P.C. Balakrishna Menon, J.
1. These appeals under Section 483 of the Companies Act 1956, read with Section 5 of the Kerala High Court Act, 1958, are by some of the accused in Criminal Complaint No. 2 of 1975 in C.P.No. 3 of 1973 before the learned Company Judge.
2. The prosecution was on a complaint filed by the Official Liquidator under Section 454(5A) of the Companies Act for the default of the accused in complying with the requirement of Sub-section (1) of Section 454, within the time allowed under Sub-section (3). The learned Judge found the appellant guilty and they were convicted under Sub-section (5) of Section 454 of the Act. The first accused was sentenced to pay a fine at the rate of Rs. 6/-, accused 2 to 4 at the rate of Rs. 3/- and the fifth accused at the rate of Rs. 2/- for each day of default, as found by the learned Judge.
The first accused was the Managing Director, accused 2 to 4 were the Directors and the fifth -accused was the Manager of the Company in liquidation. M.F.A.No. 355 of 1979 is by the first accused, M.F.A.No. 356 of 1979 is by accused 2 and 3, M.F.A.No. 358 of 1979 is by the fourth accused and M.F.A.NO. 354 of 1979 is by the fifth accused,
3. The Company was ordered to be wound up on 1-6-1973 and the Official Liquidator was appointed as provisional Liquidator on 29-1-1973, There is no dispute before us that accused 1 to 5 are persons falling under Sub-section (2) of Section 454 of the Companies Act required to submit a statement as to the affairs of the Company in the prescribed form to the Official Liquidator containing particulars referred to in Sub-section (1) within the period mentioned in Sub-section (3). The relevant date within the meaning of Sub-section (3) read with Sub-section (8) is 29-1-1973 the date on which the Official Liquidator was appointed as provisional Liquidator of the Company, and the statement under Sub-section (1) of Section 454 is to be submitted to the Official Liquidator within 21 days thereafter. The Official Liquidator as per his letter Ext.P. dt. 1-2-1973 had reminded-accused 1 to 4 of their duty to submit the statement within time. The first accused had as per Ext. 15 letter dt. 19-2-1973 addressed to the Official Liquidator, requested for three months' time to prepare and file the statement. Exhibits P6 to P10 evidence the further correspondence between the Official Liquidator and the first accused. The Official Liquidator ultimately filed Application No. 412 of 1973 before the Company Court for an order directing accused 1 to 5 to make out and submit a statement of the affairs of the Company as required by Sub-section (1) of Section 454 of the Act. The learned Company Judge by Ext.P 11 order dt. 7-11-1974 allowed the application and gave the direction as prayed for. In spite of the direction the statement was not submitted and the Official Liquidator filed a criminal complaint under Sub-section (5A) of Section 454 of the Act before the Company Court on 25-6-1975. It was during the pendency of the criminal complaint that the statement was submitted to the Official Liquidator on 18-11-1975. The statement itself was defective. The same had to be returned twice for curing the defects and a proper statement was filed long afterwards on 3-6-1978. On these facts, the learned Company Judge found the accused guilty of an offence punishable under Sub-section (5) of Section 454. They were accordingly convicted and sentenced as stated above.
4. Counsel for the Official Liquidator has raised a preliminary objection against the maintainability of these appeals. Section 483 of the Companies Act provides for an appeal 'in the matter of the winding-up of a Company`, to the Court to which appeals lie, from any order or decision of the Court in cases within its ordinary jurisdiction. Section 4 of the Kerala High Court Act 1958, in defining the powers of a Bench of two Judges, by Sub-section (6) empowers the Bench to entertain an appeal from any original judgment, order or decree passed by a single Judge, and under Section 5, an appeal lies to a Bench of two Judges from a judgment or order of a single Judge in the exercise of his original jurisdiction. The judgment of the learned Company Judge convicting the accused under Sub-section (5) of Section 454 of the Companies Act is one in the exercise of his original jurisdiction and is-appealable to a Bench of two Judges under Section 5 of the Kerala High Court Act, if the judgment of the learned Company Judge convicting the accused under Section 454(5) of the Companies Act, can be construed as a decision given 'in the matter of the winding-up of a Company' within the meaning of Section 483 of the Companies Act.
