TaxTMI 
TaxTMI 
TaxTMI 
2008 (12) TMI 402
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....ing mortgaged property as well as registered office of the Company. The Official Liquidator has lastly prayed for the direction to the Ex-Directors of the Company in liquidation to remain present before him for recording of their statement under rule 130 of the Companies (Court) Rules, 1959 and to give complete details of properties of M/s. Pushpa Synthetics Private Limited (In Liquidation). 2. The Official Liquidator has also filed Criminal Case No. 5 of 2006 against the Ex-Directors of the Company in liquidation requesting this Court to take cognizance of the default committed under section 454(5) of the Companies Act, 1956 and to issue process against accused Nos. 1 & 2 for trying and punishing them in accordance with the provisions of law and in view of the facts stated by him in the complaint. He has also prayed for the direction to accused Nos. 1 & 2 to submit forthwith the statement of affairs before him, as on the date of winding up order dated 24-8-2005 with full details. He has further prayed for the direction to accused Nos. 1 & 2 to attend to his office for recording their statements under rule 130 of the Companies (Court) Rules, 1959. 3. Company Application No. 241 o....
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.... cause for which the warrants could not be served. 6. Since the warrants could not be executed on accused Nos. 1 & 2, the Court passed further order on 25-9-2006 issuing fresh bailable warrants upon the accused Nos. 1 & 2 and directing the Official Liquidator to take necessary steps in the matter. 7. Since the bailable warrants were served on accused Nos. 1 & 2, this Court has passed an order on 20-11-2006 and issued fresh bailable warrant to Shri Rajendra Natvarlal Dilkhush after joining him as accused No. 3, on the basis of the information furnished by the accused No. 2 since he has not been joined as party to the present proceedings despite the fact that he was also one of the Ex-Directors of the Company in liquidation. 8. So far as Company Application No. 241 of 2006 is concerned, this Court has directed the Official Liquidator to file his report and this application was ordered to be heard along with OLR No. 29 of 2006 filed by the Official Liquidator. Pursuant to the Court's direction, the Official Liquidator has filed his report on 28-6-2006. Based on the averments made in the said report, this Court has passed an order on 4-8-2006. This Court has issued directions to M/s....
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....ns have tried to mislead the Court as well as the Official Liquidator. The Court, therefore, directed to join M/s. Creamy Fashions through its partners Shri Mihir Prashant Dilkhush and Shri Krishna Rajendra Dilkhush as party - respondents in the present proceedings and notice were issued on them. The Court has further observed in the order on the basis of the submissions made on behalf of the Ex-Directors of the Company in liquidation that certain other plants and machineries were also sold in scrap. The Court, therefore, directed the Ex-Directors of the Company in liquidation to file affidavit pointing out therein that all the plants and machineries sold after the filing up of the winding up petition and the amount realized by them. The Ex-Directors and also the partners of M/s. Creamy Fashions were directed to personally remain present before this Court. 9. On 27-12-2006, the Court passed further order in Company Application No. 241 of 2006 when partners of M/s. Creamy Fashions as well as the Ex-Directors remained present before this Court. A pointed question was asked to them as to what consideration has been paid to Pushpa Synthetics Pvt. Ltd. for purchase of boiler and whethe....
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....transferring, alienating, selling and otherwise disposing the assets and/or creating any charge thereon of the firm. 12. On 15-2-2008, Mr. Prasant Natvarlal Dilkhush, one of the Ex-Directors was personally present. The Court was informed that Mr. Rajendra N. Dilkhush is not traceable for the last six months and Mr. Natvarlal R. Dilkhush has expired on 21-9-2003 i.e. prior to the date of filing criminal complaint. A copy of death certificate of Natvarlal R. Dilkhush was produced on record. The Court has, therefore, deleted the name of the accused Shri Natvarlal R. Dilkhush from the proceedings of OJCR No. 5 of 2006. The Court was also informed that it was practically impossible for Prasant Natvarlal Dilkhush to file statement of affairs. With regard to the order passed by this Court on 11-2-2008 restraining respondent No. 4 i.e. M/s. Creamy Fashions from transferring, alienating, selling and otherwise disposing the assets and/or creating any charge thereon of the firm, the Court was informed by the learned advocate appearing for the Ex-Directors and the Partners of M/s. Creamy Fashions that the said firm was virtually closed and even the premises which was rented one was given back....
