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Judgment
B.V. Nagarathna, J.—This application is filed by the official liquidator u/s 454(2) of the Companies Act seeking a direction to the respondent to file statement of affairs u/s 454 of the Act.
According to the applicant M/s. Keonics Penta Semiconductors Ltd., was ordered to be wound up by this Court by order dated 4.9.2002 in Company Petition No/22/1998 and the official liquidator attached to this Court was appointed as the liquidator of the said company. Initially an application u/s 454 of the Act was filed against certain Ex-Directors of the company in liquidation including the respondent herein in C.A. No. 1182/2002 and another application in C.A. No. 44/2005 against one Vittal S. Candade seeking According to the applicant, Sri. Rao H.V. one of the Ex-Directors died on 22.11.2000, Sri. Savoor Rao Krishna is represented by a counsel and that by order dated 21.2.2007 proceedings against the respondent herein were dropped and by order dated 17.8.2006 the complaint against another Ex-Director Sri. Subramanian R.D. was dismissed. The proceedings in C.A. No. 1182/2002 is now continued against Sri. Savoor Rao Krishna and against Sri. Vittal S. Candade in C.A. No. 44/2005 as that they have not filed statement, of affairs.
According to the official liquidator, the respondent herein was a Director of the company and was actively associated with the day today activities and under the circumstances that he is the right person to whom the direction could be issued u/s 454 of the Act to file the statement of affairs showing the assets and liabilities of the company so as to enable the official liquidator to carry out the liquidation proceedings effectively.
In response to this application, the respondent herein filed statement of objection stating that on 21.2.2007, the respondent herein who was arrayed as respondent No. 3 in C.A. No. 1182/2002 was deleted from the proceedings on the ground that he has resigned from the post of Director. The said order has become final and therefore, the official liquidator cannot, once again file another application to initiate proceedings by alleging that the statement of affairs have not been filed by him. It is also contended that the instant application is hit by the principle of resjudicata. It is also denied that the respondent was aware or was actively associated with the day today activities of the company and hence, it is prayed that the application be dismissed.
I have heard the counsel for the applicant and the counsel for the respondent.
It is submitted on behalf of the applicant that despite the order dated 21.2.2007 passed by this Court deleting the respondent herein from the proceeding initiated in C.A. No. 1182/2002, Section 454 enables the official liquidator to seek permission to demand fifing of statement of affairs by even an Ex-Director of a company in liquidation and that the present application is not hit by any principle of resjudicata since the earner application pertained to Section 454(1) and the said provisions being exclusive, the present application is maintainable. He has also submitted that by virtue of the direction issued by this Court a memo enclosing certain documents were furnished in order to point out that there is sufficient material so as to seek an order u/s 454(2) in respect of the respondent. The document annexed to the said memo is adverted to.
Per contra, it is submitted on behalf of the respondent that when once the respondent was deleted from the proceedings, by virtue of the order dated 22.1.2007, the official liquidator cannot once again seek the respondent to file statement, of affairs. Section 454 has to be read as a whole and that when he is absolved of his statutory duty, there cannot be once again a direct ion to the respondent to comply with the said provision. In support of his submission, he has relied upon two decisions reported in the cases of Mother Care (India) Ltd. Vs. Prof. Ramaswamy P. Aiyar, and Official Liquidator Vs. Shri B.K. Modi and Others, to submit that the application itself is not maintainable. Alternatively, it is submitted that in case this Court comes to the conclusion that the application is maintainable, no sufficient evidence or material has been produced so as to seek a direction against the respondent to file the statement of affairs in terms of Section 454(2).
Having heard the counsel on both sides, the points that, arise for my consideration air as follows:
i) Whether an application u/s 454(2) is maintainable when the same is filed against a person who is deleted in an earlier proceeding initiated u/s 454(5) of the Companies Act.
ii) If the answer to point No. 1 is in the affirmative, whether the official liquidator has placed sufficient material on record to seek a direction to the respondent herein u/s 454(2) of the Act?
