Section 543 director liability requires proof of misfeasance or breach of trust, not merely doubtful book debts.

Section 543 liability requires substantive proof of misapplication, retention, misfeasance, or breach of trust by the directors; it cannot rest on doubtful debts or advances merely shown in the company's books. Where the sums had remained outstanding for years, were treated as doubtful or irrecoverable, had become time-barred by winding up, and no material showed a personal act of negligence or direct nexus to any individual director, liability was not established. On the facts proved, the former directors were not accountable under section 543 and recovery failed.

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Issues: Whether the official liquidator could fasten liability on the former directors under section 543 of the Companies Act, 1956 for alleged misapplication, retention, or accountability in respect of doubtful debts and advances carried in the company's books.

Analysis: Section 543 empowers the court to assess damages where there is misapplication or retention of company money or property, or where the director is guilty of misfeasance or breach of trust. On the facts, the amounts had stood in the books for several years, were treated by the board and shareholders as doubtful or irrecoverable, and had become time-barred by the date of winding up. The directors had acted on reports placed before them by those in actual management, and there was no satisfactory material showing a personal act of negligence or a direct nexus between any individual director and the non-recovery of the sums. Mere entry of amounts as recoverable in the books did not, by itself, establish accountability under the section.

Conclusion: The directors were not liable under section 543 on the facts proved, and the claim for recovery failed.

Ratio Decidendi: Liability under section 543 requires substantive proof of misfeasance, breach of trust, or accountable conduct by the directors, and cannot be inferred merely from doubtful or time-barred debts recorded in the company's accounts.

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