2003 (2) TMI 344 - HC - Companies Law

Court allows co-respondents to cross-examine, ensuring fairness and truth in liability dispute.

The court ruled in favor of allowing co-respondents to cross-examine each other based on conflicting interests in a case involving a dispute over ... Winding up - Power of Court to assess damages against delinquent directors, etc. Issues:Whether a co-respondent can cross-examine another respondent who has given evidence against him.Analysis:The case involves an application filed under section 543(1) of the Companies Act, 1956, seeking direction for the directors of a company under liquidation to pay a specific sum to the company along with interest. The respondents denied the liability, leading to the matter being referred to a Commissioner for evidence recording. Subsequently, a dispute arose regarding the right of co-respondents to cross-examine each other based on conflicting interests.The applicants contended that after their retirement as directors, the company was taken over by other respondents who manipulated the accounts to their detriment. They argued that the interest of certain respondents conflicted with others, justifying the need for cross-examination to expose falsehoods and present the truth. On the other hand, the opposing respondents argued against allowing co-respondents to cross-examine each other, denying the allegations made by the applicants.The court considered the essence of cross-examination as a crucial tool for extracting truth and exposing falsehoods. It highlighted the significance of cross-examination in impeaching witness credibility and detecting discrepancies. The court emphasized the importance of providing a fair opportunity for a party to cross-examine evidence presented against them before it can be deemed admissible.While acknowledging that the Indian Evidence Act does not specifically address the cross-examination rights of co-respondents, the court cited legal principles and authorities to support the view that such an opportunity should be granted when there is a conflict of interest between parties. The court emphasized that before acting on evidence affecting a party's interest, that party must have the chance to cross-examine the witness, ensuring the emergence of truth for the court to rely upon.In conclusion, the court ruled in favor of allowing the co-respondents to cross-examine each other based on conflicting interests, directing the Commissioner to permit the cross-examination of relevant witnesses. The court extended the time for recording evidence and allowed the applications accordingly, emphasizing the importance of ensuring a fair opportunity for all parties to present their case effectively.