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O.L., Acme Finance P. Ltd. Vs. Krishan Gopal - Court Judgment

LegalCrystal Citation
SubjectCompany;Criminal
CourtDelhi High Court
Decided On
Case NumberCriminal Appeal No. 27 of 1969
Judge
Reported in1975RLR170
ActsCompanies Act, 1956 - Sections 554(5)
AppellantO.L., Acme Finance P. Ltd.
RespondentKrishan Gopal
Advocates: Asha Goel and; Rakesh Sawhney, Advs
Excerpt:
.....to file the statement of affairs under section 454 of the companies act, 1956, despite repeated orders of the court -in view of the fact, it was ruled that directors would be liable to pay a fine of rupees 100 per day or imprisonment to the extent of six months in case of the failure to pay the fine - the aforesaid directors did not include the directors who had resigned - - was ordered to be wound up on 7.2.69. its directors were required to submit statement of affairs within 21 days which they failed to do in spite of notice. respondents 4 and 6 were given repeated opportunities to file the statement but they failed to do so. the order directing these two accused to submit the statement of affairs was passed in april, 1972. in view of their failure to submit the statement of affairs,..........no. 1 to 3 pleaded that they had ceased to be directors long before and hence were unable to file statement of affairs. respondents 4 and 6 were given repeated opportunities to file the statement but they failed to do so. they were held guilty.] (2) it appears to me that there are, as reproduced above and discussed earlier numerous orders consisting of directions by this court to the accused to file the statement of affairs. no statement of affairs has been filed inspire of these directions. i, thereforee, find that there is no reason to hold that the accused are not guilty of an offence under section 454(5) of the act. (3) section 454 of the act consists of two parts. under section 454, the directors who are directors on the date of the winding up are obliged to file the statement.....
Judgment:

D.K. Kapur, J.

(1) [M/S Acme Finance P. Ltd. was ordered to be wound up on 7.2.69. Its directors were required to submit statement of affairs within 21 days which they failed to do in spite of notice. Complaint was filed against them. As respondent no. 5 was not being served she was given up. Respondents no. 1 to 3 pleaded that they had ceased to be Directors long before and hence were unable to file statement of affairs. Respondents 4 and 6 were given repeated opportunities to file the statement but they failed to do so. They were held guilty.]

(2) It appears to me that there are, as reproduced above and discussed earlier numerous orders consisting of directions by this Court to the accused to file the statement of affairs. No statement of affairs has been filed inspire of these directions. I, thereforee, find that there is no reason to hold that the accused are not guilty of an offence under Section 454(5) of the Act.

(3) Section 454 of the Act consists of two parts. Under Section 454, the Directors who are Directors on the date of the winding up are obliged to file the statement of affairs without any order of the Court. On the other hand, the Court has the power to order the ex-Directors to file the statement of affairs as stated in Section 454(2) of the Act. In the present case, various Judges of this Court have given innumerable directions to the accused to file the statement of affairs, Mr. Rakesh Sawhney, counsel for the accused, has been making a series of statements that he was making arrangement to have the statement of affairs prepared. The first order in this respect was passed on 5th April, 1972. That order was restricted to accused Nos. 4 and 6. The final words of the order are-'to come up on 19th May, 1972'. By that date, accused should have arranged to have inspection of the records from office of the C.B.I, after obtaining a letter of authorisation from the Official Liquidator. After that date the case was adjourned again and again without any statement of affairs being filed. Eventually, the accused were examined as their own witnesses on 7th May, 1973 and 9th October, 1973 Shri Krishan Sabharwal stated that he would be preparing the statement of affairs and Shri Jagdish Chand Nagia stated that he would not take any steps to submit the statement of affairs.

(4) The upshot of the matter is that neither the fourth accused nor the sixth accused have taken steps to inspect the records and prepare the statement of affairs. The order directing these two accused to submit the statement of affairs was passed in April, 1972. In view of their failure to submit the statement of affairs, I hold both the accused guilty of an offence under Section 454(5) of the Act and I also hold that they are not entitled to any mercy in respect of the default committed by them as they have been given ample latitude by the Court to submit statement. The punishment prescribed by law enables the Court to impose a sentence of imprisonment and a sentence of fine which may extend to Rs. 100.00 per day. As the accused Nos. 4 and 6 have been in default for at least a period of two years after the direction was given to them, I think the ends of justice would be met by imposing a sentence of fine of Rs. 15,000.00 on each of these two accused. In default of payment of fine, each accused will suffer imprisonment to the extent of six months. The accused are given three month's time to pay the fine. As far as accused Nos. 1, 2 and 3 are concerned, I give them the benefit of doubt as they appear to have resigned as Directors before the winding up order was passed. If the Official Liquidator gets a direction against them under Section 454(2), they may also be directed to help in the filing of the statement of affairs. Accused No. 5 has already been given up.


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