Delayed filing of statement of affairs treated as a punishable lapse, but leniency applied for reasonable excuse and limited records.

Delayed filing of the statement of affairs under section 454 of the Companies Act, 1956 was examined against the statutory duty of the directors. The court noted that the company had been closed for years, the main promoter and several connected persons had died, and the surviving accused had supplied particulars as far as possible with professional assistance and answered the official liquidator's queries from available records. In these circumstances, the delay was not treated as a default without reasonable excuse for continuation of prosecution, although the belated filing remained a punishable lapse. A lenient view was taken, resulting in a fine on the accused directors and exoneration of the remaining alive nominee directors.

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Issues: Whether the accused directors had committed default in filing the statement of affairs under section 454 of the Companies Act, 1956, and whether the facts disclosed reasonable excuse or substantial compliance so as to warrant continuation of the criminal proceedings and the quantum of punishment.

Analysis: The statement of affairs was filed belatedly after the winding up order, but the record showed that the company had remained closed for many years, the main promoter had died, several connected persons had expired, and the remaining accused had tried to furnish the available particulars with professional assistance. The official liquidator's queries were answered to the extent possible from the surviving records. In these circumstances, the failure to file within the statutory time was not treated as a default committed without reasonable excuse, and the Court held that continuing the proceedings further was not worthwhile. At the same time, the delay of about eleven months and nine days in filing the statement of affairs was held to constitute a punishable lapse, though a lenient view was taken in view of the surrounding circumstances.

Conclusion: The accused directors were held liable only for late filing and were fined Rs. 5,000 each, while the remaining alive nominee directors were exonerated and the proceedings were disposed of.

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