Cessation of directorship before winding up can end the duty to file a statement of affairs.

Cessation of directorship before a winding up order can displace the duty to file a statement of affairs under section 454 of the Companies Act, 1956. Here, the directors produced evidence that notice of cessation had been sent to the Registrar of Companies with Form No. 32 before the winding up order, and the official liquidator's verification confirmed that two Forms No. 32 had been filed and taken on record. On that basis, cessation prior to winding up was accepted, so the statutory obligation to file the statement of affairs did not apply to respondents Nos. 1 to 3 and penal action failed.

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Issues: Whether the respondents had ceased to be directors before the winding up order and were therefore not liable to file the statement of affairs under section 454 of the Companies Act, 1956.

Analysis: The respondents produced material showing that intimation of cessation of directorship had been sent to the Registrar of Companies along with Form No. 32 before the winding up order. The official liquidator's verification also showed that two Forms No. 32 had been filed and taken on record, though the supporting particulars were no longer available because the records had been destroyed. On this basis, the cessation of directorship prior to the winding up order was accepted, and the obligation to file the statement of affairs was held inapplicable to respondents Nos. 1 to 3.

Conclusion: The respondents were not liable to file the statement of affairs, and the application for penal action failed.

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