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....d by M/s. Pushpa Synthetics Pvt. Ltd. 15. On 8-4-2008, the Court passed further order and observed therein that till this date, Statement of Affairs was not filed and the respondent No. 3 was not present before this Court. The Court, therefore, issued non-bailable warrant on the respondent No. 3. With regard to Company Application No. 241 of 2006, an affidavit was filed by respondent No. 2 and the entire burden was shifted on respondent No. 3. Even at that stage, Mr. Utkarsh Jani, learned advocate appearing for the respondents had indicated his desire to withdraw his appearance. On 28-4-2008, the Insurance Company has placed on record the survey report. A statement of Mr. Prashant N. Dilkhush under Rule 130 of the Companies (Court) Rules, 1949 was recorded. The same was produced on record on 30-4-2008. 16. In the above factual background, all the three matters are taken up for final hearing. 17. Mr. Utkarsh Jani, learned advocate appearing for the Ex-Directors and the partners of M/s. Creamy Fashions has submitted that all allegations levelled against them are absolutely baseless and because of the circum- stances beyond their control, they could not make the timely compliance o....
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....s were made during the course of business and the machineries had to be sold due to tremendous pressure applied upon the Ex-Directors of the Company by the workmen as well as the trade creditors. An amount of Rs. 3,49,400 were also paid to the trade creditors amongst whom the present applicant M/s. Gayatri Corporation had also received some amount which was evident from the receipts annexed along with the affidavit-in-reply dated 22-11-2006. The Ex-Directors of the Company in liquidation had no other alternative but to pay workmen as well as the trade creditors as well as the secured creditors the amounts due to them respectively in satisfaction of their dues. It was very unfortunate that knowing fully well that the Ex-Directors of the Company had made every attempt to pay the trade creditors their amounts, the present applicant has made a deliberate and mala fide misstatement before this Court by saying that they have not received any single amount from the Company in liquidation. After making payments to the workmen by way of settlement arrived on through their respective Unions, whatever cash on hand was remaining was also paid to the trade creditors. Pursuant to the said affida....
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....lied on the decision of the Punjab & Haryana High Court in the case of Pawanta Sahib Cement Works (P.) Ltd. (In Liquidation) v. Anil Saini [1998] 94 Comp. Cas. 674 wherein it is held that under sub-section (5) of section 454 of the Act, a mere default in complying with the requirements of this section is by itself not punishable and the term "default" has been qualified with the words "without reasonable excuse". It means that only a default made without reasonable excuse is punishable. The onus of proving that a default was committed and that too without reasonable excuse lies on the prosecution. In the present case, the prosecution had failed to prove that the books were available to the directors for submitting the statement, of affairs, especially in face of the defence that the records had been lost in 1990 and the loss reported to the police. The accused were, therefore, not guilty of having committed any offence under sub-section (5) of section 454 of the Act. 21. Mr. Jani further relied on the decision of the Delhi High Court in the case of C.R.E. Wood Co. (P.) Ltd. (In Liquidation) v. Sardar Iqbal Singh [1986] 59 Comp. Cas. 978 wherein it is held that since the records of....
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....several affida- vits in Company Petition No. 312 of 2003 and in Company Petition No. 240 of 2003. It has been stated on oath in these affidavits that the Company was a going concern, employing about 400 workmen, had substantial turn over, sufficient assets and sound financial condition. There was mention of fire and damage caused to the administrative office but no reference was made to the damage caused to the machinery. It has been stated that records pertaining to the employees and the excise details were not produced on record. In total contravention to the averments made in the said affidavits, the Ex-Directors have taken contention in the affidavits filed on 20-12-2006, 25-1-2007, 29-1-2007 and 9-2-2007 in the present proceedings that substantial part of the machinery was damaged due to fire and the Company had to sell the same a scrap to salvage the same. She has produced on record letters from the so-called purchasers which indicate that the said machinery was sold during January to May 2003 and May 2003 to June 2003. However, letter from one of such purchasers, namely, M/s. Gomti Sales Corporation dated 13-2-2007 confirms that the details given in the previous letters are ....