From the material on record, it is not in dispute that the, respondent resigned on 1.3.2002 and the winding up order was passed on 4.9.2002 and that possession of the assets of the company in liquidation was taken on 13.1,2003 and mahazar was drawn up in that regard, on 3.6.2003, That C.A. No. 1182/2002 was filed by the official liquidator in which the present respondent was also arrayed as respondent No. 3 and that by order dated 21.2.2007, this Court deleted, the respondent herein from the said proceedings. At this stage itself, it would be of relevance to refer to the order dated 21.2.2007 which reads as follows;
This application is filed to recall the NBW issued against H-3. It is brought to notice that on 29.6.2006 this Court has dispensed with the personal appearance of K-3 in view of his resignation prior to the order of winding up.
Counsel for the applicant submits that in view of the order dated 29.6.2006 proceedings against R-3 may he dropped. Perused the order dated 29.6.2006. On 29.6.2006 this Court has accepted the submission made by the counsel for R-3 about the resignation of R-3 to the post of Director w.e.f. 1.3.2002. He has also produced Form No. 32. In view of the same, this application is allowed. Non-Bailable warrant issued on 31.1.200/ is hereby recalled. Proceedings against R-3 are dropped. Deepak to amend the application.
From the aforesaid order, it is apparent that the respondent herein had failed to appear in the proceedings initiated in C.A. No. 1182/2002 and therefore, a non-bailable warrant was issued. Subsequently, he appeared and sought for recalling the said order and also for seeking his deletion from the said proceedings. Considering the fact that on 29.6.2006, this Court had accepted the submission that he had resigned from the post of Director with effect from 1.3.2002, in support of which Form No. 32 was also produced, the non-bailable warrant issued on 31.1.2007 was recalled and he was deleted from the said proceedings. The proceedings initiated u/s 454(5) in C.A. No. 1182/02 is one for violation of the obligation cast u/s 454(1) and has nothing to do with the present application filed u/s 454(2).
Subsequently, the present application has been made u/s 454(2) of die Act. Before answering the question of maintainability of the said application, it is necessary to analyse the said section, which reads as follows:
Section 464(1)-Where the [Tribunal] has made a winding up order or appointed the Official Liquidator as provisional liquidator, unless the (''tribunal) in its discretion otherwise orders, there shall be made out and submitted to the Official Liquidator a statement as to the affairs of the company in the prescribed form, verified by an affidavit, and containing the following particular''s namely:
(a) the assets of the company, stating separately the cash balance in hand and at the bank, if any, and the negotiable securities, if any, held by the company;
(b) its debts and liabilities;
(c) the names, residences and occupations of its creditors, stating separately the amount of secured and unsecured debts; and in the case of secured debts, particulars of the securities given, whether by the company or an officer thereof, their value and the dates on which they were given;
(d) the debts due to the company and the names, residences and occupations of the persons from whom they are due and the amount likely to be realised on account thereof;
(e) such further or other information as may be prescribed or as the Official Liquidator may require.
454(2) The statement shall be submitted and verified by one or more of the persons who are at the relevant date the directors and by the persons who is at that date the manager, secretary or other chief officer of the company, or by such of the persons hereinafter in this sub-section mentioned, as the Official Liquidator, subject to the direction of the [Tribunal], may require to submit and verify the statement, that is to say, persons-
(a) who are or have been officers of the company,
(b) who have taken part in the formation of the company at any time within one year before the relevant date;
(c) who are in the employment of the company, or have been in the employment of the company within the said year, and are, in the opinion of the Official Liquidator, capable of giving the information required.
(d) Who are or have been within the said year officers of or in the employment of, a company which is, or within the said year was, an officer of the company to which the statement relates.
(3) The statement shall be submitted within twenty-one days from the relevant date, or within such extended time not exceeding three months from that date as the Official Liquidator or the (Tribunal] may, for special reasons, appoint.
(4) Any person making, or concurring in making, the statement and affidavit required by this section shall be allowed, and shall be paid by the Official Liquidator or provisional liquidator, as the case may be, out of the assets of the company, such costs and expenses incurred in and about the preparation and making of the statement and affidavit as the Official Liquidator may consider reasonable, subject to an appeal to the (Tribunal].
(5) If any person, without reasonable excuse, makes default in complying with any of the requirements of this section, he shall be 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.
