In a prosecution under Section 454(5) of the Companies Act, 1956, the burden of proving that the accused had no reasonable excuse for making the default in respect of which he is being prosecuted lies upon the prosecution.

( 1 ) M/s. Security and Finance Private Limited registered under the Companies Act was ordered to be wound up by this Court and on 20th March, 1969 an Official Liquidator was appointed its provisional liquidator. The Official Liquidator filed a complaint on 16th July, 1969 under Section 454 (3) and (5a) of the Companies Act, 1956 (hereinafter called the Act; on the allegation that though he had issued notice dated 21st April 1969, calling Upon respondent No. 1 to submit before him the statement of affairs of the company but they have neither appeared before him nor have they complied with the notice nor the statement of affairs has been filed nor any reasonable excuse for the non-filing has been given. Accord- ingly it was prayed that this Court be pleased to summon the accused and punish them according to law. During the pendency of this complaint before the learned Single Judge question arose as to on whom the burden lies to show that there was no reasonable excuse for the respondent for not filing the statement of affairs of the company within the prescribed time. Rangarajan J. considered that the matter was of great importance which was not only raised in a number of prosecution which are pending but rather also likely to be raised in future in this Court and referred the following question to the Chief Justice for being referred to the larger bench :

"whether in a prosecution under Section 454 (5) of the Companies Act, 1956, the burden of proving that the accused had no reasonable excuse for making the default in respect of which he is being prosecuted lies upon the prosecution?"this is how the matter has come up before us. As the complaint is still pending and as this bench is only called upon to answer the question referred it is unnecessary to deal with other facts as they are not relevant.

( 2 ) SECTION 454 (1) provides that where the Court has made a winding up order or appointed the Official Liquidator as provisional liquidator, unless the Court in its discretion otherwise orders, there shall be made out and submitted to the Official Liquidator a statement as to the affairs of the company in the prescribed foim.

SUB-SECTION (2) specifies the persons, including the directors, at the relevant date, who are to submit the statement.

SUB-SECTION (3) requires that the statement shall be submitted within twenty one days from the relevant date or within such extended time not exceeding three months from that date as the Official Liquidator or the Court may, for special reasons, appoint.

SUB-SECTION (4) provides that any person making or concurring in making the statement and affidavit required by this section shall be allowed, and shall be paid by the Official Liquidator or provisional liquidator, as the case may be, out of the assets of the company, such costs and expenses incurred in and about the preparation and making of the statement and affidavit as the Official Liquidator may consider reasonable.

SUB-SECTION (5) and (5a) on which the main arguments were raised read as under:

SUB-SECTION (5)

IF any person, without reasonable excuse, makes default in complying with any of the requirements of this section, he shall be punishable with imprisonment for a term which may extend to two years or with fine which may extend to one hundred rupees for every day during which the default continues or with both.

SUB-SECTION (5a)

THE court by which the winding up order is made or the provisional liquidator is appointed, may take cognizance of anoffence under sub-section (5) upon receiving a complaint of facts constituting such an offence and trying the offence itself in accordance with the procedure laid down in the Code of Criminal Procedure, 1898, for the trial of summons cases by magistrates. Sub-section (8) defines "the relevant date" to mean in a case where a provisional liquidator is appointed, the date of his appointment, and in a case where no such appointment is made, the date of the winding up order.

( 3 ) IT can