TaxTMI 
TaxTMI 
2025 (10) TMI 185
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....tor and Sub-Section (5) of Section 454 reads 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 Liquida....
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....ice of Official Liquidator led evidence on 16th January, 2019 by 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....
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....n 18th June 2009 and 21st July 2009, notices were issued to the Ex-Directors 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 w....
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....onths, the offence took place in the month of July / August 2009 and the present complaint has been filed in the year 2013. Drawing support from the provisions 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 state....
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....en by way of Official Liquidator's Report in the year 2012, pursuant to which the complaint came to be filed and therefore complaint is within limitation. 19. He would further submit that insofar as the 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 atte....
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....ng the relevant date as 19th March, 2009, the extended period of three months would end in June, 2009. The complaint has been filed in the year 2013. Section 468 of Cr.PC bars taking of cognizance after lapse of period 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 Min....
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....e issues for consideration of the Hon'ble Apex Court was whether the default of non-filing of return within the time stipulated by law is a continuing offence under Section 271 of Income Tax Act, 1961. Sub-Section (1)(b)(ii) of Section 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 refere....
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.... permissibility of leading evidence by way of Affidavit in summons triable case is to be determined by considering the relevant provisions of the Evidence Act, CrPC and the Companies Act. Section 4 of CrPC provides for offences under the Indian Penal 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 S....
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....Evidence" means and includes - (1) all statements which the Court permits or requires to be made before it by witnesses, in relation to matters of fact under inquiry such statements are called oral evidence; (2) all documents including electronic records produced for the inspection of the court; 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 summon....
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....on proceeds, shall be taken in writing by the presiding judge or in his presence and hearing and under his personal direction and superintendence. 37. Mr. Shah would press in service the provisions of Sections 460 and 461 of CrPC to contend that the filing of Affidavit in lieu of examination in chief does not constitute an irregularity 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 Mah....
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....to such mode of proof as would be regular. The omission to object becomes fatal because by his failure the party entitled to object allows the party tendering the evidence to act on an assumption that the opposite party is not serious about the mode of proof. On the other hand, a prompt objection does not prejudice the party tendering the evidence, 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 firs....
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.... Section 454(5) of Companies Act does not make existence of reasonable excuse an exception to the offence, in which case the burden would have been upon the Accused to prove that his case falls within the exception. 42. Section 106 of Evidence Act which is an exception to Section 101 of Evidence Act, places the burden of proving the fact which 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),....
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....here it is impossible to prove the facts, Section 106 of Evidence Act comes into play. The view taken by the Hon'ble Madras High Court, the Hon'ble Full Bench of Delhi High Court and Hon'ble Telangana High Court is consistent that absence of reasonable excuse can very well be proved by prosecution by leading evidence to demonstrate that the Accused inspite 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 ....
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....ng that the statement of affairs has been forwarded as well as the books of account and the records available with the Accused i.e. balance sheets for the financial year 2001 to 2009, vouchers, bank statements, central excise stock register, correspondence, delivery challan. P-15 is communication by the Official Liquidator to the Accused in response to P-14 informing 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 Af....
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....requirements of Section 454(1) of Companies Act. P-14 would prove that the Accused based on the records available had submitted statement of affairs to the Official Liquidator. 49. PW-1 has admitted that after filing of complaint, the statement of affairs P-18 and P-19 have been furnished by the Accused in the year 2014 and 2015. The evidence of prosecution was filed 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-exa....