(5A) The (Tribunal] by which the winding up order is made or the provisional liquidator is appointed, may take cognizance of an offence under Sub-section (5) upon receiving a complaint of facts constituting such an offence and trying the offence itself in accordance with the procedure laid down in the Code of Criminal Procedure, 1898 (5 of 1898), for the trial of summons cases by magistrates.
(6) Any person stating himself in writing to be a creditor or contributory of the Company shall be entitled, by himself or by his agent, at all reasonable times, on payment of the prescribed fee, to inspect the statement submitted in pursuance of this section, and to a copy thereof or extract therefrom.
(7) Any person untruthfully so stating himself to be a creditor or contributory shall be guilty of an offence u/s 182 of the Indian Penal Code (45 of 1860); and shall, on the application of the Official Liquidator be punishable accordingly.
(8) In this section, the expression "the relevant date" means, in a case where a provisional liquidator is appointed) the date of his appointment, and in a case where no such appointment is made, the date of the winding up order.
A perusal of the said section makes it apparent that Section 454(1) casts a statutory duty to file a statement of affairs of the company in the prescribed format containing the particularly mentioned in the said sub-section by the Directors and by any person who is a Manager, Secretary or other Chief Officer of the company on the relevant date which is stated in Section 454(2). The relevant date is explained in Section 454(8) of the Act to mean in a case where a provisional liquidator is appointed, the date of his appointment, and in a case where no such appointment was made, the date of the winding up order is made. The nature of information to be furnished is stated in Clauses (a) to (e) of Section 454(1). Sub-section (2) of Section 454 however, enables the official liquidator to seek a direction to certain category of persons to file a statement of affairs. The category of persons are as follows:
(a) who are or have been officers of the company,
(b) who have taken part in the formation of the company at any time within one year before the relevant date;
(c) who are in the employment of the company, or have been in the employment of the company within the said year, and are, in the opinion of the Official Liquidator, capable of giving the information required.
(d) Who are or have been within the said year officers of or in the employment of a company which is, or within the said year was, an officer of the company to which the statement relates.
Section 454(1) creates is a statutory duty cast on the Directors and other officers to file the statement of affaire provided they held the said office on the relevant date. Even in the absence of the official liquidator calling upon them to tile a statement of affairs, it is incumbent on the said officers to tile the statement within a period of 21 days from the relevant date or within such extended time not exceeding three months from the date as the official liquidator of the court may for special reasons to appoint as stated in Section 454(3) of the Act. However, under Sub-section (2) of Section 454, there is no statutory duty case on the categories of persons mentioned in Clauses (a) to (d) therein to file u/s 454(2) unless they have been called upon to do so and the officers who have been mentioned in the said section need not be only holding office on the relevant date but. who were or had been officers of the company, who had taken pail in the formation of the company at any time within one year before the relevant date, who were in the employment of the company, or have been in the employment of the company within the said year, and are, in the opinion of the Official Liquidator, capable of giving the information required, who are or have been within the said year officers of, or in the employment of, a company which is, or within the said year was, an officer of the company to which the statement relates. Hence, Sub-section (2) is an enabling provision which gives the official liquidator tire right to seek information by way of filing a statement of affaire from even the Ex-Directors or employees of the company. This is clear from the fact that u/s 454(2) the word "or" before the words "by such of the persons hereinafter in this sub-section mentioned" clearly differentiate between the mandatory requirement of the directors, manager, secretary or other Chief Officer of the company on the relevant date to submit the statement of affairs and the officers who are mentioned in Clauses (a) to (d) of the said sub-section who Can be directed, to file the statement of affairs, it would also be relevant to note that Sub-section 2(30) of the Act defines officer of the company to include even a Director.
