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Issues: Whether the ex-directors of the company in liquidation committed a breach of Section 454 of the Companies Act, 1956 by failing to file the statement of affairs within the prescribed time and whether they had a reasonable excuse for the default, and what sentence should follow.
Analysis: Section 454 of the Companies Act, 1956 required the directors of a company in liquidation to file the statement of affairs within twenty-one days of the relevant date, which in the facts was the winding up order. The respondents were the promoter directors and remained responsible for the company's affairs until the winding up order. Their explanation that the records were with RIICO and that there was a dispute with the Chartered Accountant was found to be contradictory and unsupported by credible material. The record showed that RIICO had taken over only the fixed assets and not the books of account, and there was no reliable basis to accept that the directors were prevented by circumstances beyond their control from complying with the statutory duty. The belated and incomplete filing in 2015 and 2016 did not amount to compliance in law.
Conclusion: The respondents were held guilty of contravention of Section 454 of the Companies Act, 1956, had no reasonable excuse for the default, and were punished with a fine of Rs. 2 lakhs jointly and severally, with default imprisonment of six months.
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