Statement of affairs default under the Companies Act failed where no cogent material proved wilful non-compliance.

Liability under section 454(5) of the Companies Act, 1956 required proof of a default in complying with the obligation to file the statement of affairs. The record did not contain cogent material establishing that the respondents had, without reasonable excuse, committed the alleged non-compliance, and their explanation was accepted. On that basis, the respondents were not held guilty under section 454(5), and the application was rejected.

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Issues: Whether the respondents had, without reasonable excuse, defaulted in complying with the requirement to file the statement of affairs so as to attract punishment under section 454(5) of the Companies Act, 1956.

Analysis: To sustain action under section 454(5), it was necessary to establish a default in complying with section 454 of the Companies Act, 1956. The record did not disclose cogent material showing that the respondents were guilty of such default. The explanation offered by the respondents was accepted, and the circumstances did not justify a finding of liability for the alleged non-compliance.

Conclusion: The respondents were not held guilty under section 454(5) of the Companies Act, 1956, and the application was rejected.

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