Andhra HC (Pre-Telangana)
Indla Satya Raju vs Sramika Agro Farm (P) Limited (In ... on 9 July, 2002
Equivalent citations: 2002(4)ALD637, 2002(2)ALD(CRI)319
JUDGMENT S.R. Nayak, J.
1. The question of law that arises in both these appeals is common. Hence, we clubbed both the appeals and heard them together and they are being disposed of by this common judgment.
2. OSA No.28 of 2001 is directed against the order dated 11-7-2001 passed in CA No.478 of 2000 in CP No.214 of 1998 by which order, the learned Company Judge convicted the appellant herein and sentenced him to suffer imprisonment for a period of six months. OSA No.49 of 2001 is directed against the order dated 1-10-2001 in CA No.478 of 2001 in CP No.214 of 1998, by which order, the learned Company Judge convicted the appellant and sentenced him to suffer imprisonment for a period of six months in the purported exercise of the power conferred under Sub-section (5-A) of Section 454 of the Companies Act, 1956 (for short, 'the Act') for the alleged default in complying with the requirements of Section 454.
3. The impugned orders are made by the learned Company Judge under Sub-section (5-A) of Section 454 of the Act. Sub-sections (5) and (5-A) are relevant for the decision-making. They read as follows:
"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.
(5-A) The Court by which the winding up order is made or the provisional liquidator is appointed, may take cognizance of an offence under Sub-section (5) upon receiving a complaint of facts constituted such an offence and trying the offence itself in accordance with the procedure laid down in the Code of Criminal Procedure, 1898 (15 of 1898) for the trial of summons cases by Magistrates."
4. The Company Court could punish a person for non-compliance with any of the) requirements specified under Section 454 of the Act provided that person has no reasonable excuse. In other words, if the person against whom prosecution could be launched under Sub-section (5-A) has reasonable excuse for not complying with the requirements of Section 454, such a person cannot be prosecuted and punished under Sub-section (5-A) of Section 454 of the Act. Therefore, the fact whether the person has reasonable excuse for committing default in the matter of complying with any of the requirements of Section 454 of the Act assumes the characteristic of a jurisdictional fact, the existence of which is a must to exercise power under Sub-section (5-A). In the context of Section 454, particularly having regard to the provisions of Sub-section (5), it is trite that the burden to prove that the appellant has no reasonable excuse is on the prosecution, namely, the Official Liquidator. In the instant case, admittedly, no material is placed before the learned Company Judge to discharge the burden that the appellants have no reasonable excuse in committing the default. A person cannot be prosecuted and convicted under Sub-section (5-A) merely for the reason that he committed default in complying with any of the 'requirements of Section 454. In addition to establishing the default, the prosecution is required to establish that the person without reasonable excuse has committed such default in complying with any of the requirements of Section 454. The second element is completely missing in the instant case for want of proof. The prosecution has utterly failed to lay any evidence to establish that fact. On that short ground, we allow these appeals and set aside the impugned orders. However, this order of ours shall not preclude the learned Company Judge from taking de novo steps in accordance with law and in terms of the provisions of Sub-sections (5) and (5-A) of Section 454 of the Act. Ns costs.