Official Liquidator Vs. Kolli Vengaiah Naidu - Court Judgment

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company - non-compliance - sections 303, 449 and 454 of companies act, 1956 - company application filed for summoning respondent for non-compliance with requirements of section 454 and to direct him to file statement of affairs of company - respondent contended that he ceased to be a director of company long time ago and he had no knowledge of its affairs - court after considering said fact observed that no case whatever is made out against respondent regarding his duty to file statement of affairs as he ceased to be director several years prior to winding up - as respondent had no duty to submit statement he cannot be held liable for non-compliance of requirements of section 454 - application accordingly dismissed. - motor vehicles act (59 of 1988)section 149 (2): [v. gopala gowda & jawad rahim, jj] insurers entitlement to defend the action joint appeal by insured and insurer - held, the language employed in enacting sub-section (2) of section 149 appears to be plain and simple and there is no ambiguity in it. it shows that when an insurer is impleaded and has been given notice of the case, it is entitled to defend the action only on grounds enumerated in sub-section (2) of section 149 of the act, and no other grounds are available to it. the insurer is not allowed to contest the claim of the injured or heirs of the deceased on other grounds, which are available to the insured. if insurer is permitted to contest the claim on other grounds it would mean adding more grounds of contest to the insurer and will be negation of the intention of the legislature and annihilate mandate of the provisions of sections 170 and 149 of the act. the insured can pursue appeal only after giving up the insurer as the appellant and not otherwise. in the instant case, the insurer has not withdrawn from party array but has remained prosecuting the appeal with the insured on the grounds which are available only to the insured. therefore, the joint appeal as filed by the insured and the insurer is not maintainable. section 166: [v. gopala gowda & jawad rahim, jj] claim for compensation accident due to mechanical defect in the vehicle held, it is not in dispute that the claimant suffered injuries in an accident, which occurred during the course of his employment, albeit due to his negligence but law does not render him remediless. statutory right is conferred on him, accruing by virtue of his employment under insured to claim compensation under workmens compensation act. the insurer is statutorily duty bound to discharge the liability of the owner of the vehicle, to pay such compensation to the employee, as mandated under the provisions of section 149 of the act. the right of an injured employee or his dependents as the case may be to be compensated, when injury is suffered or death occurs during his employment, is recognised not only under workmens compensation act, but also under benevolent provisions under section 166 and 167 of the m.v. act. the right of driver to seek compensation is not restricted only to the workmens compensation act, it has been enlarged to enable such person to seek just compensation (sections 166 and 168), conferring upon him the right of election engrafted under section 167 of the act to choose either of the two forum. the only defence which the insurer could take is limit of its liability as enumerated under section 147 of the act, leading to contest, inter alia, only between insured and insurer and does not impact claimants right to recover the compensation determined by the tribunal which crystallizes into enforceable right against both. in the instant case, the claimant/driver has exercised right of election under section 167 of the act to seek compensation under section 166 of the act resulting in award passed by the tribunal. therefore, the insured and the insurer have no escape but to discharge the said award as directed. undisputedly, in this case as deduced for proved facts, the vehicle in question was not properly maintained by the owner and despite faulty brake system, the claimant had undertaken the hazardous journey to his peril at the behest of and at the instruction of the owner. the owner is therefore, tortfeasor. section 168: [v. gopala gowda & jawad rahim, jj] insurers limit of liability - held, it is well settled that the liability of the insurance company for payment of compensation can be statutory or contractual. is for the insurance company to show that the insurance policy was a statutory policy and not a contractual policy to restrict its liability. that issue was neither raised before the tribunal nor is raised in this appeal requiring decision. thus, if at all the insurer has any valid ground to restrict its liability, it can proceed against the insured but firstly it has to discharge the award as required under section 149 (1) of the act. where the owner/insured has failed to maintain the vehicle as per prescribed safety standards and has caused the claimant to drive the vehicle with mechanical defects, the owner would be the tortfeasor and the claimant can maintain a petition seeking compensation under the provisions of the act, instead of seeking compensation under the workmens compensation act. on facts, held, the material evidence on record, particularly, with regard to the income of the claimant, his age, medical evidence and the evidence relating to pecuniary loss has not been considered by the tribunal in the correct perspective, which has resulted in passing of the impugned award, disproportionate to the pecuniary loss and the loss of future income of the victim. the settled principles governing determination of compensation has been given a go-bye. compensation of rs.4,15,150/- awarded by the tribunal was enhanced to rs.8,20,000/-. - 5. after hearing learned counsel for the official liquidator and also learned counsel for the respondent, i am satisfied that no case whatever is made out against the respondent as regards his duty to file a statement of affairs of the company, in view of the uncontroverted fact that he ceased to be a director of the company several years prior to the date of winding up order. 