Former nominee director cannot be prosecuted for non-filing of statement of affairs where compliance is impossible

A direction to file a statement of affairs under Section 454 of the Companies Act, 1956 should not be issued against a former director who is not in a position to furnish the required information. Liability cannot be imposed mechanically where the person had resigned long before winding up, had no access to company records, and no practical means of complying; prosecution in such circumstances would be an empty formality. On the facts, the nominee director's prior resignation, lack of involvement in management, and absence of access to the books meant continuation of prosecution was unwarranted and discharge was justified.

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Issues: Whether a nominee director who had resigned long before the winding-up proceedings and had no access to the company's records could still be required to file the statement of affairs and face prosecution under Section 454 of the Companies Act, 1956.

Analysis: Section 454 of the Companies Act, 1956 is intended to assist speedy liquidation by enabling the Official Liquidator to obtain relevant information. Although the Act does not create a distinction between a nominee director and other directors, liability under Section 454 cannot be imposed mechanically on every former director. The Court relied on the statutory definition of "director" and on earlier decisions holding that directions under Section 454 must be given only where the person concerned is in a position to furnish the information, and that insisting on compliance where the person has ceased to be associated with the company, lacks access to records, and has no practical means of filing the statement would be an empty formality. On the facts, the applicant had resigned years before winding up, had been described only as a nominee director, had not signed company documents, and had no access to the books or affairs of the company.

Conclusion: The applicant could not be fastened with liability to file the statement of affairs and continuation of the prosecution was unwarranted. She was entitled to discharge.

Final Conclusion: A former nominee director with no access to the company's records and no effective role in its affairs cannot be compelled to undergo prosecution for non-filing of the statement of affairs when such proceedings would serve no practical purpose.

Ratio Decidendi: Directions to file a statement of affairs under Section 454 of the Companies Act, 1956 should not be issued where the person is not in a position to furnish the required information, and prosecution cannot be sustained when compliance would be an exercise in futility.

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