Summary procedure under Section 235 allows a liquidator to pursue officers for company monies; summary proceedings may proceed.

Section 235 is characterised as a procedural, summary remedy enabling a liquidator to investigate and recover moneys in the hands of promoters, directors or managers where affidavits and annexed accounts show sums due and no adequate explanation or inspection was provided; the court need not treat the affidavit as conclusively proving misapplication but may examine conduct, frame issues and record evidence in its discretion. Objections based on convenience of counterclaim or set-off do not bar resort to the summary mode. The application is maintainable and will proceed with affidavits treated as pleadings, discovery, inspection and evidence listed.

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Issues: Whether a liquidator may proceed under section 235 of the Indian Companies Act to recover moneys alleged to be in the hands of a director/manager and whether the summary procedure under section 235 is the appropriate mode of proceeding in the present case.

Analysis: The Court examined the scope and purpose of section 235 as a procedural provision providing a summary mode for the liquidator to investigate and obtain assets or moneys in the hands of promoters, directors, managers or officers where there is misapplication, retention or liability in respect of company property. The Court rejected the submission that the liquidator must on the face of the affidavit conclusively prove misapplication or breach of duty before the section can be invoked, noting that the section authorises the court to examine conduct, frame issues and record evidence in its discretion. Authorities addressing the limited scope of summary jurisdiction were considered, but the Court found that where the affidavit and annexed accounts show moneys due from an officer and no adequate explanation or timely inspection was given, the case falls within the ambit of section 235. The Court also observed that objections based on convenience of counter-claim or set-off do not bar resort to the section and that section 235 does not itself create new substantive rights but provides a summary remedy for enforceable liabilities.

Conclusion: The application under section 235 is maintainable; the objection that section 235 is inapplicable is overruled. The matter will proceed under section 235 with affidavits treated as pleadings, leave for rejoinder and sub-rejoinder, discovery and inspection and evidence to be heard. The decision is in favour of the liquidator (applicant) insofar as the court permits the summary proceeding to continue.

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