Reasonable excuse in statement-of-affairs prosecutions must be proved by the prosecution where company records are unavailable.

In a prosecution for default in filing the statement of affairs under section 454(5) of the Companies Act, 1956, absence of reasonable excuse is an essential ingredient that the prosecution must prove. Where the company's records were not available to the accused, the books had remained with the Revenue authorities, and there was no reliable proof that the records were made available for inspection or for preparing the statement, the default was treated as attributable to a reasonable excuse. The accused were therefore given the benefit of doubt and acquitted. The material principle is that mere default is insufficient unless the prosecution establishes that it occurred without reasonable excuse.

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Issues: Whether the accused's failure to file the statement of affairs under section 454 was without reasonable excuse and whether they were entitled to relief under section 633(1).

Analysis: Under section 454(5), mere default is not enough; the prosecution must prove that the default was without reasonable excuse. The evidence showed that the company's records were not available to the accused when the statement was required, that the books had been in the custody of the Revenue authorities and were later recovered by the official liquidator without notice to the accused, and that there was no reliable proof that the records had been made available for inspection and preparation of the statement. The circumstances supported the accused's inability to prepare a true statement of affairs and constituted a reasonable excuse.

Conclusion: The prosecution failed to prove that the default was without reasonable excuse, and the accused were entitled to the benefit of doubt and acquittal.

Ratio Decidendi: In a prosecution for default under section 454(5) of the Companies Act, 1956, absence of reasonable excuse is an essential ingredient of the offence and must be established by the prosecution; where company records are unavailable to the accused so as to prevent preparation of the statement of affairs, the default is not punishable.

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