Director liability in winding-up turns on neglect, non-cooperation, and proof of directorship before personal exposure attaches.

In winding-up proceedings, personal liability of directors may arise where misapplication of assets, breach of duty, negligence, non-cooperation, or inaction causes company assets or debts to become irrecoverable, and liability may also follow for unsupported expenditure. The discussion notes that time-barred recoveries, failure to supply correct addresses to the official liquidator, and absence of vouchers can support a finding of misfeasance and breach of duty if unrebutted by evidence. It also states that personal liability cannot be imposed without proof that a person was in fact a director during the relevant period.

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Issues: (i) Whether the ex-directors were guilty of misfeasance, breach of trust, negligence and breach of duty in relation to the company's affairs so as to be personally liable for the loss caused to the company. (ii) Whether respondent No. 4 was a director of the company and liable under the petition.

Issue (i): Whether the ex-directors were guilty of misfeasance, breach of trust, negligence and breach of duty in relation to the company's affairs so as to be personally liable for the loss caused to the company.

Analysis: Liability under sections 541, 542 and 543 of the Companies Act, 1956 can arise where officers of a company misapply assets, act in breach of duty, or by neglect permit loss to the company. On the evidence, the amounts listed as recoveries had become time-barred because no effective steps were taken to recover them, the claim for certain sums failed because the correct addresses were not supplied to the official liquidator, and a further amount was unsupported by vouchers. The respondents led no evidence to rebut these findings. The court also distinguished mere inability to recover debts from a case where directors, by inaction and non-cooperation, caused the loss.

Conclusion: The ex-directors were liable for misfeasance and breach of duty, and the claim against respondents Nos. 1 to 3 and 5 was proved.

Issue (ii): Whether respondent No. 4 was a director of the company and liable under the petition.

Analysis: The record did not establish that respondent No. 4 continued as a director of the company for the relevant period. In the absence of proof of directorship, personal liability under the petition could not be fastened on him.

Conclusion: Respondent No. 4 was not held liable.

Final Conclusion: The petition succeeded substantially against respondents Nos. 1 to 3 and 5, with a decree for the proved loss and interest, while respondent No. 4 was excluded from liability.

Ratio Decidendi: In winding-up proceedings, directors may be made personally liable where their neglect, non-cooperation, or failure to act causes company debts to become irrecoverable or results in unexplained expenditure, but liability cannot be imposed on a person whose status as director is not proved.

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