Honest and reasonable conduct can justify relief from prosecution for technical company law defaults under section 633(2).

Section 633(2) empowers the Court to relieve company officers from apprehended proceedings where a technical default occurred, but their conduct was honest and reasonable. Here, the petitioners showed that the company's management had been taken over under the Textile Undertakings (Taking Over of Management) Ordinance, 1983, and that failures to hold annual general meetings and file returns arose for reasons beyond their control. On that basis, the High Court granted relief, accepting that the defaults were technical and did not reflect dishonest or unreasonable conduct.

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Issues: Whether the petitioners, who were in technical default of their obligations under the Companies Act, 1956, were entitled to relief from apprehended prosecution under section 633(2).

Analysis: The petitioners showed that the company's management had been taken over under the Textile Undertakings (Taking Over of Management) Ordinance, 1983 and that the defaults in holding annual general meetings and filing returns were stated to have occurred for reasons beyond their control. The power under section 633(2) is intended to relieve officers of a company from proceedings where the circumstances disclose negligence, default or breach of duty, but the conduct is nevertheless honest and reasonable.

Conclusion: Relief was granted under section 633(2), as the petitioners' conduct was accepted as honest and reasonable despite the technical defaults.

Ratio Decidendi: Where company officers are in technical default for reasons beyond their control and their conduct is honest and reasonable, the Court may exercise its discretionary power under section 633(2) to relieve them from apprehended proceedings.

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