Globe Associates (P.) Limited (In ... vs F.C. Mehra And Ors.
1986 Latest Caselaw 280 Del

JUDGMENT

D.P. Wadhwa, J.

(1) By all these different applications, the accused seek their discharge and these arise out of a criminal complaint filed by the Official Liquidator under S. 454(5) of the Companies Act 1956 (for short 'the Act').

(2) M/S. Globe Associates (P) Ltd. was ordered to be wound up provisionally 10-1-1969 and finally orders were passed on 7-3-1969 by this court. The complainant was appointed the Official Liquidator of the Company. Under S. 454(5) and (2) of the Act, the accused who are 5 in number were required to file statement of affairs of the Company. This statement is to be submitted within 21 days of the winding Up order or within such extended time not exceeding 3 months from that date as the Official Liquidator or the court may, for special reasons, appoint : [S. 454(3)]. Then, under sub-s. (5) of S. 454 of the Act, if a person without reasonable cause or excuse makes default in complying with any of the requirements of the section, "he shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to one hundred rupees for every day during which the default continues, or with both". It is not necessary to refer to other provisions of this section except to note that the offence complained of is the default by the accused in filing the statement of affairs within the prescribed period. It is mentioned in the complaint that earlier also a complaint was filed against accused No. 1 F. C. Mehra in 1970 and on his assuring the court and expressing willingness to give necessary statement of affairs he was discharged. This accused F. C. Mehra filed application [Cri. M. (Co.) 3184] seeking his discharge particularly on the ground that in the earlier complaint he had already been discharged. On this the court passed orders on February 17, 1986, that F. C. Mehra was again willing to co-operate with the Official Liquidator to prepare the necessary statement of affairs provided the books of account of the Company were made available. He also said that due to lapse of time he might not be able to help much but would do to the best of his ability. In this view of the matter, it was mentioned that it was agreed that the present prosecution against F. C. Mehra under S. 454 of the Act be dropped. His application [Crl. M. (Co.) 3/84] therefore does not survive for consideration.

(3) The only point raised in all the other three applications is that the present prosecution is barred by limitation, and reference has been made to S. 468 of the Code of Criminal Procedure 1973 (for short 'the Code'). Mr. Bawa, learned counsel for the accused, said that the offence was complete after 21 days of the winding up order and that the present complaint is hopelessly barred by limitation. He said under S. 468 of the Code. the period of limitation prescribed for filing such a complaint was 3 years. On the other hand, it was the contention of the complainant that offence under S. 454(5) of the Act was a continuing offence and that a fresh period of limitation would begin to run at every movement of time during which the offence continued. Reference was made to S. 472 of the Code. In fact, according to Mr. Malhotra, learned counsel for the complainant, the offence still continues.

(4) Filing of the statement of affairs under S. 454 of the Act is an important step towards the winding up of a company: It brooks no delay. That is the reason that stringent punishment is provided incase of default in filing the statement of affairs within the prescribed period. It has been said that much of the delay in winding up is caused by the statement of affairs not being filed in time to enable the Official Liquidator to take the necessary action. Sub-sections (5) and (5A) of S. 454 of the Act were introduced by the Companies (Amendment) Act 1960 and the High Court itself was vested with jurisdiction to punish the defaulters and all this was to speed up the winding up of the company as it was found that statement of affairs was not being filed in time in spite of repeated reminders and warnings and, if filed at all, was filed only after considerable delay. The object of requiring the statement of affairs to be filed within a period' of 21 days or within the extended period up to 3 months is to facilitate speedy action in winding up and also to enable the Liquidator to get .himself immediately acquainted with all the relevant facts relating to the affairs of the Company. Sub-s. (1) of S. 454 of the Act prescribes the requirements of the statement of affairs and Rules 124 to 134 of the Companies (Court) Rules 1959 describe how the statement of affairs is to be filed and action taken thereon.

(5) The question that arises is if the offence is complete on the 21st day of the winding up order in case there is default in filing the statement of affairs, or, for that matter, if the offence is complete after 3 months if time is extended. Mr. Bawas contention is that the offence is complete and the provisions of S. 468 of the Code would bar filing of the complaint. I am unable to agree with his submission. A reading of the provisions of S. 454 of the Act would make it abundantly clear that nonfiling of the statement of affairs in time is a continuing offence and it terminates only on filing of the statement of affairs. That is why under sub-s. (5) of S. 454, the punishment of fine could extend to one hundred rupees for every day during which the default continued. Mr. Malhotra is right when he says that in the present case S. 472 of the Code would be applicable.

(6) I will also note that in his application [Crl. M (Co.) 7/84] accused B. K. Bedi also stated that since he had resigned more than one year before the winding up order, he could not be called upon to submit the statement of affairs and as such he was not liable under that section. Nothing, however, was said on this aspect. In any case, the accused would be entitled to take up this point after the cross-examination of the complainant.

(7) Accordingly, all these applications are dismissed.