Reference to the rules pertaining to tiling of Statement of affairs under the Company Court Rules 1939 would reveal that under Rule 124 when a notice is issued by the Official Liquidator requiring any person to submit and verify the statement of affairs of the company under 454(2) the same is in Form No. 55. But when the Official Liquidator applies by summons to the court for an order directing any person who in his opinion is liable to furnish the statement of affairs, and u/s 454 of the Act the court makes an order the same is in Form No. 56 under Rule 125 of the said Rules. Therefore, the Act read with Rules makes a distinction between the notice of the Official Liquidator u/s 454(2) seeking compliance with the statutory duty u/s 454 of the Act and when the Official Liquidator applies for the summons to the court for an order directing any person to file the statement of affairs. Hence the Official Liquidator can suo moto seek filing of statement of affairs u/s 454(2) or file an application to the court seeking a direction to any person who in the opinion of the Official Liquidator is liable to furnish the statement of affairs u/s 454.
While u/s 454(1) of the Act the statutory duty is on the manager, secretary or other chief officer of the company. u/s 454(2) of the Act the Official Liquidator can seek direction against not only the officers who were part of the company as on the date of winding up order or when provisional Liquidator was appointed, but also those who have been officers and employees of the company even prior to the date of winding up of the company.
Therefore, I am of the view that the object and purpose of the two sections are quite different. The said sections are mutually exclusive and independent of each other and merely because a Director has been deleted from the proceedings initiated u/s 459(5) and (5A) initiated not complying with the statutory requirement of Section 454(1) as he had ceased to be a director on the relevant date cannot absolve him of the duty to comply with a request made by official liquidator to file the statement of affairs u/s 454(2) of the Act, particularly, when an application is made to the court, as in the instant case. Therefore, even if a person has been deleted horn the proceedings initiated u/s 454(5) and (5A) for violation of statutory duty u/s 454(1), an application u/s 454(2) is maintainable against such a person. In other words, the official liquidator can seek permission to seek statement, of affairs from a person who does not have a statutory duty to file the same u/s 454(1) provided he is belonging to one of the categories of persons mentioned in Section 454(2) and sufficient material is placed before the court.
In this regard, it is of relevance to refer to the citations placed by the learned Counsel for the respondent, in the case of Mother Care (India) Ltd. Vs. Prof. Ramaswamy P. Aiyar, this Court was dealing with the tact of resignation of a Director in a proceeding initiated u/s 454(5) & (5A) of the Act arid in para 13 of the said judgment it is enunciated as follows:
A reading of Section 454(2) of the Act makes it very dear that the statement of affairs to be made by the Official Liquidator u/s 454(1) is to be submitted and verified by one or more of the persons who are at the relevant date the director, Therefore, the relevant date would be the date on which the winding up order is made and it is persons who are on that date directors and who are in charge or the company and its affairs who are expected to furnish the particulars mentioned in 454(1) and if a person has ceased to be a director on that relevant date, there is no obligation cast upon him to furnish the aforesaid particulars contemplated u/s 454(1). Even if a person is not a Director on the aforesaid relevant date in exceptional cases the Official Liquidator can call upon such person who has taken part in the formation of such company at any time within one near before the relevant date to furnish the particulars. Only if a default is committed in furnishing those particulars, the Director would be punishable u/s 454(5) of the Act. Therefore the intention of the legislature is very clear. After the winding up order. Director on the date of the winding up order commits default in performing his statutory obligation u/s 454(1) of the Act, action may be taken against such director u/s 454(5) of the Act. In exceptional cases even persons who are director one year anterior to the date of the winding up order would be called upon to furnish such particulars. But if a person has ceased to be Director of the company either on the date of the winding up order or one year before the date of the winding up order then no action could be taken against him u/s 454(5) for noncompliance with Section 454(1) of the Act as there is no statutory obligation cast on such director to comply with the said requirement. If the date of communication of the intention to resign is taken into consideration and if that date happens to be anterior to the winding up order, such director who has resigned is under no obligation to comply with Section 454 of the Act, as such no action could be taken u/s 454(5) and (5A) of the Act.
(emphasis supplied)
In the case of Official Liquidator Vs. Shri B.K. Modi and Others, in the context of Section 454(2) of the Act, it is stated that in exceptional cases the official liquidator could call upon such a person who has taken part in the formation of the company or at any time within one year before the relevant date to furnish particulars and if a default is committed in furnishing those particulars, the officer would be punishable u/s 454(5) of the Act.
