provided the physical punishment but also fiscal punishment as well or both. 13. However, keeping in view aforesaid circumstances, much less the fact that respondent No. 1 was not in the helms of affair of the company in liquidation as on the date when it was ordered to be wound up on 13.05.2011 and had already hung his boot/resigned from the affairs of the company, cannot be held liable for non-compliance of Section 454 and 456 of the Act. 14. Accordingly, I do not find any merit in both the applications therefore, same are hereby dismissed qua respondent No. 1 though without any order as to costs. 15. Proceedings qua respondent Nos. 2 to 5 shall continue. Adjourned to 14.07.2018.