Adverse inference from withheld financial records can justify treating disputed assets as group property in winding up proceedings.

A party claiming that assets standing in another entity's name were not part of the group must produce the best evidence of the source of acquisition funds. Where bank records, account statements, transfer instruments and other primary documents are withheld, an adverse inference may be drawn and the assets may be treated as belonging to the group for winding up purposes. A belated request for framing issues and recording evidence may also be refused where complete records were already sought, prior refusal of cross-examination has attained finality, and the further evidence would not answer the central question of source of funds. The applications were found to lack merit and the Official Liquidator was allowed to proceed according to law.

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Issues: (i) Whether the land and related assets standing in the name of Goga Foods Limited were shown to have been acquired from the funds of Hoffland Finance Limited so as to justify treating them as part of the Hoffland group; (ii) Whether the applicants were entitled to a direction for framing of issues and recording of evidence.

Issue (i): Whether the land and related assets standing in the name of Goga Foods Limited were shown to have been acquired from the funds of Hoffland Finance Limited so as to justify treating them as part of the Hoffland group.

Analysis: The applicant was unable to produce the best evidence necessary to explain the source of funds for acquisition of the lands. The balance sheets did not show sufficient financial capacity to purchase the properties, the lands were found to be interspersed with property standing in the name of Hoffland Engineers Limited, and the material on record, including statements attributed to the promoter and the report of the Economic Offences Wing, supported the inference that the properties were acquired by the Hoffland group using funds of Hoffland Finance Limited. The withholding of bank statements, account records, transfer instruments, and other primary documents warranted an adverse inference.

Conclusion: The issue was decided against the applicant and the land was treated as belonging to the Hoffland group for the purposes of the winding up proceedings.

Issue (ii): Whether the applicants were entitled to a direction for framing of issues and recording of evidence.

Analysis: The request for evidence was rejected because the applicant had already been directed to file complete financial and transaction records, but failed to do so. The earlier order declining cross-examination had attained finality, and the materials sought to be introduced would not have answered the central question, namely the source of acquisition funds. In the circumstances, the plea was viewed as lacking bona fides and as an attempt to delay the proceedings.

Conclusion: The issue was decided against the applicant and no direction for framing of issues or leading evidence was granted.

Final Conclusion: The applications were found to be devoid of merit, the applicant failed to displace the adverse inference arising from non-production of material records, and the Official Liquidator was permitted to proceed in accordance with law.

Ratio Decidendi: In winding up-related asset disputes, a party in possession of the best evidence as to source of acquisition must produce it, and unexplained withholding of such material can justify an adverse inference and rejection of a belated request for evidence.

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