2003 (10) TMI 397 - HC - Companies Law

Court Rules Third Respondent Not a Director at Winding-Up Date; Absolved of Companies Act Obligations.

Mother Care (India) Ltd. Versus Prof. Ramaswamy P. Aiyar

The court allowed the applications filed by the third respondent, directing the Official Liquidator to delete his name from the proceedings. The court ... Non-compliance with section 454 of the Companies Act, 1956 - Vacation of office by - Directors to hand over books and records u/s 538(1)(c) - HELD THAT:- After the winding up order, Director on the date of the winding up order commits default in performing his statutory obligation u/s 454(1) of the Act, action may be taken against such director u/s 454(5) of the Act. In exceptional cases even persons who are director one year anterior to the date of the winding up order would be called upon to furnish such particulars. But, if a person has ceased to be director of the company either on the date of the winding up order or one year before the date of the winding up order then no action could be taken against him u/s 454(5) for non-compliance with section 454(1) of the Act as there is no statutory obligation cast on such director to comply with the said requirement. If the date of communication of the intention to resign is taken into consideration and if that date happens to be anterior to the winding up order, such director who has resigned is under no obligation to comply with section 454 of the Act, as such no action could be taken u/s 454(5) and (5A) of the Act. In that view of the matter, in the instant case, the applicant resigned from the Board on 5-7-1995 which resignation was accepted on 8-9-1995. The winding up order was passed on 15-11-1999. Therefore, on the date of winding up order he was not a Director of the Company, as such he was under no obligation to comply with the statutory requirement as contemplated u/s 454 of the Act. Therefore, the action taken by the Official Liquidator against the applicant-Director for non-compliance of sections 454, 538(1)(a)( b)(c) of the Act is one without jurisdiction and therefore, the same is liable to be ordered to be dropped. Consequently, the applications filed by the applicant for deleting his name are allowed. Hence, I pass the following order :— The Official Liquidator is directed to delete the name of the third respondent from the applications which he has filed for non-compliance with the statutory requirements by the Directors of the Company under liquidation. Company applications 610, 611 and 612/2001 are accordingly allowed. Issues Involved:1. Non-compliance with section 454 of the Companies Act, 1956.2. Direction to hand over books and records u/s 538(1)(c) of the Companies Act, 1956.3. Direction to hand over movable and immovable property u/s 538(1)(b) of the Companies Act, 1956.4. Deletion of the third respondent's name and relief u/s 633 of the Companies Act, 1956.Summary:Issue 1: Non-compliance with section 454 of the Companies Act, 1956- Company Application No. 1003/2000 was filed u/s 454(5) & (5A) against three Directors for not complying with section 454 of the Companies Act, 1956.- The court concluded that the applicant, who resigned on 5-7-1995 and whose resignation was accepted on 9-8-1995, was not a Director on the winding-up date (15-11-1999). Therefore, he was under no obligation to comply with section 454, and the action taken by the Official Liquidator was without jurisdiction.Issue 2: Direction to hand over books and records u/s 538(1)(c) of the Companies Act, 1956- Company Application No. 1263/2000 was filed for a direction to the three Directors to hand over all books and records of the Company in liquidation.- The court found that the applicant had ceased to be a Director from 5-7-1995, and thus, he was not responsible for handing over the books and records.Issue 3: Direction to hand over movable and immovable property u/s 538(1)(b) of the Companies Act, 1956- Company Application No. 1264/2000 was filed for a direction to the Directors to hand over movable and immovable property of the company in liquidation.- The court held that since the applicant was not a Director on the winding-up date, he was not liable for handing over the property.Issue 4: Deletion of the third respondent's name and relief u/s 633 of the Companies Act, 1956- The third respondent filed applications (CAs 610, 611, and 612 of 2001) to delete his name from the aforementioned applications and sought relief u/s 633.- The court accepted the evidence that the applicant had resigned and was not a Director on the winding-up date. Consequently, the court directed the Official Liquidator to delete the applicant's name from the applications and drop all proceedings against him.Conclusion:- The court allowed the applications filed by the third respondent for deleting his name and directed the Official Liquidator to comply accordingly.