TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 185
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.... as under: "If any person, without reasonable excuse, makes default in complying with any requirements of section, he shall be punishable with imprisonment for a term which may extend to two years or with fine which may extend to Rs. 1,000/- for every day during which the default continues or with both" 3. The complaint has been filed by the Official Liquidator of M/s. Geeta Marine Services Pvt. Limited. against the Accused. It is stated in the complaint that the Company was ordered to be wound up by order of 19th March 2009 passed by this Court and the Official Liquidator was appointed as Liquidator. The Accused Nos.1 to 4 are the Directors of the Company at the date of winding up order and as such under a statutory obligation under Section 454(1) and (3) of Companies Act to make out and submit to the official liquidator a statement as to the affairs of the Company (in liqn) in the prescribed form duly verified by an affidavit and containing the particulars specified in Sub-Section (1) of Section 454 of the Companies Act, within 21 days from the relevant date or within the time extended by the Court or by the Official Liquidator. 4. The complaint states that notices calling fo....
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....y tendering the Affidavit in lieu of examination in chief, which was taken on record along with the documents, which were marked as Exhibit P-1 to P-17. In further examination in chief, PW-1 has stated that the complaint is filed for non-filing of the statement of affairs within the time prescribed under Section 454 of the Companies Act and she has knowledge about the matter being section in-charge and is giving evidence on the basis of documents that are maintained in the office of Official Liquidator. 9. On the adjourned date for cross examination, an objection was taken to the evidence being recorded by way of affidavit in lieu of examination in chief as the trial was summons trial. By order of 12th June 2019, this Court overruled the objection proceeding on the basis that accused no. 1 has consented to the fact that the Court need not waste its time in recording evidence but accepts the affidavit in lieu of examination in chief and for convenience, the affidavit of examination in chief was marked as Exhibit P-18. 10. In cross examination, PW1 has admitted that she is not personally aware about what happened in the meeting held on 4th August 2009. She has stated that no statem....
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.... to file statement of affairs and meeting was held on 4th August 2009. He has taken this Court through various orders passed by this Court in the Company Petition and submits that by order of 12th March 2012, the Ex-Directors were directed to file three statements of affairs and affidavit setting out the whereabouts of three barges. He submits that on 20th March 2012, the Official Liquidator addressed a letter to the accused calling upon them to file the statement of affairs under Section 454 of the Companies Act. He further points out Exhibit P-14 which is the response by the advocate for accused no. 1 to the Official Liquidator and submits that the communication does not set out any reasonable excuse for not having filed the statement of affairs or handing over the books of accounts or records to the Official Liquidator. He submits that after the complaint was filed, Exhibit P-18 and Exhibit P-19 were furnished by the accused. He points out to the evidence of PW-1 and submits that PW-1 has specifically deposed that the statement of affairs is not in prescribed form and has given reasons for the same. He would further take this Court to Exhibit P-19 and would submit that Form No. ....
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....ions of Section 468 of CrPC, he submits that in case of summons triable case, the limitation is 3 years. 15. On merits, he submits that the complaint does not state that there is default without a reasonable excuse but the averment is that the default is without reasonable cause. He submits that the evidence by way of affidavit in lieu of examination in chief cannot be accepted as evidence as the procedure prescribed under Section 273 of CrPC has not been followed. He would further submit that under Section 296 of the CrPC, the evidence of formal character is permitted to be recorded by way of affidavit of evidence. Without prejudice to the said argument, he submits that PW-1 had no personal knowledge as she had joined on 4th July 2016. He submits that in order to establish that the accused without reasonable excuse had committed default, personal knowledge was required. He would further submit that under Section 454(1) of the Companies Act r/w Rule 124 of the Company Court Rules, extension of time was granted for filing statement of affairs. 16. He has taken this Court through various orders passed in the Company Petition and submits that in accordance with the communication dat....
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....he aspect of recording of evidence by way of affidavit in lieu of examination in chief is concerned, the decision in Anil Ambashankar Joshi v. Reena Anil Joshi (supra) relied upon by Mr. Patil is per incuriam. He would further submit that the objection raised at the initial stages by Mr. Patil was rejected by this Court. He submits that as the objection has been rejected, the principle of res judicata will apply. He submits that recording of evidence by way of an affidavit would at the most constitute an irregularity and drawing support from the provisions of Sections 460 and 461 of the CrPC, he submits that the same is not irregularity which would vitiate the proceedings. He would further submit that under Section 283 of CrPC, every High Court is empowered to prescribe the manner in which the evidence of witness and examination of accused shall be taken down in cases before the Court and points out to the provisions of Bombay High Court Appellate Side Rules, 1960 and draws attention of this Court to Chapter XXVI of the said Appellate Side Rules and the Bombay High Court (Original Side) Rules, 1980 Rule No.976. He further submits that the initial burden was upon the Official Liquid....
