Statement of affairs under Companies Act: ex-directors need court direction, and penal default requires proof of no reasonable excuse.

Ex-directors who had resigned long before the relevant date could not be compelled to file a statement of affairs under section 454 of the Companies Act, 1956 on a mere notice; for ex-officers, the Official Liquidator had to obtain a Company Court direction, and the notice issued without such direction was invalid. Criminal liability under section 454(5) also required proof that the default was without reasonable excuse. Where the managing director had not received the company records and had informed the Official Liquidator that he could not prepare the statement, the absence of reasonable excuse was not proved.

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Issues: (i) whether ex-directors who had resigned about three years before the relevant date could be required to file a statement of affairs under section 454 of the Companies Act, 1956 without an order of the Company Court; (ii) whether the managing director on the relevant date could be convicted under section 454(5) in the absence of proof that the default was without reasonable excuse.

Issue (i): whether ex-directors who had resigned about three years before the relevant date could be required to file a statement of affairs under section 454 of the Companies Act, 1956 without an order of the Company Court.

Analysis: Section 454 distinguishes between persons who are directors or chief officers on the relevant date and other persons mentioned in sub-section (2), such as ex-officers. The former may be called upon to submit the statement directly, but the latter can be required to do so only when the Official Liquidator obtains the Court's direction. The statutory scheme in Rules 124 and 125 also supports this distinction, since notice in Form No. 55 applies to the first category, while the Official Liquidator must move the Court for an order in Form No. 56 against ex-officers. Since the appellants had ceased to be directors long before the relevant date, a mere notice without Court direction was not sufficient.

Conclusion: the notice issued to the ex-directors was invalid and their conviction could not stand.

Issue (ii): whether the managing director on the relevant date could be convicted under section 454(5) in the absence of proof that the default was without reasonable excuse.

Analysis: Penal liability under section 454(5) is not automatic on mere non-compliance. The prosecution must prove that the person was statutorily liable to submit the statement, was called upon to do so, was in a position to comply, and failed without reasonable excuse. On the evidence, the managing director had not received the relevant records from the earlier board and had informed the Official Liquidator that he could not prepare the statement. The burden of proving absence of reasonable excuse was not discharged.

Conclusion: the managing director was entitled to acquittal and his conviction was liable to be set aside.

Final Conclusion: the convictions and sentences in all the connected company appeals were set aside, with liberty to the Official Liquidator to proceed in accordance with law on any independent civil or company-law remedy available.

Ratio Decidendi: ex-directors who had ceased to hold office long before the relevant date cannot be compelled to file a statement of affairs under section 454 of the Companies Act, 1956 unless the Company Court directs it, and criminal liability under section 454(5) arises only when default is proved to be without reasonable excuse.

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