2008 (12) TMI 402 - HC - Companies Law

Court grants Liquidator's requests, penalizes Ex-Directors for non-compliance, and orders creditor protection.

Official Liquidator of Pushpa Synthetic (P.) Ltd. Versus Diamond Jubilee Co-op. Bank Ltd.

Official Liquidator of Pushpa Synthetic (P.) Ltd. Versus Diamond Jubilee Co-op. Bank Ltd. - [2009] 91 SCL 109 (GUJ.) Issues Involved:1. Ratification of the Official Liquidator's action of taking possession of properties.2. Direction to Secured Creditors to produce documents regarding mortgaged property.3. Direction to Ex-Directors to remain present for recording statements and provide property details.4. Criminal case against Ex-Directors for default under section 454(5) of the Companies Act, 1956.5. Application by unsecured creditors for taking possession of assets, obtaining statements of affairs, and disposing of properties.6. Allegations of disposal of assets during the winding-up process.Detailed Analysis:1. Ratification of the Official Liquidator's Action:The Official Liquidator sought ratification for taking possession of six shops at Yash Plaza Complex under sections 531/531A of the Companies Act, 1956. The court, however, noted that the occupants had filed applications which were allowed, and thus, did not grant this prayer. Notice was issued for other prayers.2. Direction to Secured Creditors:The Official Liquidator requested the court to direct Secured Creditors to produce documents regarding mortgaged property. The court did not grant this prayer due to the lack of details establishing the charge of Punjab National Bank on any property of the Company in liquidation.3. Direction to Ex-Directors:The Official Liquidator also sought directions for Ex-Directors to remain present for recording their statements and provide property details. The court noted that the statement of Mr. Prashant Natvarlal Dilkhush was recorded, thus partially granting this prayer.4. Criminal Case Against Ex-Directors:The Official Liquidator filed Criminal Case No. 5 of 2006 against the Ex-Directors for default under section 454(5) of the Companies Act, 1956. The court issued bailable warrants and later non-bailable warrants when the accused did not comply. The court found that the Ex-Directors did not file the statement of affairs intentionally to suppress relevant details and thus, were liable to be punished with imprisonment of three months and a fine of Rs. 25,000 each.5. Application by Unsecured Creditors:Unsecured creditors filed Company Application No. 241 of 2006 seeking possession of assets and necessary actions by the Official Liquidator. The court directed the Official Liquidator to file a report and noted that the Ex-Directors had sold assets, including a boiler, without proper consideration. The court ordered the Ex-Directors to deposit Rs. 3 lakhs towards the value of the boiler and Rs. 25,000 towards exemplary costs.6. Allegations of Disposal of Assets:The court found that the Ex-Directors and partners of M/s. Creamy Fashions attempted to dispose of the company's properties. The court observed serious controversies about the extent of damage caused by fires in 2002 and 2003 and noted that the accused did not maintain proper accounts. The court directed the Ex-Directors to file detailed affidavits about the properties sold and the amounts realized.Conclusion:The court disposed of the matters with specific directions:- OLR No. 29 of 2006: Partially granted prayers and issued directions based on the affidavit-in-reply.- Company Application No. 241 of 2006: Directed the Official Liquidator to take actions as per the court's interim orders.- Criminal Case No. 5 of 2006: Punished the accused with imprisonment and fines for not filing the statement of affairs.The court emphasized the importance of transparency and compliance with statutory duties by the Ex-Directors and ordered necessary actions to protect the interests of the creditors.