This Court has also has clearly stated in the above quoted decision that the obligation u/s 454(1) is statutory, but the obligation u/s 454(2) would arise only when the official liquidator would call upon such an officer or an employer to file the statement of affairs. It is also stated that for non-compliance of any of the sections, action u/s 454(5) can also be taken. But if a Director has resigned and proved to the satisfaction of the court that on the relevant date he had no obligation to comply with Section 454(1), then no action could be taken u/s 454(5) or (5a) of the Act. While adverting to the decision of this Court, in the case of Official Liquidator Vs. Shri B.K. Modi and Others, it has been held that even if a person has been a Director of the company at any point of time and he has ceased to be so on the relevant date i.e., the date of winding up order or within one year poor to the relevant date, such a person can be held responsible for not submitting and verifying the statement of affair''s in view of the provisions of Section 454(2)(a) read with Section 2(30) of the Companies Act, 1956, though he is absolved of his responsibility u/s 454(1) of the Act. Therefore, in view of the aforesaid decisions, it is held that the, application filed u/s 454(2) of the Act is maintainable and hence, point No. 1 is answered in favour of the applicant.
As far as point No. 2 is concerned, it is the contention of the learned Counsel for the respondent that no sufficient material has been furnished to the court so as to enable the court to issue a direction to the respondent herein, to file a statement of affairs. In the application it is stated that the respondent herein was a Director of the company and was actively associated, with the day today activities of the company having knowledge as to the affairs of the company and that according to the official liquidator, he is the right person to whom necessary direction could be given to file the statement of affairs u/s 454(2) of the Act. In support of the said pleading and in accordance with the direction issued by this Court, to furnish further material, by a memo dated 11.12.2008. the official liquidator has produced a copy of the Minutes dated 13.1.2003 and mahazar drawn on 2.6.2003 and letter dated 2.6.2003 written by the respondent, herein to the Assistant Official Liquidator. Though the respondent resigned as Director on 1.3,2002 and was not at. all a Director as on 4.9.2002 on the date the winding up order was passed by this Court, at the time of taking over possession of the-assets of the company on 13.1.2003, he has signed the Minutes of the said proceeding and also on 2.6.2003 when a mahazar was drawn up on which date his representative one Sri. K.C. Venkatesh was present since he could not attend on that day as he was indisposed as is evident from his letter dated 2.6.2003. The material on record makes it amply evident that despite his resignation as a director, he was actively involved during the post-winding up proceedings which is in the year 2003 as per Annexures-A to C to the memo. No doubt it was only on 21.2.2007 that this Court deleted the respondent from the proceedings initiated in C.A. No. 1182/2002. Even if a person has been deleted from the proceedings initiated u/s 454(5) and (5) for violation of statutory duty u/s 454(1), an application u/s 454(2) is maintainable against such a person. In other words the official liquidator can seek permission to seek statement, of affairs from a person who does not have a statutory duty to file the same u/s 454(1) provided he is belonging to one of the categories of persons mentioned in Section 454(2) and sufficient material is placed before the court. But if the stand of the respondent is that consequent to his resignation he had nothing to do wit the affairs of the company, then he ought not to have taken part in any of its proceedings post-winding up older being made by this Court. On the other hand, the material furnished would make it. evident that be participated in the proceeding initiated by the official liquidator subsequent to the winding up order and particularly Annexure-C makes clear the intention of the respondent herein to be present on 2.6.2008 and on account of the reasons mentioned therein, he could not personally be present and had therefore, sent his representative. The said letter would indicate that the respondent herein was a key person amongst the other Directors of the company who were also present and that though he contended that he had no statutory duty as per Section 454(1) on account of his resignation, but in view of his participation in the post-winding up proceeding which is evident from the said material, other directors not being there, the direction sought, to the respondent, to furnish the statement of affairs in terms of Section 454(2) of the Act, in my view, is in accordance with the requirement of the said provision in the context of the material furnished and hence, point No. 2 is answered in the negative as there is sufficient material placed before this Court.
For the aforesaid reasons, the application is allowed. The respondent is directed to file his statement of affairs as sought, by the official liquidator in terms of Section 454(2) of the Act.