5. Reliance is placed on the decision of the Gujarat High Court in Niranjan Jayantilal Tolia v. Official Liquidator Trimurthy Agro-Chemical Ltd. (in liquidation) 56 Com Cas 505, where a Division Bench held that no appeal will lie under Section 483 of the Companies Act, against the decision in a criminal prosecution under Section 454(5A) of the Act. Poti C. J. on behalf of the Bench stated at page 507:
Whether Section 483 will cover all matters including a decision in a criminal prosecution, is a question which has to be considered in the light of the language of Section 483(1). That enables appeals against any order made or decision given in the matter of a winding-up of a Company. 'In the matter', indicates not 'incidental to' the winding-up but is 'part of the winding-up itself. While non-compliance with obligations 'in the matter of winding-up' has been made punishable under the provisions of the Chapter and the procedure thereof prescribed, proceedings for imposing such punishment being matters 'incidental to' the winding-up cannot be said to be a 'part of' the winding-up process itself. Evidently, orders contemplated under Section 483 are matters 'in the matter of the winding-up of a company' which, according to us, would exclude a decision in a prosecution under Section 454(5A).
The learned Judge has referred to an unreported decision of a Division Bench of the same High Court wherein it has been held that Clause (15) of the Letters Patent excludes from its scope an appeal against the judgment passed in exercise of criminal jurisdiction. If an appeal to a Division Bench from a decision of a single Judge in the exercise of criminal jurisdiction does not lie, Section 483 of the Companies Act will be of no avail even on the wording of the section itself. An appeal under Section 483 from any order or decision in the matter of the winding-up of a Company is only to the Court to which appeals lie 'in the same manner in which and subject to the same conditions under which appeals lie from any order or decision of the Court in cases within its ordinary jurisdiction.'
We are however unable to agree with the view expressed by the Division Bench of the Gujarat High Court that a decision in a criminal prosecution under Section 454(5A) of the Companies Act, is not one 'in the matter of the winding-up of a Company' and that it is only incidental to the winding-up. The statement of the affairs of the Company referred to in Section 454(1) of the Companies Act, is an essential requirement of the winding-up proceedings. A provision in the Act for enforcement of compliance to Sub-section (1) of Section 454 is therefore 'a matter arising in the I winding-up of the Company' and not merely I incidental or ancillary thereto.
6. In Vamanan Nambudiri v. Narayana Kurup : AIR1965Ker1 (FB), M.S. Menon, C. J., considering the conflicting views expressed in two single Bench decisions of this Court, and concurring with Madhavan Nair, J. on the question whether an appeal will lie against a decision on an application under Section 5(2) of the Malabar Tenancy Amendment Act 1956, stated at page 2 :
The very fact that two eminent Judges trained in the same legal discipline and familiar with the nuances of Indian legislation, have come to divergent conclusions is itself an indication that the section, at any rate, should be considered as ambiguous in its wording. And in such a case, where the words are not clear enough to be coercive, the canon of construction is that the ambiguity should be resolved in favour of the right to an appeal rather than against it. As stated by Sutherland:
Statutes giving the right of appeal are liberally construed in furtherance of justice, and an interpretation which will work a forfeiture of that right is not favoured. (Statutory Construction, 3rd Edition, Volume 3, Paragraph 6807).
7. To the same effect is Samidorai Thennavarayar v. Vaithilinga Thennavarayar : AIR1964Mad314 wherein Jagadisan, J., said that a provision for an appeal should be read:
with a liberality which would favour an appeal being preferred rather than with the stringency that would defeat it.
The Supreme Court in Shanti Kumar R. Canji v. Home Insurance Co. of New York : 1SCR550 has held that an appeal is maintainable under Clause 15 of the Letters Patent against an order amending the pleadings in cases where the order affects the merits of the action between the parties by determining some right or liability. A similar view is expressed in the decision in Jugal Kishore Paliwal v. S. Sat Jit Singh : (1984)1SCC358 .
7. Referring to Section 7 of the English Act namely the Companies (Winding-up) Act of 1890, requiring a statement of the affairs of the Company to be made out and submitted to the Official Receiver, Lord Russel of Killowen observed in In re New Par Consols Ltd. (1898(1) OB 573 at P. 576):
It is perfectly clear that that is an essential part of the proceedings in the winding-up - an essential part without which the whole machinery of the winding-up must be most certainly imperfect...It is clear, upon looking at this section, that the object is to get at the persons who have the information which the Court requires for the purposes of the winding-up.
8. A Full Bench of the Delhi High Court in Official Liquidator, Security & Finance P. Ltd. v. B. K. Bedi 44 Com Cas 499 : 1975 Tax LR 1465 stated at p. 502 (of Com Cas): (At p. 1467 of Tax LR):
It cannot admit of any doubt that the object of Section 454 requiring the person concerned with the Company at the relevant time to submit the statement of affairs is a laudable one and is obviously with a view to facilitate the winding-up proceedings by the Official Liquidator by seeing that full information is made available to it in as short a time as possible.
