OFFICIAL LIQUIDATOR AUTO Vs. P R MEHTA

JUDGEMENT

(1.) THE official liquidator of the company in liquidation, namely, Auto Electricals (India) Pvt. Ltd., has filed this application under Section 454 of the Companies Act, 1956 (for short 'the Act'), with the prayer to suitably punish the non -applicants, who are ex -directors of the company as they have failed to submit the statement as to the affairs of the company in the prescribed form within the stipulated period.

(2.) THE undisputed facts are that non -applicant No. 1, P. R. Mehta, who was the managing director of the company, filed Company Petition No. 11 of 1985 under Section 433 read with Section 439(b) and 439(c) of the Act with a prayer to order winding up of the company and to appoint the official liquidator attached to the court as provisional liquidator of the company. This petition was filed on October 4, 1985. Vide order dated September 18, 1987, the company court appointed the official liquidator as provisional liquidator of the company. Thereafter, vide order dated July 22, 1988, the company was wound ,up and the official liquidator was appointed as liquidator of the company. In the petition the official liquidator has stated that the non -applicants were required to submit statement as to the affairs of the company within. 21 days from the date of his appointment as provisional liquidator. He has also stated that he gave notice to the non -applicants on his being appointed as the provisional liquidator asking them to file the statement as to the affairs of the company on the prescribed form. D. P. Gupta replied to the above notice on September 26, 1987, wherein he has stated that all papers, documents, records and books of account are in the possession of P. R. Mehta, the managing director of the company. Hefurther stated that though Mr. Mehta, had tendered a letter of resignation as managing director of the company but it was not accepted by the board of directors as he did not render accounts. After receipt of notice of this application, the non -applicant, P. R. Mehta, has taken the plea that on the relevant date, i.e., the date when provisional liquidator was appointed in the present case, he was not a director of the company as he had resigned on October 20, 1982. The plea of other non -applicants is that they were not in possession of the papers, documents and other records of the company as such they were not in a position to submit/file the statement of the affairs of the company. From the record it further transpires that in pursuance of letter dated November 16, 1993, of the official liquidator, the non -applicant, P. R. Mehta, submitted the records of the company which were in his possession to the official liquidator on January 18, 1994. Thereafter, counsel for the non -applicants informed this court that for preparation of the statement as to the affairs of the company the books/records of the company were available with the official liquidator and if any other book or document was in the possession the same shall be submitted to the official liquidator. On November 15, 1996, the non -applicant, P. R. Mehta, filed an application before this court to the effect that no other record, property or assets of the company were in his possession. He also submitted the statement as to affairs of the company on this date which was prepared by him on the basis of the records made available to him by the official liquidator. Similarly the other non -applicants also submitted statement as to affairs of the company after preparing from the records which were made available by the official liquidator.

(3.) FROM the language employed in Sub -section (5) it is clear that it is only when it is made out that the default was without reasonable excuse that one can be punished for such default under Sub -section (5) of Section 454. The initial burden of proof that the non -applicants had failed to submit the statement without reasonable excuse is on the prosecution. It all depends on the facts of each case as to whether the prosecution has discharged this initial burden.