IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE R.BASANT & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN THURSDAY, THE 2ND JUNE 2011 / 12TH JYAISHTA 1933 Co.Appeal.No. 16 of 2011() -------------------- AGAINST THE JUDGEMENT/ORDER IN CO.APPL.NO. 93/2011 IN CRL.COMPLAINT NO. 2/2006 IN CP.28/2002 DATED 1.4.2011 ................. APPELLANT / ACCUSED NO.6 : ------------------------------------------ SRI.JIMMY JOSE, KISHAKKETHOTTAM,G-245, PANAMPILLY NAGAR, ERNAKULAM-682036. BY ADVS. SRI.G.HARIHARAN SRI.PRAVEEN.H. RESPONDENT / COMPLAINANT : ------------------------------------------------ THE OFFICIAL LIQUIDATOR, ATTACHED TO HON'BLE HIGH COURT OF KERALA, ERNAKULAM, REPRESENTING M/S.SOUTH INDIA WIRES AND ROPES LIMITED (IN LIQUIDATION). BY ADV. SRI. K. MONI THIS COMPANY APPEAL HAVING COME UP FOR ADMISSION ON 02/06/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Mn R.BASANT & K.SURENDRA MOHAN, JJ. ------------------------------------------- Co.A. No.16 of 2011 ------------------------------------------- Dated this the 2nd June, 2011 JUDGMENT Basant, J. The petitioner is one of the Directors of a Company - M/s South India Wires and Ropes Limited which is facing liquidation proceedings in Company Petition No.28 of 2002. The order of winding up was passed long back. It is submitted and not disputed that the statement of affairs under Section 454 of the Companies Act has not been filed so far. In these circumstances, cognizance of the offence under Section 454 of the Companies Act has been taken by the Company Court and the prosecution proceedings is pending. 2. While so, the petitioner filed an application for stay of the criminal prosecution initiated against him. An ad-interim order of stay was initially given. When the matter came up for extension, the company court refused the prayer for extension of the order of stay and proceeded to pass the impugned order. The learned judge CO.Appeal No.16 of 2011 2 observed that the trial can proceed now and if necessary, at the stage of final hearing, the question of staying the proceedings can be considered. 3. The appellant claims to be aggrieved by the impugned order. What is his grievance? According to him, petition under Section 391 of the Companies Act to consider the proposal to revive the company is pending. There is every chance of revival of the Company. In these circumstances, it is not necessary to proceed with the prosecution now. Order of stay was initially granted. But the Company Court has erred in not extending it further. This in short is the contention. 4. The official liquidator has entered appearance through counsel. The learned counsel submits that there is no merit in the prayer for stay of the criminal prosecution. We have been taken through the provisions of Section 454. The obligation to file a statement of affairs within the stipulated time under Section 454 of the Companies Act has a laudable purpose to serve. The official liquidator will come to know from those who were hitherto managing the company, the state of affairs, financial status etc. of the company from such statement. Law obliges the persons hitherto in management to file CO.Appeal No.16 of 2011 3 such statement within a period of 21 days or at any rate within a period of three months. The learned counsel for the respondent submits that any steps under Section 391 of the Companies Act has no bearing whatsoever on the obligation of the directors to file the statement of affairs under Section 454. It will not be expedient in the interests of justice to delay the prosecution any longer. All officers or directors of the companies in liquidation must zealously comply with the obligation under Section 454 for a proper and effective implementation of the scheme of the Act. The obligation to file a statement of affairs has nothing to do with the outcome of the proceedings under Section 391. The learned counsel submits that the official liquidator requires the relevant data even to taken a specific stand before the companies Court on an application filed under Section 391. In these circumstances, the learned counsel for the respondent submits that there is no merit in the prayer to keep the prosecution in abeyance till meeting under Section 391 of the Companies Act to consider proposals for revival takes place. 5. We find the submission of the learned counsel for the respondent to be eminently reasonable. The obligation CO.Appeal No.16 of 2011 4 to file a statement of affairs under Section 454 clearly shows the anxiety of the law to keep the official liquidator informed about the state of affairs of the company immediately after the order of winding up. That information is crucial for the official liquidator to mould his stand even when an application under Section 391 of the Companies Act comes up for consideration. In these circumstances, we are unable to agree that the court below has committed any error in not granting stay as prayed for. 6. Counsel for the petitioner submits that the petitioner is sick and will be unable to appear before the company court. We do not intend to express any opinion on that submission. If that submission is correct, it is for the petitioner to make appropriate application before the company court to claim exemption from personal appearance. This appeal is in these circumstances dismissed in limine. sd/- R.BASANT JUDGE sd/- K.SURENDRA MOHAN JUDGE css/ true copy P.S. TO JUDGE