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....iod of limitation and provides for limitation of three years where offence is punishable with imprisonment exceeding one year but not exceeding three years. The offence in the present case is punishable with imprisonment for a term which may extend to two years or with fine which may extend to one thousand rupees for every day during which the default continues, or with both. The offence under Section 454 of Companies Act is summons triable case. 23. It would be relevant to note the provisions of Section 472 of CrPC which provide that in case of a continuing offence, a fresh period of limitation shall begin to run at every moment of time during which the offence continues. The issue to be considered is whether an offence under Section 454 of Companies Act constitutes "continuing offence". 24. In the case of State of Bihar v. Deokaran Nenshi (supra), the Hon'ble Apex Court was considering the issue of limitation in case of offence under Sections 66 and 79 of the Mines Act, 1952. Section 66 of Mines Act, 1952 provided that upon any person omitting inter alia to furnish return in the prescribed form or manner or at or within the prescribed time required under the Act shall be punish....
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....ction 271 of the Income Tax Act, 1961 provides for payment of penalty of sum equal to 2% of the assessed tax for every month during which the default continued. The Hon'ble Apex Court held: "17............. and in view of the language used in Section 271(1)(a) of 1961 Act, the position is beyond dispute that the legislature intended to deem the non-filing of the return to be a continuing default-the wrong for which penalty is to be visited, commences from the date of default and continues month after month until compliance is made and the default comes to an end. The rule of de die in diem is applicable not on daily but on monthly basis. "19. The imposition of penalty not confined to the first default but with reference to the continued default is obviously on the footing that non-compliance with the obligation of making a return is an infraction as long as the default continued. Without sanction of law no penalty is imposable with reference to the defaulting conduct. The position that penalty is imposable not only for the first default but as long as the default continues and such penalty is to be calculated at a prescribed rate on monthly basis is indicative of the legislativ....
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....al Code to be tried according to the provisions contained in CrPC and Sub-Section (2) provides that all offences under any other law shall be dealt with according to the same provisions but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences. In the present case, Sub-Section (5A) of Section 454 of Companies Act provides that the Court may take cognizance of the offence under Sub-Section (5) upon receiving a complaint of facts constituting such an offence and try the offence itself in accordance with the procedure laid down in the Code of Criminal Procedure, 1898 for the trial of summons cases by Magistrate. The procedure governing the trial of summons case will therefore govern the trial of offence under Section 454 of the Companies Act. 29. Chapter XXIII of CrPC providing for mode of taking and recording evidence contains Section 273 which reads as under: 273. Evidence to be taken in presence of accused.- Except as otherwise expressly provided, all evidence taken in the course of the trial or other proceeding shall be taken in the presence of the accused, or, when hi....
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....urt; such documents are called documentary evidence. 32. The Evidence Act categories the evidence into (a) oral evidence that is statement of witnesses made before the Court and (b) documentary evidence including electronic records which are produced before the Court for its inspection. In order to constitute oral evidence, the statement of witnesses is required to be made before the Court. The Affidavit of a witness with regard to the facts in issue cannot be treated as a statement of the deponent made before the Court, unless the law permits otherwise, such as in the case of Section 145 of Negotiable Instruments Act, 1888, which permits the complainant to adduce evidence by filing affidavit. 33. Upon conjoint reading of the above noted statutory provisions, the legal position emerging is that while trying an offence under Section 454 of Companies Act, which is summons triable case, the evidence is required to be taken in the presence of Accused, which requirement is not satisfied by filing of an Affidavit in lieu of examination in chief. It will be worthwhile to note that the Hon'ble Apex Court in State of Maharashtra v. Dr. Praful B Desai (2003) 4 SCC 601., and Sujay Mitra v.....
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....egularity envisaged under Section 461 of CrPC. The issue is not about irregularity vitiating the trial but whether the Affidavit of prosecution witness would constitute evidence for the purpose of deciding the culpability of Accused. The recording of evidence by way of affidavit falls foul of the statutory provisions and the rule framed by the High Court. 38. The decision of Gajanan Manikrao Mandekar v. Deepashree Gajanan Mandekar (supra) arose out of judgment passed by the Family Court, Akola in the context of Section 127 of CrPC. One of the submissions canvassed was that the proceedings were vitiated as the evidence was led by way of Affidavit which was not permissible under Section 10 of Family Courts Act. The Learned Single Judge noted the decision of Hon'ble Division Bench in Mr. K.V. More 3rd Joint Civil Judge and JMFC, Baramati v. The State of Maharashtra (Criminal Reference No 3/2007) holding that in matters which go to trial under Chapter IX of Cr.Pc, the evidence shall be taken by affidavit considering that the applications under Chapter IX of CrPC are of civil nature and consequently applied the provisions of Civil Procedure Code. Similarly, the decision of Anil Ambasha....