8. i am, therefore, satisfied that the official liquidator, the complainant herein, has not made out that the respondent committed any offence under sub-section (5) of section 454 of the act. the magistrate may drop the proceedings if he is satisfied on reconsideration of the complaint that there is no offence for which the accused could be tried. ' 9. in the present case, i am satisfied that the facts alleged against the respondent do not constitute an offence under sub-section (5) of section 454 of the act.parvatha rao, j. 1. this company application is filed under sub-sections (5) and (5a) of section 454 of the companies act, 1956 (hereinafter referred to as 'the act') for summoning the respondent herein, i.e., kolli vengaiah naidu and to punish him under sub-section (5) of section 454 of the act for non-compliance with the requirements of section 454 of the act and to direct him to file forthwith the statement of affairs as required by sub-sections (1), (2) and (3) of section 454 of the act. 2. in the affidavit filed in support of this company application, it is stated that this court passed a winding up order dated september 8, 1989, in company petition no. 28 of 1987 directing the winding up of weber electric private limited and that the official liquidator was appointed as the liquidator of the company under section 449 of the act. it is further stated that the official liquidator issued notice to the respondent herein on november 30, 1989, to submit the statement of affairs of the company as required under section 454 of the act and that in spite of that notice, the statement of affairs has not been filed by any of 'the ex-directors of the company' including the respondent herein. it is also stated that under section 454 of the act, the ex-directors of the company are required to file the statement of affairs of the company in liquidation furnishing the required details in the prescribed form. as the respondent herein did not comply with the requirements of section 454 of the act, it is stated that he has committed default in complying with the statutory requirement of sub-sections (1), (2) and (3) of section 454 of the act and, therefore, he is punishable under sub-section (5) of section 454 of the act and this court can take cognizance of the offence in view of sub-section (5a) of section 454 of the act. 3. summons was ordered on july 29, 1992. the respondent appeared through his counsel and his personal appearance was dispensed with. he filed a counter affidavit dated september 11, 1992. therein he states that though he was inducted as a director of the company during september, 1978, he submitted his resignation from the said post on april 26, 1986, with immediate effect, to the board of directors and the board of directors in their meeting held on december 22, 1986, accepted the said resignation and the resignation of another director by name s. ramachandraiah. he also states that on december 22, 1986, itself, the company submitted form no. 32 as required under sub-section (2) of section 303 of the act as regards his ceasing to be a director. he states that in the circumstances, he does not have any knowledge about the affairs of the company and that, therefore, he is not under any statutory duty to furnish the statement of affairs of the company. 4. even though learned counsel for the official liquidator sought time on november 20, 1992, for filing a reply, he has not filed any reply till now controverting the averments in the counter-affidavit of the respondent that he ceased to be a director of the company with effect from april 26, 1986, that is long before the date of the winding up order. 5. after hearing learned counsel for the official liquidator and also learned counsel for the respondent, i am satisfied that no case whatever is made out against the respondent as regards his duty to file a statement of affairs of the company, in view of the uncontroverted fact that he ceased to be a director of the company several years prior to the date of winding up order. under sub-section (2) of section 454 of the act, the statement referred to therein shall be submitted in the manner required therein (i) by persons who are at the relevant date the directors of the company, and (ii) by the person who is by that date the manager, secretary or other chief officer of the company. in cases where no provisional liquidator is appointed, the relevant date is defined in sub-section (8) of section 454 of the act as the date of the winding up order which in the present case is september 8, 1989. the respondent states that he ceased to be a director of the company from april 26, 1986, because he submitted his resignation with effect from that date and his resignation was accepted by the board of the company on december 22, 1986, on which date form no. 32 was also submitted by the board to the registrar of companies. 6. even apart from this, in the affidavit filed in support of the present company application, it is not stated whether the respondent was a director of the company on the relevant date, i.e., september 8, 1989. in the absence of such an allegation in the affidavit in support of the application-taking it as the complaint filed by the official liquidator - i am afraid a very essential link in the chain of facts for making out the commission of me offence under sub-section (5) of section 454 of the act is missing because the duty to file a statement as per sub-section (2) of section 454 of the act will arise only in the case of a person who was a director of the company on the relevant date. 7. sub-section (2) of section 454 of the act also. obligates persons mentioned in clauses (a), (b), (c) and (d) therein to verify and submit the statement if the official liquidator so requires any of them, subject to the direction of the court. it is not the case of the official liquidator that any such direction was given to the respondent herein. what is stated in the affidavit is only that on november 30, 1989, a notice was got issued to the respondent. but the said notice was returned by the postal authorities. even assuming that the official liquidator can issue such a notice to a person who was not a director on the relevant date without any direction from the court, in the present case, admittedly, no such notice, requiring the respondent to file a statement, was served on the respondent. 8. i am, therefore, satisfied that the official liquidator, the complainant herein, has not made out that the respondent committed any offence under sub-section (5) of section 454 of the act. under sub-section (5a) of the said section 454, the court may take cognizance of an 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 for the trial of summons cases by magistrates. the trial of summons cases by magistrates is under chapter of the code of criminal procedure. in mathew (k. m.) v. state of kerala., : 1992crilj3779 , the supreme court has held that the need to try the accused arises when there is an allegation in the complaint that the accused has committed the crime and that even after the accused enters appearance in response to the summons the magistrate is not bound to proceed under chapter xx of the code of criminal procedure if it is shown that no offence is made out in the complaint. the supreme court has held as follows (at page 2208) : 'it is open to the accused to plead before the magistrate that the process against him ought not to have been issued. the magistrate may drop the proceedings if he is satisfied on reconsideration of the complaint that there is no offence for which the accused could be tried. it is his judicial discretion. no specific provision is required for the magistrate to drop the proceedings or rescind the process. the order issuing the process is an interim order and not a judgment it can be varied or recalled. the fact that the process has already been issued is no bar to drop the proceedings if the complaint on the very face of it does not disclose any offence against the accused.' 9. in the present case, i am satisfied that the facts alleged against the respondent do not constitute an offence under sub-section (5) of section 454 of the act. 10. the proceedings against the respondent are, therefore, dropped and the company application is accordingly dismissed.