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....ted 4-5-2003 which confirmed that the fire could be stopped from extending to the machine department and the estimated damage as per the Ex-Director himself was approximately Rs. 15 lakhs. This shows that the Ex-Directors now claim to have sold as scrap were not the machinery damaged by the fire. Considering the claim being put up by the Company before the Insurance Company, it is difficult to believe that the survey undertaken by the Insurance Company was also over in the month of May itself so as to enable the Company to sell it as scrap in the month of May itself. The said statements are obtained by the Ex-Directors with a view to avoid the legal consequences as the said transactions are actually undertaken during the pendency of the winding up petitions. 28. Mrs. Soparkar has further submitted that the Company was operating its manufacturing activities from the premises that were rented. A copy of the rent note dated 11-9-1992 is produced and the copy of the registered sale deed dated 11-2-2004 entered into between the original landlords and purchasers M/s. M. Kantilal Exports is produced on the record of the present proceedings. Clause 10 of the said sale deed confirms that t....
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....ke immediate possession of the said M/s. Creamy Fashions and make a complete inventory of its assets and specifically its machineries. The Official Liquidator should further be directed to undertake the valuation of all the properties of the Company so acquired and take necessary action to release the said assets in favour of the unpaid Creditors of the Company in liquidation. She has further requested this Court to appoint a Court Commissioner and/or Special Investigator to look into the matter and carry out complete investigation in the affairs and transactions of the Company since March, 2002. 31. In Criminal case No. 5 of 2006, Shri Rajendra N. Dilkhush, the accused No. 3 who is not now traceable has filed an affidavit on 9-2-2007 wherein it is stated that the Official Liquidator has wrongly joined accused No. 1 as a party who is father of accused Nos. 2 & 3 who has already expired and was only a Director of the Company in liquidation. He has further stated in the said affidavit that the Company in liquidation has faced true and genuine difficulties time and again. There was a major fire in the Company in liquidation on 5-10-2002 which is clear from the certificate of the Sura....
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....action of its dues. This fact was well within the knowledge of the Official Liquidator as the said properties were taken in possession by the Official Liquidator which were later on released due to the order of this Court on 29-3-2006 directing the Official Liquidator to remove the seal and hand over the possession of the offices to the respective parties. 33. In the above view of the matter, it is requested to the Court that the explanation tendered by the Ex-Directors should be considered as reasonable explanation for not being able to comply with the provisions of section 454 of the Companies Act, 1956 upon the notice issued by the Official Liquidator to the accused. Lastly, it is assured that the accused are ready and willing to submit the statement of affairs to the Official Liquidator with full details and also are ready and willing to attend to the meeting with the Official Liquidator under Rule 130 of the Companies (Court) Rules, 1959 and for that purpose, 8 weeks time was sought for by the accused. 34. The Official Liquidator has filed his report on 29-4-2008 wherein it is submitted that the accused No. 2, namely, Prashant N. Dilkhush remained present in his office on 8-....
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....creditors, dispose off the assets of the company and commit a breach of discharging their statutory duties by non-filing of statement of affairs under the guise of reasonable excuse and facts and evidence found on record justifies this Court to take the view that the prosecution has discharged its burden to prove that there was no reasonable excuse which prevented the accused from filing the statement of affairs. The accused Nos. 2 and 3 are, therefore, liable to be punished under section 454(5) of the Companies Act, 1956. The judgments relied on by Mr. Jani would not render any assistance to the accused as they are distinguishable on facts. 36. In view of the above discussion, all the three matters are disposed off in the following terms:- 37. OLR No. 29 of 2006 (A)Prayer No. 1 was not granted by this Court vide its order dated 18-4-2006. (B)In view of the affidavit-in-reply filed on behalf of the Diamond Jubilee Cooperative Bank Ltd., Surat on 1-7-2006, and in absence of any details available on record establishing the charge of Punjab National Bank on any property of the Company in liquidation or even existence of the property itself, the prayer No. 2 cannot be granted. (C)....