Winding-up order places company with official liquidator; former directors bear no liability and proceedings against them must be quashed

HC held that a winding-up order dated 08.09.2015 places the company in the custody of the official liquidator, so erstwhile directors have no ongoing liability or responsibility for company affairs and proceedings against them should be quashed. Income Tax authorities' ignorance of the winding-up order was noted; the official liquidator is a necessary party before the trial court. Relief to the former directors must be sought by discharge application in the trial court after adding the official liquidator. Revisional application dismissed; magistrate directed to proceed expeditiously.

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Issues Involved:
1. Quashing of Complaint Case No. CS/36744/19 under Section 200 of the Code of Criminal Procedure.
2. Charges under Section 276C(2) read with Section 278B of the Income Tax Act, 1961.
3. Orders passed by the learned Chief Metropolitan Magistrate at Calcutta.
4. Liability of Directors under Section 179 of the Income Tax Act, 1961.
5. Role and authority of the Official Liquidator post winding up order.

Summary:

Issue 1: Quashing of Complaint Case No. CS/36744/19
The petitioners sought to quash Complaint Case No. CS/36744/19 under Section 200 of the Code of Criminal Procedure, along with all orders passed therein, including the cognizance order dated 02.08.2019 and subsequent orders by the learned Chief Metropolitan Magistrate at Calcutta.

Issue 2: Charges under Section 276C(2) read with Section 278B of the Income Tax Act, 1961
The complaint was filed by the Income Tax Officer against Vikash Metal and Power Limited (under liquidation) and its directors, including the petitioners, alleging willful attempt to evade tax under Section 276C(2) read with Section 278B of the Income Tax Act, 1961. The assessment for the Assessment Year 2010-11 was re-opened and completed on September 14, 2017, raising a demand of Rs. 43,25,07,040/-.

Issue 3: Orders passed by the learned Chief Metropolitan Magistrate at Calcutta
The learned Chief Metropolitan Magistrate, Calcutta, took cognizance of the complaint on 02.08.2019 and transferred the case to the learned 16th Metropolitan Magistrate, Calcutta, who issued process against the petitioners and other ex-directors on 19.11.2019.

Issue 4: Liability of Directors under Section 179 of the Income Tax Act, 1961
The petitioners argued that as the company is a Public Limited Company, the directors are not liable for the tax demand under Section 179 of the Income Tax Act, 1961. The relevant portion of Section 179 states that directors of a private company are liable for tax dues unless they prove non-recovery is not due to their neglect, misfeasance, or breach of duty.

Issue 5: Role and authority of the Official Liquidator post winding up order
Post the winding up order dated September 8, 2015, the Official Liquidator took possession of the company's assets and records. The petitioners contended that only the Official Liquidator is authorized to deal with the company's affairs, including receiving notices and appearing before authorities. The Income Tax Department did not obtain leave from the Tribunal as required under Section 279 of the Companies Act, 2013, to initiate proceedings against the company (under liquidation).

Conclusion:
The High Court dismissed the revisional application, directing the petitioners to seek discharge before the trial court, which should consider adding the Official Liquidator as a party. The learned Magistrate was instructed to proceed expeditiously with the case, ensuring the Official Liquidator's involvement. The court emphasized that the petitioners, as erstwhile directors, are still required to assist the Official Liquidator in the company's affairs. No costs were ordered, and all interim orders were vacated.

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