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....vidence, for two reasons: firstly, it enables the Court to apply its mind and pronounce its decision on the question of admissibility then and there; and secondly, in the event of finding of the Court on the mode of proof sought to be adopted going against the party tendering the evidence, the opportunity of seeking indulgence of the Court for permitting a regular mode or method of proof and thereby removing the objection raised by the opposite party, is available to the party leading the evidence. Such practice and procedure is fair to both the parties. Out of the two types of objections, referred to hereinabove, in the later case, failure to raise a prompt and timely objection amounts to waiver of the necessity for insisting on formal proof of a document, the document itself which is sought to be proved being admissible in evidence. In the first case, acquiescence would be no bar to raising the objection in superior Court." 40. The Affidavit in lieu of examination in chief was tendered on 16th January, 2019 without any objection being raised by the Accused and further examination in chief was recorded. On the adjourned date of cross examination, objection was raised by Accused, ....
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.... is especially within the knowledge of that person upon that person. It will have to be considered whether the fact of existence of reasonable excuse is a fact which can be said to be especially within the knowledge of the Accused placing the burden of proof upon the Accused by applying Section 106 of Evidence Act. In P.V.R.S Manikumar v. The Official Liquidator High Court (supra), the Hon'ble Division Bench of Madras High Court held that it is the initial burden of prosecution to prove that in spite of availability of relevant records, the accused failed to submit the statement of affairs without reasonable excuse and burden would shift to the accused only in case the complainant discharges the primary requirement of the provision regarding absence of reasonable excuse. In Vertex Stock and Shares Pvt Ltd v. Vemuri Venkatewara Road (supra), the Full Bench of Telangana High Court took a view that initial onus to prove absence of reasonable excuse is on the prosecution and it is only after it has adduced prima facie proof of relevant facts which, if unrebutted, by the accused would raise a presumption of existence of such fact in issue i.e. absence of reasonable excuse, would the onu....
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....e of availability of relevant records to facilitate the submission of statement of affairs, have failed to submit the same. I find no reason to take a different view. The essential constituent of the offence under Section 454(5) of Companies Act is the absence of reasonable excuse for default in filing the statement of affairs, the initial burden being upon the prosecution. Once the primary facts are proved by prosecution, the onus shifts upon the defence to show that there was reasonable cause for not complying with the requirements of Section 454 of Companies Act. [See Official Liquidator, Trimurthy Agro-Chemical v. Niranjan Jayantilal Tolia (supra)]. 44. One of the defences taken by Mr. Patil is that in absence of any notice under Rule 124 of The Companies (Court) Rules, 1959, the liability of Accused to submit the statement of affairs does not arise. Rule 124 provides for notice in Form No.55 by the Official Liquidator to the persons mentioned in Section 454(2) as soon as may be after the order of winding up or order appointing the Official Liquidator as Provisional Liquidator is made to submit and verify statement of affairs. The substantive provision is Section 454 of Compan....
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....nforming the Accused that the statement of affairs is not submitted in prescribed format duly verified by an Affidavit containing the particulars required as per provisions of the section. The communication states that the books of accounts and statutory records including the minutes book, statutory books were not handed over except a few documents even though paragraph 2 of the letter dated 22nd March, 2012 states that the statement of affairs and books of accounts have been forwarded. It was stated in the communication that the Affidavit informing about the whereabouts of three barges of the Petitioner has not been submitted. 46. In response to questions put up in cross examination, PW-1 produced two documents P-18 and P-19 i.e. Statement of Affairs in Form No. 57 affirmed before notary on 6th May, 2014 and Statement of Affairs affirmed on 11th February, 2015. P-18 and P-19 are the statements of affairs which were submitted after the complaint was filed on 6th February, 2013. In cross-examination, PW-1 has stated that these documents are not statement of affairs as every page of P-18 and P-19 are not signed by Directors, all columns are not filled, most of the columns are blank ....
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....led on 1st November 2018 by which time, the statement of affairs was on record of Official Liquidator and despite thereof, the PW-1 has not deposed about the filing of statement of affairs and the same was required to be brought out in cross-examination. The submission of Mr. Shah is that the P-18 and P-19 are not in consonance with the books of accounts by pointing out that Director's Report referred to the liabilities which did not find place in the statement of affairs, which is not the deposition of PW-1. The said aspect was required to be deposed, which would have given an opportunity to the Accused to cross-examine PW-1. It is not the case of prosecution that the statement of affairs filed subsequently did not satisfy the requisites of Section 454(1) of the Companies Act and the deposition by PW-1 in the cross-examination is that there are certain blanks in the statement of affairs at Exhibit P-18 and P-19 and supporting documents have not been filed. 50. Even accepting that the statement of affairs was not in prescribed format, the essential constituent of Section 454 is wilful default in filing the statement of affairs. PW-1 has merely deposed that there is default in fili....