Judgment:
1. The instant application is Bled by the Official Liquidator alleging that the erstwhile Directors of the respondent company have not filed the Statement of Affairs as contemplated in law and as such, action is liable to be initiated as contemplated under Section 454(5) and (5A) of the Companies Act.
2. The respondents have appeared and put forth their explanation by way of defence to contend that they have not committed the offence as alleged. It is their case that even though the dates indicate, that there is delay, the same was for reasonable cause and if such cause is accepted by this Court, they are entitled to be exonerated. In view of the allegation, the charge had been framed against the respondents. The respondents denied the charge and sought to be tried. Accordingly, it was set down for evidence. The witness on behalf of the Official Liquidator was examined as PW. 1 and the respondents were examined as RW. 1 and RW.2 respectively. On behalf of the applicant, the documents at Ex.P1 to P12 have been marked. The respondents have referred and marked the documents at Exhs.R. 1 to R. 13.
3. In the light of the above, I have heard the learned counsel appearing for the parties and perused the materials on record.
4. Insofar as the legal requirement, the fact that the statement of affairs is required to he filed by the erstwhile Directors of the company within 21 days from the date of winding up is evident. In the instant case, the Company in liquidation was ordered in be wound up on 12.06.2000 and in a normal circumstance, the Statement of Affairs was required to be hied on 03.07.2000. The statement of affairs in the instant case has been filed on 10.01.2005 and the same has been marked as Ex.P3 in the evidence tendered by one Sri Jambayya, Assitant working in the office of the Official Liquidator,
5. From the above dates, it is clear that the Statement of Affairs has been filed subsequent to the time, which is provided in law. However, the question for consideration is as to whether there is reasonable cause for the delay which has occurred and in that circumstance, whether the case put forth by the respondents could be accepted. In that regard, the undisputed fact is that the possession of the assets including the immovable property including building belonging to the Company in liquidation was taken over jointly by the Official Liquidator. Karnataka State Financial Corporation and Indian Overseas Bank on 24.07.2000. The mahazar for taking over possession of the premises is produced by the respondents and marked as Ex.R. 1. Though the said date is after the initial date of 21 days, the same indicates that it is immediately thereafter. Insofar as that aspect of the matter, a perusal of the cross examination of RW.1 would indicate that while denying the suggestion put forth that there was delay in filing the statement of affairs, the respondent No. 1 (RW. 1) has stated that the taking over of possession had occurred at a stage when the respondents were in the process of preparing the Statement of Affairs to be filed.
6. In that background, what is to be considered is as to whether from the said date viz., 24.07.2000, there is any explanation for the time lapse till it was filed. In this regard, a perusal of the Mahazar and also the explanation put forth would indicate that all the records relating to the company was also available in the premises, possession of which was taken. After the possession had been taken over by the Official Liquidator and the secured creditors, the security agency viz.. Maitrey; Detective Agency was appointed for taking care of the premises and the said security agency had been appointed at the instance of the Official Liquidator and the secured creditors. Firstly, since the possession had beer) taken and the premises had been sealed, the respondents did not have access to the records which were available in the premises. Secondly, the undisputed fact is also that theft had occurred in the premises on 17.10.2000 and in that regard. Official Liquidator has lodged the complaint with the jurisdictional police and the jurisdictional police has also filed 'C report indicating that no further progress could be made and no recoveries have been made during the process of investigation. This aspect of the matter would indicate that in view of the change in circumstance which had occurred due to the scaling of the premises and theft thereafter which had also occurred in the year 2000 itself, the respondents were not in a position to immediately file the Statement of Affairs. premises. documents were not available and as per the permission granted by the Official Liquidator, vide communication
7. In the above background, the question that would arise is as to how on the subsequent date the Statement of Affairs was filed i.e.. on 10.01.2005. To explain the manner in which the Statement of Affairs was filed, the respondents have relied on the correspondences which had been exchanged between them and Official Liquidator which are marked in evidence at Exhs.R.3 onwards. It is pointed out that the respondents in order to file the Statement of Affairs, had requested the Official Liquidator to permit them to examine the records which were in the However, on such examination, all the dated 16.03.2004 the details which were available had been gathered and the Statement of Affairs was ultimately filed on 10.01.2005. It is no doubt true that the Statement of Affairs thus filed was not complete which itself is justification for not tiling earlier. The Official Liquidator by the admitted communication at Exh.R.8 and also the documents marked at Exhs.PS 10 P8 had pointed out that the details relating to the Bank balance. Cash in hand. Trade Debtors, Loans and Advances and Unsecured Creditors had not been properly furnished. Though that is the position, it is also not in dispute that the Official Liquidator has already initiated proceedings in that regard by filing an application as contemplated under Section 543 of the Companies Act. Therefore, filing of the incomplete statement of affairs need not be considered any further in the instant proceedings.
8. Keeping in view the nature of the proceedings under Section 454 of the Companies Act and the consideration being as to whether the respondents have made out reasonable cause for explaining the delay, in the instant facts, the fact that possession was taken over on 24.07.2000 and a theft had occurred in the premises on 17.10.2000 and the respondents had thereafter made efforts to approach the office of the Official Liquidator to secure the details from the records is evident. Such permission was granted on 16.02.2004 and on the examination of the available records, the Statement of Affairs was filed on 10 01.2005. All this would indicate that the action of the respondents was not deliberate and they had reasonable cause for the delay in filing the statement of affairs and the same had been explained. In that view of the matter. I am of the opinion that the respondents are entitled to be exonerated.
Accordingly, the respondents are exonerated. The application is accordingly dismissed.