The seizure of company records by the police can constitute a reasonable excuse for the directors' failure to submit a statement of affairs within the prescribed time.

( 1 ) THIS prosecution under Section 454 (5-A) of the Companies Act, 1956, requires reference first to some of the admitted facts of the case. R. S. Motors (P) Ltd. , is a company which was ordered to be wound up on 7th October, 1969, by this Court. On the date of the winding up order, some of the records of company were with C I. D. Crime Branch and the remaining records were with the Liquidator. Section 454 of the Companies Act, 1956 requires the Directors of the company to submit a statement of affairs within 21 days of the winding up order subject to an extension being granted for an additional period which might extend to three months. The Offcial Liquidator sent notices to the two accused-directors, Shri Jagjit Singh Sawhncy and Shri Gurcharan Singh Sawhney. on 15th December, 1969, calling upon them to submit a statement of affairs. . The directors replied to say that all the books of the company had been removed in October, 1967. by the C. I. D. Crime Branch and the books of other associated companies, viz. M/s. B. Dharam Singh and Co. , (P) Ltd. , and M/s. B. Dharam Singh Ram Singh were also removed. The directors prayed for extension of time being granted. The extension was accordingly granted up to 7th January, 1970. which was the maximum period permitted by law. No statement of affairs was filed and the present complaint dated 20th March, 1970, was instituted by the Official Liquidator. The complaint has remained pending for a number of years.

( 2 ) IN support of the prosecution case,. the Official Liquidator examined only one witness, Shri Ram Nath, an Assistant in his own office and the defence has examined only one witness, one Shri R. C. Garg an employee of Shri Jagjit Singh Sawhney.

( 3 ) SHRI Ram Nath stated that the company was ordered to be wound lip on 7th October, 1969, and the company had only two directors. namely. Shri Jagjit Singh Sawhney and Shri Gurcharan Singh Sawhncy (accused in this case ). Some of the records of the company were with the Crime Branch, C. I. D. . and some were with the Offcial Liquidator. A letter was written to the Crime Branch to permit inspection being granted to the directors. The directors did not visit the office of the Liquidator but had asked for extension which was granted up to 7th January. 1970. On cross-examination, he admitted that a letter dated 24th December, 1969, had been received from Shri Jagjit Singh Sawhncy. the first accused. That document is Exhibit R-1 After receipt of that letter, the Official Liquidator wrote on 21st March, 1970 to the Crime Branch. The witness was unable to say if the first accused, Shri Jagjit Singh Sawhney had been meeting Shri Bhargava, the then Official Liquidator. The witness admitted that he was dealing as an Assistant in the office with the liquidation work of as many as 15 companies. The wilness also admitted that the books of the company were handed over to the Official Liquidator by Shri Jagjit Singh Sawhney, but he could not recall a list of the books that had been filed. As far as the records seized by the police were concerned, he admitted that the same were received on 14th July. 1971. He produced a list of the books returned by the police, that list being Exhibit Public Witness 1/1 He was unable to say whether these books constituted a complete set of books of the company for the years 1961 to 1967, as the books had not been checked. He denied that the directors had come to the office of the Liquidator to inspect the records to prepare the statement of affairs. He, however. admitted that two representatives of the accused were already working in the office of the Official Liquidator in order to preparc the statement of affairs of another firm, namely, M/s. Dharam Singh Ram Singh. On 16th July, 1971, the Official Liquidator made a statement that the books necessary to prepare the statement of affairs were now available in the office and the statement of affairs should now be prepared. Counsel for the accused