Sri Ashok Prakash Vs the Official Liquidator

Digitally signed THE OFFICIAL LIQUIDATOR by VASANTHA KUMARY B K M/S ATHERYONIX SYSTEMS PRIVATE LIMITED Location: HIGH (IN LIQUIDATION) COURT OF ATTACHED TO HIGH COURT OF KARNATAKA KARNATAKA IV FLOOR, D AND F WING KENDRIYA SADAN, KORAMANGALA BENGALURU-560034.

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…RESPONDENT

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(BY SRI. K S MAHADEVAN., ADVOCATE)

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THIS MEMORANDUM OF ORIGINAL SIDE APPEAL UNDER SECTION 483 OF THE COMPANIES ACT, 1956 R/W SECTION 4 OF THE KARNATAKA HIGH COURT ACT, 1961 PRAYING TO SET ASIDE ORDER OF THE LEARNED SINGLE JUDGE DATED 24.01.2024 IN COMPANY APPLICATION NO.1083/2002 IN

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HC-KAR

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COMPANY PETITION NO.53/2021 AND CONSEQUENTLY DISMISS COMPANY APPLICATION NO. 1083/2002 IN COMPANY PETITION NO. 53/2001 FILED BY THE RESPONDENT AND ETC.,

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THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE D K SINGH and

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HON'BLE MR. JUSTICE VENKATESH NAIK T

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ORAL JUDGMENT

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(PER: HON'BLE MR. JUSTICE D K SINGH)

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This original side appeal is filed by the appellant, the Ex-Director of M/s. Athreyonix Systems Pvt. Ltd., which stood wound up vide judgment and order dated 15.03.2002 passed by the learned Company Judge in Company Petition No.53/2001. The Official Liquidator filed Company Application.No.1083/2002 under Section 454 (5) and (5A) of the Companies Act, 1956 (for short, 'the Act') alleging that the statement of affairs of the Company were not filed by the appellant within 21 days from the date of the winding up order. The said application came to be dismissed against three other Directors i.e., respondent Nos.2 to 4 in the Company Application and it survived only against the present appellant.

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HC-KAR

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The learned Company Judge, after considering the report and the submissions, was of the opinion that the statement of affairs of the Company were filed after delay of 1732 days and therefore, as per the provisions of sub-section (5) of Section 454 of the Act, penalty of Rs.1,000/- per day for the delayed period amounting to Rs.17,32,000/- was to be imposed and recovered from the appellant.

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Mr. Aditya Sondhi, learned Senior Counsel who has addressed the Court through video conferencing assisted by Mr. Parashuram A. L., learned counsel for the appellant, submits that sub-section (5) of Section 454 of the Act itself provides that if there is reasonable excuse for not filing the statement of affairs within 21 days from the date of winding up order, then only penalty of Rs.1,000/- per day has to be imposed. He further submits that the appellant was acquitted in C.C.No.786/2007 registered for the offence punishable under Section 538 (1) (c) of the Act vide judgment dated 04.07.2016 passed by the LXVII Additional City Civil and Sessions Judge, Bengaluru in Crl.A.No.1128/2014. The allegation against the appellant was that the appellant and other Directors and office

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HC-KAR

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bearers of the Company had not delivered the books and papers to the Official Liquidator which were in their custody and control.

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The First Appellate Court held that the appellant was having only 10% of the share holdings and he was not administering the affairs of the Company, but, the other Directors who were accused Nos.2 to 4 in C.C.No.786/2007 were on the helm of the affairs of the Company and they were the persons who were administering the affairs of the Company. The other Directors were maintaining the accounts and registers of the Company.

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Considering the said fact that the appellant was a minority share holder and he was not holding the custody of books and papers which were sought by the Official Liquidator, the First Appellate Court set aside the conviction of the appellant and acquitted him of the offence punishable under Section 538(1)(c) of the Act.

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Learned Senior Counsel for the appellant has further submitted that when the other Directors who were at

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HC-KAR

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the helm of the affairs of the Company and having custody of the records were not available, their signatures could not be obtained on the statement of affairs of the Company. The Official Liquidator was of the opinion that unless and until all the Directors put their signatures on the statement of affairs of the Company, the same would be defective. He, therefore, submits that the appellant has reasonable excuse for not submitting the statement of affairs of the Company within 21 days from the date of the order of winding up. Without considering these aspects, the learned Sessions Judge has passed the order.

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Sri K S Mahadevan, learned counsel for the Official Liquidator has not disputed the fact that the learned Company Judge has not considered the judgment passed by the First Appellate Court in Crl.A.No.1128/2014 wherein, the appellant has been acquitted for the alleged offence under Section 538(1)(c) of the Act on the ground that the appellant was a minority shareholder and he was not having possession of the accounts and papers of the Company. He also does not dispute

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HC-KAR

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that the statement of affairs of the Company was not accepted inasmuch as all the Directors did not put their signatures.

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Considering the aforesaid facts, the material placed on record along with present appeal and submissions advanced at the Bar, we are of the considered view that the matter requires a fresh consideration by the learned Company Judge. Accordingly, we pass the following:

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ORDER

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