1999 (2) TMI 493 - HC - Companies Law

Court orders restoration of tenanted premises for company, denies relief on accounts & misappropriation pending further petition.

The court ordered the restoration of the company's tenanted premises, prohibiting commercial use. The petitioners were advised to seek clarification from ... Power of the Court to assess damages against delinquent directors etc. Issues Involved:1. Restoration of company's tenanted premises.2. Rendering of accounts and handing over company records.3. Misappropriation of proceeds from the sale of a bus.4. Running a tea stall on the company's premises.5. Applicability of sections 541, 542, and 543 of the Companies Act, 1956.6. Maintainability of the petition.7. Timeliness of the petition.Detailed Analysis:1. Restoration of Company's Tenanted PremisesThe petitioners sought the restoration of the company's tenanted premises at 18, Mehrauli, New Delhi, which was allegedly occupied by respondents without authority. The court found that the entire ground floor of the premises was under the tenancy of the company and not under the personal tenancy of Late Shri R.K. Sharma. The court ordered that the premises be restored to the company, but noted that a clarification from the Company Judge in CP. No. 91 of 1980 was necessary due to a previous stay on dispossession.2. Rendering of Accounts and Handing Over Company RecordsThe petitioners requested that respondents render accounts and hand over the records of the company. However, the court held that the provisions of section 543 could not be invoked at this stage as the petition under sections 397 and 398 was still pending, and no prima facie view had been formed.3. Misappropriation of Proceeds from the Sale of a BusThe petitioners claimed that respondents misappropriated proceeds from the sale of a bus (Bus No. 5290). The court did not address this issue directly in its final order, focusing instead on the need for a prima facie finding in the pending petition under sections 397 and 398.4. Running a Tea Stall on the Company's PremisesThe petitioners sought to restrain respondent No. 1 from running a tea stall on the company's premises. The court agreed and directed that respondent No. 1 should not use the premises for commercial purposes but could use it for residential purposes until further clarification or vacation of the stay order.5. Applicability of Sections 541, 542, and 543 of the Companies Act, 1956The court explained that sections 541, 542, and 543 relate to the liability of company officers in cases where proper accounts were not kept, fraudulent conduct of business, and assessing damages against delinquent directors, respectively. These sections could only be invoked during the winding-up process or if a prima facie case was established under sections 397 or 398.6. Maintainability of the PetitionThe court found that the petition was maintainable. It cited the case of Rajendra Nath Bhaskar v. Bhaskar Stoneware Pipes (P.) Ltd., which held that a separate application under section 543 could be filed after a prima facie view was formed in a petition under sections 397 or 398. The court rejected the objection that the petition should have been filed in CP. No. 91 of 1980.7. Timeliness of the PetitionRespondent No. 1 argued that the petition was barred by time, but the court found no merit in this argument. The court noted that no specific arguments were made on this point, and the petition was not found to be time-barred.ConclusionThe court ordered the restoration of the company's tenanted premises and restrained the use of the premises for commercial purposes. The petitioners were advised to seek clarification from the Company Judge regarding the stay on dispossession. The court did not grant relief related to the rendering of accounts and misappropriation of proceeds at this stage, as these issues depended on the outcome of the pending petition under sections 397 and 398.