Winding up and company funds: ex-director's unexplained routing of debtor payments led to a repayment direction.

After a winding up order, an ex-director who received company funds through a debtor payment and then routed them through another account was required to account for those sums to the Official Liquidator. The Court found no satisfactory proof that the recipient was an employee or that the payments were bona fide disbursements for identifiable company liabilities, and treated the ad hoc handling of the funds as inconsistent with proper accounting practice. On those facts, the amount was treated as misapplied or retained company property, and the Court directed repayment to the Official Liquidator.

---

---

Issues: Whether the ex-director, after the winding up order, was liable to deposit with the Official Liquidator the amount collected from the company's debtor and later transferred and spent through another account.

Analysis: The amount was credited to the company only after the winding up order and was thereafter routed through a third-party account without satisfactory proof that the recipient was an employee or that the payments were made bona fide for identifiable company liabilities. The Court held that such ad hoc handling of company funds was inconsistent with proper accounting practice and that, once winding up had been ordered, the ex-director could not justify operating the company's funds in that manner. On the facts, the money was treated as misapplied or retained company property attracting the Court's power to direct repayment under the winding up provisions.

Conclusion: The ex-director was directed to deposit Rs. 16,31,174/- with the Official Liquidator within the extended period granted by the Court.

---