Case Note & Summary
The Official Liquidator of M/s. Geeta Marine Services Pvt. Ltd. filed a complaint under Section 454(5) of the Companies Act, 1956 against four accused directors for failing to submit the statement of affairs of the company after it was ordered to be wound up on 19 March 2009. The Official Liquidator issued notices on 18 June 2009 and 21 July 2009 calling for the statement, and the court passed orders on 15 July 2010 and 12 March 2012 directing compliance. Despite these, the accused did not file the statement. The accused denied receipt of notices and claimed they were not directors at the relevant time. The court examined the evidence, including postal acknowledgments and court orders, and found that the accused had notice of the proceedings. The court held that the offence under Section 454(5) is a strict liability offence and the accused failed to prove any reasonable excuse. The court convicted all four accused and sentenced them to pay a fine of Rs. 1,000 per day from the date of default (21 days from the winding up order) until the date of judgment, with default simple imprisonment. The court also directed the accused to file the statement of affairs within 30 days.
Headnote
A) Company Law - Winding Up - Statement of Affairs - Section 454(5) Companies Act, 1956 - Default in Filing - The accused directors failed to submit the statement of affairs of the company in liquidation despite repeated notices and court orders. The court held that the offence under Section 454(5) is a strict liability offence and the accused failed to prove any reasonable excuse. Conviction and sentence imposed with fine of Rs. 1,000 per day from the date of default till compliance. (Paras 1-38) B) Criminal Law - Strict Liability - Mens Rea - Section 454(5) Companies Act, 1956 - The court held that the offence under Section 454(5) does not require mens rea; the burden is on the accused to show reasonable excuse. The accused's claim of non-receipt of notices was disbelieved as they had appeared in court proceedings. (Paras 20-25) C) Evidence - Burden of Proof - Reasonable Excuse - Section 454(5) Companies Act, 1956 - The accused must prove reasonable excuse on a preponderance of probabilities. The accused failed to provide any evidence of compliance or reasonable excuse. (Paras 26-30)
Issue of Consideration
Whether the accused directors are guilty of offence under Section 454(5) of the Companies Act, 1956 for failing to submit the statement of affairs to the Official Liquidator despite notices and court orders, and whether they had any reasonable excuse for such default.
Final Decision
All four accused are convicted for offence under Section 454(5) of Companies Act, 1956. Each accused is sentenced to pay a fine of Rs. 1,000 per day from the date of default (i.e., 21 days from 19 March 2009) until the date of judgment (1 October 2025). In default of payment of fine, each accused shall undergo simple imprisonment for a term of six months. The accused are directed to file the statement of affairs within 30 days from the date of judgment.
Law Points
- Section 454(5) of Companies Act
- 1956 creates a strict liability offence for default in filing statement of affairs
- burden of proof on accused to show reasonable excuse
- mens rea not required
- default continues until compliance
- court can impose fine per day of default.
