OJCR/12/2006 1/7 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD CRIMINAL CASE No. 12 of 2006 In COMPANY PETITION No. 26 of 2003 For Approval and Signature: HONOURABLE MR.JUSTICE K.A.PUJ Sd/- ====================================== 1. Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2. To be referred to the Reporter or not ? NO 3. Whether their Lordships wish to see the fair copy of the judgment ? NO 4. Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5. Whether it is to be circulated to the civil judge ? NO ====================================== O.L. OF M/S. SWADIA BROTHERS ENGG. PVT. LTD. - Complainant Versus RAJDENRA INDUKANT SWADIA & 4 - Accused ====================================== Appearance : MR HIREN M MODI for Official Liquidator. NOTICE NOT RECD BACK for Accused : 1, 3. MR KARTIKEY P RAWAL for Accused : 2, 4. MR PREMAL R JOSHI for Accused : 5. ====================================== CORAM : HONOURABLE MR.JUSTICE K.A.PUJ OJCR/12/2006 2/7 JUDGMENT Date : 28/02/2008 ORAL JUDGMENT 1. The Official Liquidator has filed this criminal case under Section 454 of the Companies Act, 1956 requesting this Court to take cognizance of the default committed by the accused persons under Section 454 (5) of the Companies Act, 1956 and to issue process against them and to try and punish them in accordance with the provisions of law. The Official Liquidator has also prayed for the direction to the accused persons to submit forthwith the statement of affairs to him as on the date of winding up order dated 17.03.2006 with full details in statutory form and to attend his office for the purpose of recording their statement under Rule 130 of Companies (Court) Rules, 1959. 2. This Court has issued process on 24.08.2006. Despite service of process, accused Nos. 1 to 4 did not appear and hence, Bailable Warrant was ordered to be issued on 20.09.2006. Accused Nos. 2 & 4 remained present before the Court on 13.11.2006 and fresh Bailable Warrant was issued on accused Nos. 1 & 3. On 15.12.2006, Mr. K.P. Rawal, learned advocate filed his appearance on behalf of accused Nos. 2 & 4. So far as accused Nos. 1 & 3 are concerned, it was stated before the Court that they have left India and at present, they are residing in U.S.A. The Court, therefore, directed accused Nos. 2 & 4 to furnish the present residential address of accused Nos. 1 & 3. On furnishing of the new OJCR/12/2006 3/7 JUDGMENT address, the Court has issued fresh process on accused Nos. 1 & 3 at their new address in U.S.A. On 26.02.2007, Mr. Hiren Modi, learned advocate appearing for the Official Liquidator has submitted before the Court that the Official Liquidator has received one communication dated 15th February, 2007 from one Shri Indukant B. Swadia father of accused No.1 and father-in- law of accused No.3. In the said communication, it was submitted that accused No.1 has shifted with his family to U.S.A. It was further submitted in the said letter that he would make every effort to collect relevant details to file the statement of affairs under Section 454 at the earliest possible date and would wholeheartedly cooperate with office of Official Liquidator. Time was asked for on this ground and the Court has granted one month time. The Court has also directed the office to join the said Shri Indukant Swadia as party – respondent in the present criminal case and to inform him to appear before this Court on the next date of hearing through his advocate and/or personally. The hearing was thereafter adjourned to 26.03.2007. Subsequently, Mr. Premal Joshi, learned advocate has filed his appearance for accused No. 5 and statement of affairs was also filed by accused No. 5. However, the Official Liquidator has pointed out certain defects vide his letter dated 27.04.2007. Those defects were not removed. On 28.01.2008, submission was made on behalf of accused No.5 that all the queries raised by the Official Liquidator were satisfied and hence, the matter was fixed for final disposal. OJCR/12/2006 4/7 JUDGMENT 3. Heard Mr. Hiren Modi, learned advocate appearing for the Official Liquidator, Mr. K. P. Rawal, learned advocate appearing for accused Nos. 2 & 4 and Mr. Premal Joshi, learned advocate appearing for accused No. 5. Since the accused Nos. 1 & 3 are out of India and permanently residing at U.S.A., process could not be served on them. 4. As far as accused Nos. 2 & 4 are concerned, they have filed detailed affidavit dated 09.01.2007. Mr. Rawal has submitted that accused Nos. 2 & 4 are falsely involved in the present case. They have resigned as Directors of the Company with effect from 01.04.1996 i.e. Much prior to the relevant date as envisaged under Section 454 (8) of the Companies Act, 1956. The winding up order was passed on 24.11.2005 and the accused Nos.2 & 4 have resigned long back. He has further submitted that the fact of resignation was made known to the Registrar of Companies on 30.04.1996 in Form No. 32 and it was acknowledged by the office of the Registrar of Companies. A copy of Form No. 32 is also attached along with the affidavit-in-reply. 