SUBRAMANIAN K R Vs. OFFICIAL LIQUIDATOR

JUDGEMENT

(1.) Company Appeal No. 30 of 2003 is filed by the first accused in Criminal Complaint No. 4 of 2001 in Company Petition No. 41 of 1999. He was convicted by the impugned judgment of the company court and sentenced to undergo imprisonment for a period of six months and to pay a fine of Rs. 20,000. Company Appeal No. 29 of 2003 is filed by the second accused. He was convicted and sentenced to pay a fine of Rs. 20,000. Company Appeal No. 33 of 2003 was filed by accused Nos. 3, 4 and 5 in the above criminal complaint. They were also convicted and sentenced to pay a fine of Rs. 20,000 each. All of them were charge-sheeted for offences punishable under Section 454(5) of the Companies Act, 1956 (for short "the Act").

(2.) M/s. Kanippayyur Hire Purchase Co. P. Ltd., was incorporated on December 7, 1976, under the Indian Companies Act. The company went into liquidation and the liquidator of the company was appointed on January 25, 2002, in C. P. No. 41 of 1999. The complainant issued notice under Section 451 of the Companies Act, 1956, to the accused demanding them to file statement of affairs within 21 days from the date of winding up order. According to the official liquidator, there were nine ex-directors of the company including accused Nos. 1 to 7. Two of the directors expired. The company court exonerated accused Nos. 6 and 7. First we will deal with Company Appeals Nos. 30 and 33 of 2003. Appeal filed by the second accused is dealt with separately.

(3.) Exhibit P3 is the copy of the annual return filed by the company before the Registrar of Companies. It shows that all these accused were directors as on December 16,1994. The technical assistant dealing with the affairs of the company under liquidation gave evidence on behalf of the official liquidator that the winding up order was passed on January 25, 2001 and on February 15, 2001 the official liquidator sent letters to all the directors in Form No. 55 directing them to furnish the statement of affairs in Form No. 57 as per law and none of the accused filed the statement of affairs. According to him, the official liquidator has taken possession of the records of the company, but, the up to date registers were not made available to the official liquidator and he got only old registers. The particulars of those registers obtained by the official liquidator were not furnished. It is the contention of the appellants in Company Appeals Nos. 30 and 33 of 2003 that they ceased to be the directors and they resigned from the board of directors of the company on March 9, 1998, nearly three years before the winding up order was passed and, therefore, they are not liable to be proceeded against under Section 454 of the Act. It has come out in evidence that first accused (the appellant in Company Appeal No. 30 of 2003) was the managing director of the company. There was a general body meeting on December 29,1997 and in that meeting a new board had been elected. The second accused was elected as the managing director of the new board. Exhibit D25 is the minutes book of the general body meeting from October, 1991 to April, 1999. The minutes of the board of directors (exhibit D23) would show that in that meeting it was decided to get the accounts for the years 1994-95 and 1995-96 audited. It was further resolved that the second accused alone was responsible for all the mistake in the accounts and he has to be proceeded against for the same, but, after the second accused was elected as the managing director and a new board was elected, it was resolved that the earlier committee was responsible for all the activities/misdeeds of the company. The board meeting held on February 4,1998, would reveal that the account books of the company was not given by the earlier committee to the newly elected committee. All these accused other than the second accused resigned from the company on March 6, 1998 and they did not attend any of the board meeting after April, 1998. Their resignation in March, 1998, is not disputed. The fact that they did not attend any of the board meetings after April, 1998, is admitted by the official liquidator and is evident from exhibit D22 records. Section 283(1)(a) of the Act reads as follows: