OJCR/11/1999 1/8 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD CRIMINAL CASE No. 11 of 1999 In COMPANY PETITION No. 7 of 1996 In COMPANY PETITION No. 7 of 1996 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 R. K. TANEJA FASHION FABRICS PVT.LTD. - Complainant Versus NARESH R. TANEJA & 8 - Accused ====================================== Appearance : MR JS YADAV for Complainant. DELETED for Accused : 1 - 5. MR PAVAN GODIAVALA for Accused : 6, 9, NOTICE UNSERVED for Accused : 7 - 8. ====================================== OJCR/11/1999 2/8 JUDGMENT CORAM : HONOURABLE MR.JUSTICE K.A.PUJ Date : 28/04/2008 ORAL JUDGMENT 1. The Official Liquidator has filed this complaint under Section 454 of the Companies Act, 1956 requesting this Court to issue summons on the accused and further direction to the accused to file statement of affairs. Initially, there were six accused. Accused Nos.7,8 & 9 were joined pursuant to the order passed by this Court on 03.05.2006. Accused Nos. 7 & 8 are still not served. Accused Nos.1 to 5 were discharged by this Court vide its order dated 11.08.2006. Mr. Pavan Godiawala, learned advocate appears on behalf of accused Nos. 6 & 9. 2. Accused No. 6 has filed his affidavit on 21.01.2008 wherein it is specifically stated that he has filed Form No. 32 with the Registrar of Companies. He resigned from the post of Directorship on 11.07.1995 along with the other Directors, namely, Mr. R. K. Taneja, Mr. Vinod K. Taneja, Mr. Kishanlal Taneja, Mr. Naresh R. Taneja and Mr. Jitendra R. Taneja. All the other five Directors were discharged by this Court from the present OJCR/11/1999 3/8 JUDGMENT proceedings based on Form No. 32. An affidavit was filed on 18.01.2003. Mr. Godiawala has strongly urged that since the accused No. 6 retired much before the date of winding up order, the accused No. 6 should not have been even impleaded as an accused in the present proceedings. The practice of initiating the criminal case at the cost of the innocent person is nothing but a sheer abuse of the process of law. If there is any doubt, the Official Liquidator, instead of filing criminal case should have sought clarification by filing report. The said action of the Official Liquidator is highly detrimental, against the principles of natural justice and highly unjust. He has, therefore, submitted that accused No.6 be discharged forthwith. 3. The Court has heard Mr. Godiawala on behalf of accused No. 6 and Mr. J.S. Yadav, learned advocate appearing for the Official Liquidator. The Court also perused the affidavits filed by accused No.6 and Form No. 32 along with the affidavit filed by accused Nos.1,4 & 5 dated 25.02.2003. Since Accused Nos.1 to 5 were discharged on the basis of Form No.32, there is no reason not to discharge accused No.6 on the basis of same Form No. OJCR/11/1999 4/8 JUDGMENT 32. The accused No. 6 is, therefore, exonerated. 4. So far as accused Nos.7,8 & 9 are concerned, accused Nos.7 & 8 did not appear. In fact, no summons was served on them. Initially, they were residing at the same address at which accused No. 9 is residing. However, it appears from the statement of accused No. 9 recorded by the Official Liquidator on 19.12.2007 that accused No.7 is residing abroad and her address is not known to accused No. 9. Accused No. 8 is residing at Sheetal Gunj, Buland Saher (U.P.). Since statement of affairs is already filed by accused No.9, no useful purpose would be served to issue fresh summons on accused Nos. 7 & 8. Even otherwise, accused No. 9 has undertaken the liability of accused Nos. 7 & 8 for penalty that may be imposed by this Court. 5. In the above view of the matter, the present criminal complaint is taken up for hearing for the purpose of deciding their liability for late filing of the statement of affairs. 6. Mr. Godiawala has taken the Court through the various OJCR/11/1999 5/8 JUDGMENT affidavits filed on behalf of accused No.9 wherein it is specifically stated as to why statement of affairs could not be filed in time. He has submitted that non-filing of statement of affairs within a stipulated time is not a deliberate action. Non-filing of statement of affairs is due to the reasons beyond the control of the accused persons. In the month of December 1996, the Excise Department had visited the Company at Piplej, Tal. Daskroi, Dist. Ahmedabad and persons of Excise Department were in the factory for 2 days and they have verified all the documents. The documents, bill books, books of accounts, stock register and other such material documents were seized by the Excise Department. Even at the time of filing statement of affairs with the Official Liquidator, it was made clear that the records of the Company were lying at the registered office as well as the factory premises and all the records of the Company are seized by the Excise Department. Once the statement of affairs is filed and the statement under Rule 130 of the Rules is recorded, the proceedings are required to be dropped. The accused No. 9 has visited the office of the Excise Department on various occasions along with his consultant and upon taking inspection, the OJCR/11/1999 6/8 JUDGMENT statement of affairs was filed. He has, therefore, submitted that the accused No. 9 may also be relieved or at the most some token penalty may be imposed which may serve the ends of justice. 7. It appears that the proceedings were adjourned from time to time only to seek clarification for one particular entry. In the statement of affairs, balance of Rs.6,67,072/- was shown lying with Bank of Baroda. However, the details of the Bank were not furnished in the statement of affairs. The Court, therefore, passed an order for furnishing the details including the names, address and Account No. with the Bank. Pursuant to the order dated 06.12.2007, accused No.9 remained personally present before the Court. On the basis of the information given, the Official Liquidator was directed to make an inquiry with Bank of Baroda, Ambawadi Branch with regard to the balance amount of Rs.6,67,072/-. The Official Liquidator, therefore, inquired with the Bank of Baroda and the report was filed before the Court. In the last report filed on 25.04.2008, it was stated that the Bank filed suit for Rs.1,37,83,441/- being O.A. No. 31 of 1996. The said suit was disposed of vide order dated OJCR/11/1999 7/8 JUDGMENT 18.01.2006 and the Bank has initiated recovery proceedings against the Company as well as Directors / Guarantors. It was also stated by the Bank that there was no such balance available in the C.C. Account. The letter is also produced on record. From this clarification, it appears that so far as the present criminal case is concerned, the same does not have any bearing. It is open for the Official Liquidator to initiate separate proceedings against the Bank if the amount has been wrongly adjusted by the Bank after the winding up order was passed by the Court. 8. The only question which is left in the present proceedings is with regard to determination of the liability of the accused Nos.7,8 & 9 for late filing of the statement of affairs. The Company went into liquidation on 11.11.1998. Within 21 days from the date of winding up order, the Directors of the Company in liquidation are required to file statement of affairs before the Official Liquidator. The same was filed in 2008. Thus, there is delay of more than 9 years. It is true that the explanation is offered by respondent No.9. However, that could not completely absolve or exonerate the OJCR/11/1999 8/8 JUDGMENT accused Nos.7 to 9 from not filing the statement of affairs in time. Having regard to the entire facts and circumstances of the case and considering the explanation tendered by the accused No.9, the Court hereby while holding the accused Nos.7 to 9 guilty imposes fine of Rs.5,000/- each on them instead of passing any order for imprisonment. Since the liability of the accused Nos.7 & 8 has been accepted by the accused No. 9, the entire amount of Rs.15,000/- should be deposited by the accused No. 9 with the Official Liquidator within four weeks from today. If the amount is not deposited, the Official Liquidator shall file appropriate report before the Court for further action. 9. Subject to the aforesaid direction and observation, this criminal case is accordingly disposed of. Sd/- [K. A. PUJ, J.] Savariya