5. Mr. Rawal has further submitted that accused Nos.1 & 3 are the Directors on the relevant date. Despite the fact that the Official Liquidator was aware that accused Nos. 2 & 4 have resigned from the Directorship of the Company way back on 01.04.1996, he has wrongly impleaded them as accused in the present proceedings. He has, therefore, submitted that the accused Nos.2 & 4 are wrongly involved in the criminal complaint without any proof or basis and they are not either directly or OJCR/12/2006 5/7 JUDGMENT indirectly concerned with assets and liabilities, or affairs of the Company nor with the debtors or creditors or with the mortgaged properties. They are, therefore, required to be discharged. 6. As stated earlier, accused Nos. 1 & 3 have not appeared. However, on their behalf, accused No. 5 has undertaken to file statement of affairs. Mr. Premal Joshi, learned advocate appearing for accused No. 5 has submitted that though the accused No.5 is not the Director of the Company, he being the father and father-in-law of accused Nos. 1 & 3, who are residing at U.S.A., has undertaken to file the statement of affairs and in fact, the statement of affairs is filed and all queries raised by the Official Liquidator are also satisfied. The Court should therefore take lenient view in the matter and exonerate the accused Nos. 1 & 3 or in the alternative, some token fine may be imposed on them. 7. Mr. Hiren Modi, learned advocate appearing for the Official Liquidator has confirmed that the statement of affairs has already been filed and queries raised by the Official Liquidator have also been satisfied. 8. Having regard to the facts and circumstances of the case and considering the affidavit-in-reply filed by accused Nos.2 & 4 and further considering the fact that statement of affairs has been filed and the queries raised by the Official Liquidator have been satisfied by accused No.5 while acting on behalf of accused Nos. 1 & 3, the Court hereby exonerates the accused Nos. 2 & 4 from OJCR/12/2006 6/7 JUDGMENT the present proceedings as they were admittedly not the Directors on the relevant date. It is very unfortunate that without verifying the record from the Registrar of Companies, the Official Liquidator has impleaded accused Nos.2 & 4 as accused in the present proceedings and they have to undergo this trauma of criminal proceedings. If the facts reveal that a particular person is not the Director on the relevant date and still the Official Liquidator is in puzzle as to whether that particular person is to be joined as accused or not in the criminal case, in that case, the Official Liquidator ought to have sought prior approval of this Court, before filing a criminal case against any such individual. 9. As far as accused Nos. 1 & 3 are concerned, there is no dispute about the fact that they were Directors of the Company on the relevant date. Simply because they are residing at U.S.A., they are not absolved from discharging their obligation of filing statement of affairs. The Court would have taken a very serious view of the matter but for the fact that accused No.5 has undertaken to file the statement of affairs and in fact, the statement of affairs has been filed and all the queries raised by the Official Liquidator have been satisfied by him. The Court, therefore, does not pass any order of sentence. However, considering the fact that the statement of affairs has been filed late, the accused Nos. 1 & 3 are hereby penalized by way of fine of Rs.5,000/- each and the said fine should be paid by accused No.5 who has acted on behalf of accused Nos.1 & 3, within a period of 30 days from today, to the Official Liquidator. It is made OJCR/12/2006 7/7 JUDGMENT clear that if the amount of fine has not been paid by the accused No.5, the Official Liquidator shall file appropriate report before this Court so that necessary order can be passed on that report. 10.Subject to the aforesaid direction and observation, this criminal case is accordingly disposed of. Sd/- [K. A. PUJ, J.] Savariya