2012 (6) TMI 127 - HC - Companies Law

Court lacks authority to reopen final decree under Section 47 of Insolvency Act, rejects claims based on 1958 balance sheet.

Smt. Anupam Khosla Versus Official Liquidator

Smt. Anupam Khosla Versus Official Liquidator - TMI Issues Involved:1. Misfeasance application against directors and subsequent decree.2. Examination of judgment-debtors under Order XXI Rule 41 of the Code of Civil Procedure.3. Execution of misfeasance decree and appointment of Official Liquidator as Receiver.4. Satisfaction of decree and calculation of decretal dues.5. Set-off claims under section 47 of the Presidency Town Insolvency Act.6. Authority of the Court to reopen the decree.Issue-wise Detailed Analysis:1. Misfeasance Application Against Directors and Subsequent Decree:The company, D.C. Dhiman & Bros. Limited, was directed to be wound up by an order dated 7-9-1965. The Official Liquidator filed a misfeasance application against several directors, including Banshilal Dhiman. An ex parte decree was passed on 7-2-1974 for a principal sum of Rs. 14,17,948 with interest at 6% per annum from 7-11-1965 until repayment.2. Examination of Judgment-Debtors Under Order XXI Rule 41 of the Code of Civil Procedure:On 5-8-1979, the Official Liquidator filed an application for the examination of the judgment-debtors. The application was disposed of on 5-12-1979, treating it as an application under section 446(2) of the Companies Act, 1956. The Court noted that the respondents were attempting to deprive the Official Liquidator of the misfeasance decree benefits. The properties disclosed by the respondents were sufficient for the Official Liquidator to execute the decree.3. Execution of Misfeasance Decree and Appointment of Official Liquidator as Receiver:The Court directed the Official Liquidator to be appointed as Receiver over the properties described in a letter dated 27-11-1979. The Official Liquidator was instructed to sell the properties after obtaining appropriate directions from the Court for valuation, advertisement, and sale by public auction. The order aimed to prevent multiplicity of proceedings and expedite the winding-up and dissolution of the company.4. Satisfaction of Decree and Calculation of Decretal Dues:The Official Liquidator sold the assets of the judgment debtors under the misfeasance decree. It was claimed that the decree had been satisfied upon payment of the decretal dues. However, the petitioner contended that the rent realized by the Official Liquidator was not accounted for, and the amounts payable from Mohta Brothers and Omprakash Mohta had already been paid. The petitioner argued that these amounts should be deducted from the decretal dues, and the Official Liquidator should have shown these deductions.5. Set-Off Claims Under Section 47 of the Presidency Town Insolvency Act:The petitioner claimed entitlement to a set-off under section 47 of the Presidency Town Insolvency Act, arguing that there is no time limit for such claims. The petitioner also referred to section 70 of the Contract Act and cited the decision in State of West Bengal v. B.K. Mondal & Sons AIR 1962 SC 779, emphasizing that compensation should be made for the benefit enjoyed by the other party.6. Authority of the Court to Reopen the Decree:The learned Counsel for the Official Liquidator argued that the Court should not go beyond the decree, which had already been satisfied. The petitioner did not challenge the decree or the misfeasance decree, and therefore, the executing Court could not reopen the decree. The Court noted that the petitioner did not pray for any variation when the order dated 15-3-2010 was passed, which required the judgment debtors to pay the remaining decretal debt.Conclusion:The Court concluded that it had no authority to reopen the decree, which had become final and binding. Section 47 of the Presidency Insolvency Act did not authorize the Court to reopen the decree or adjust the rent amounts. The claim based on the balance sheet of 1958 was not acceptable, as the winding-up order was passed in 1965. The claims regarding payments to Mohta Brothers and O.P. Mohta were disputed and lacked sufficient evidence. Therefore, the application was rejected.