1. This is a complaint filed by the official liquidator against Shri Jagannath DAS ex-director-in-charge of the China Clay Refinery Company (Private) Limited (in liquidation) (hereinafter referred to as the company) to take cognizance of the offence under Sub-sections (5) and (5A) of Section 454 of the Companies Act, 1956 and impose necessary punishment on the said accused ex-director-in-charge as required under the law, in the circumstances hereinafter stated.
2. On January 21, 1966, there was an order for winding up of the company under the provisions of the Act and the official liquidator was directed to take charge of properties and effects of the said company as liquidator.
3. Under Section 454(3) of the Act, the accused ex-director-in-charge of the company was to submit a statement of affairs of the company in the prescribed form verified by an affidavit within twenty-one days from the relevant date, namely, the date of winding up order or within such extended time not exceeding three months from the date as the official liquidator or the court may, for special reasons appoint.
4. On February 11, 1966, the statutory period of twenty-two days as provided under Section 454(3) of the Act expired.
5. Thereafter, the official liquidator gave notice dated March 21, 1966, to the said accused ex-director-in-charge to submit a statement of affairs of the company within April 21, 1966 (exhibit 1). The said notice was received by the accused ex-director-in-charge on March 23, 1966, as will appear from the acknowledgment of postal notice (exhibit 1-A).
6. It was not until April 19, 1966, that the accused ex-director-in-charge wrote a letter (exhibit 2) to the official liquidator that the vigilance police had taken away the balance-sheet, minutes register, audit reports, share certificates and money receipts on January 9, 1966 ; that the details as required in the notice could not be furnished nor would he be able to collect those papers and documents by April 21, 1966, as required under the notice. The accused ex-director-in-charge further prayed that the forms and instructions for preparation of the statements might be made available to him so that he could enable himself to submit the statement of affairs of the company as stated in the said letter.
7. On April 25, 1966, the official liquidator, by registered parcel, sent the necessary forms, etc., to the accused ex-director-in-charge as requested by him with instructions to file the statement of affairs as soon as possible.
8. On May 25, 1966, the official liquidator issued a reminder to the accused ex-director-in-charge but in spite of the reminder the accused ex-director-in-charge had not filed the statement of affairs as required under the law.
9. On June 8, 1966, the accused ex-director-in-charge intimated to the official liquidator that the information called for was under compilation and that it would be supplied soon.
10. On June 27, 1966, a complaint was filed by the official liquidator against the accused ex-director-in-charge on the ground that the accused ex-director-in-charge, without reasonable excuse, made default in complying with the requirements of Section 454 of the Act,
11. On September 10, 1966, the complaint case came up for hearing before this court. The substance of the accusations was explained to the accused ex-director-in-charge. He stated that he had defaulted in filing the statement of affairs of the company as required under Section 454 of the Act and that he would show cause as to why he did not do so. The case was ultimately fixed for hearing and the taking of evidence in the case on the date as hereinafter stated.
12. On January 5, 1967, the trial of the com plaint case filed by the official liquidator commenced. The head assistant of the office of the official liquidator was examined as P.W. 1 on behalf of the complainant and documents relied on on behalf of the complainant were marked as exhibits. On the same date, examination of the accused was recorded under Section 364, Criminal Procedure Code, on behalf of the defence, the accused ex-director-in-charge was examined as D.W. 1 and documents relied in defence were also marked as exhibits.
13. In due course, arguments both on behalf of the complainant and accused were placed before this court by reference to the evidence, both oral and documentary, as part of the records herein.
14. The defence in substance is stated to be this :
It was by reason of the vigilance police having taken away the necessary papers as early as January 9, 1966, before the winding up order was passed, that the accused ex-director-in-charge could not file the statement of affairs within time. It is said that the accused was trying his best to get back the papers from the vigilance police for the purpose of filing the statement of affairs. In fact, on August 4, 1966, he filed a statement, which however, was defective in that it was not complete. The defence point is that it is not a case of wilful default ; the accused was trying to get back the papers from the vigilance police but he did not succeed ; he was not secreting the papers nor was he making any unlawful gain by not filing the statement of affairs as required by law. On August 10, 1966, the official liquidator informed that the statement as filed by the accused ex-director-in-charge on August 4, 1966, was defective ; the accused was asked to send a revised statement. On September 9, 1966, the accused filed the revised statement, which also, was found defective. The accused was again asked to file further revised statement. On January 3, 1967, the accused filed another revised statement.
15. In this context, the relevant provisions of the Act are these :
' 454. (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.
(5) If any person, without reasonable excuse, makes default in complying with any of the requirements of this section, he shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to one hundred rupees for every day during which the default continues or with both.
(5A) The court by which the winding-up order is made or the provisional liquidator is appointed, may take cognizance of an offence under subsection (5) upon receiving a complaint of facts constituting such an offence and trying the offence itself in accordance with the procedure laid down in the Code of Criminal Procedure, 1898 (5 of 1898), for the trial of summons cases by magistrates.
633. (1) If in any proceeding for negligence, default, breach of duty, misfeasance or breach of trust against an officer of a company, it appears to the court hearing the case that he is or may be liable in respect of the negligence, default, breach of duty, misfeasance or breach of trust, but that he has acted honestly and reasonably, and that having regard to all the circumstances of the case, including those connected with his appointment, he ought fairly to be excused, the court may relieve him, either wholly or partly, from his liability on such terms as it may think fit : Provided that in a criminal proceeding under this sub-section, the court shall have no power to grant relief from any civil liability which may attach to an officer in respect of such negligence, default, breach of duty, misfeasance or breach of trust. '
16. In evidence, the accused ex-director-in-charge, while trying to explain the delay in filing the statement of affairs of the company, said that he could not prepare the balance-sheet, as some of the papers were seized by the vigilance police ; that the vigilance police had given a receipt for the papers seized by them from him which he had sent to the official liquidator. The receipt was tendered and marked as exhibit A. The accused ex-director-in-charge further said that he wrote to the vigilance police to return the papers which were seized by them. He also said that when he asked the D.S.P., he said that unless he took special permission of the S.P., the papers could not be returned ; he informed the official liquidator that he was not able to submit the statement of affairs owing to the seizure of the above papers by the vigilance police ; and that it was not possible to prepare a statement of affairs from the papers which were left with him (D.W. 1 Shri Jagannath Das Qq. 3, 8, 9, 10, 12 and 16).
17. Assuming that the accused ex-director-in-charge was handicapped in filing the statement of affairs by reason of the seizure of some necessary papers by the vigilance police prior to the winding-up order, even so, it is not understandable why immediately after he received the notice of the official liquidator on March 23, 1966, the accused ex-director-in-charge did not immediately write to the official liquidator that some of the necessary papers had been seized by the vigilance police. In fact, it was not until April 19, 1966, that the accused ex-director-in-charge for the first time wrote a letter (exhibit 2) to the official liquidator intimating to him about the seizure of the papers by the police and asked for forms as hereinbefore stated.
18. Although, under the law, the punishment for such default in complying with the requirements of Section 454 of the Act is very heavy as quoted above, in the present case, however, there are certain extenuating circumstances, hereinbefore stated, which call for taking a somewhat lenient view with regard to the sentence.
19. In this view of the case, the accused ex-director-in-charge, Shri Jagannath Das, is found to have made default in complying with the requirements of Section 454(3) of the Act and is accordingly fined a lump sum of Rs. 100 ; in default, imprisonment for one month.