We are therfore clearly of the view that a proceeding for the enforcement of the requirements of Section 454(1) of the Companies Act, is one in the matter of the winding-up of the Company and not merely incidental or ancillary thereto. We therefore overrule the preliminary objection raised against the maintainability of these appeals and hold that the judgment of the learned Company Judge convicting the accused under Sub-section (5) of Section 454 of the Companies Act is appealable under Section 483 of the Act read with Section 5 of the Kerala High Court Act.
9. Counsel for the appellant submits that an offence under Sub-section (5) of Section 454 of the Companies Act can be made out only if it is shown that the default in compliance to the requirements of Sub-section (1) is 'without reasonable excuse'. According to the learned Counsel, the burden is on the prosecution to prove absence of reasonable excuse, an essential ingredient of the offence itself, and for the failure of the prosecution to prove such an essential ingredient the conviction of the accused is unsustainable in law. Counsel relies on the decision of a Full Bench of the Delhi High Court in the Security & Finance P. Ltd.'s case referred to above in support of the proposition that the burden is on the prosecution to prove want of reasonable excuse to make out an offence under Sub-section (5) of Section 454 of the Act. This decision was followed by a learned Judge of this Court in Official Liquidator v. Indira Kartha 1982 Ker LT 215 : 1982 Tax LR 2509. Learned Counsel appearing for the Official Liquidator, challenges the correctness of the decisions in Indira Kartha's case, 1982 Ker LT 215 : 1982 Tax LR 2509 and the Security & Finance (P) Ltd.'s case 44 Com Cas 499 : 1975 Tax LR 1465 (FB) (Del). According to him if the prosecution proves default in compliance to the requirements of Sub-section (1)of Section 454, the burden is on the accused to prove reasonable excuse, as a valid defence against the prosecution. We think it unnecessary to decide the question of burden of proof for the reason that even if want of reasonable excuse is to be held as an essential ingredient of the offence, the same has been fully made out in the present case. The Full Bench of the Delhi High Court in Security & Finance P. Ltd.'s case observed at page 506 (of 44 Com Cas) : (at p. 1469 of Tax LR):
It appears to us that the official liquidator need only prove that notice was sent to the concerned director to submit a statement of affairs, that the prescribed time has lapsed and that no extension has been sought for from him or from the Court and that the necessary books of the company were available for inspection by the concerned director. These are facts which are conveniently available to the official liquidator and if he shows these facts prima facie he would have proved the director has, without reasonable excuse, made the default in complying with the requirements of Section 454.
In the present case by Ext. Pl notice dt. 1-2-1973 the Official Liquidator had required accused 1 to 4 to submit the statement of affairs of the Company. Accused 2 to 4 by Exts.P2 to P4 letters replied stating that they are not the directors of the Company. The first accused by Ext. P5 letter dt. 19-2-1973 prayed for three months' time for submission of the statement. As per Ext.P7 letter dt. 30-4-1973, the first accused named five persons as the staff authorised by him to do the work of preparing the statement. The Official Liquidator as per his letter Ext.P 8 dt. 5-5-1973 had informed the first accused, the Managing Director of the Company that the records will be made available in his Office at Ernakulam. The Official Liquidator thereafter filed Application No. 412 of 1973 before the Company Court for an order directing accused 1 to 4 to submit the statement of affairs of the Company as required by Sub-section (1) of Section 454 of the Act. The objection by accused 2 to 4 that they are not the Directors of the Company was overruled and accused 1 to 5 were directed to submit the statement as per Ext. P11 order of the Company Court made on 7-11-1974. There was a similar order Ext. P12 directing accused 6 to 22 to submit the statement of affairs of the Company within 21 days from the date of the order. In spite of all these proceedings the accused failed to submit the statement and the Official Liquidator had to file the criminal complaint under Section 454(5A) of the Companies Act on 26-5-1975. It is only long afterwards that the statement was submitted on 18-11-1975. The statement itself was defective and had to be returned twice for rectification. A revised statement curing the defects was filed only on 3-6-1978. On these facts, we have no hesitation to hold that the prosecution has made out that the accused had without reasonable excuse made default in complying with the requirements of Sub-section (1) of Section 454 of the Companies Act.
10. No case is made out for interference with the sentence imposed on the accused by the learned Company Judge.
The appeals fail and are dismissed; in the circumstances, without any order as to costs.