TaxTMI 
TaxTMI 
TaxTMI 
1979 (11) TMI 200
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....ging director up to February 8, 1969. The 4th respondent was the administrative director with effect from February 8, 1969, on which date, the 1st respondent-managing director was designated as technical director. The other respondents, who were ordinary directors, did not have direct concern in the matter of day-to-day administration of the company in liquidation. The official liquidator has alleged that the company in liquidation was originally incorporated on 5th May, 1966, with an authorised capital of Rs. 2,00,000 divided into 200 equity shares, each valued at Rs. 1,000. The said capital was at all material times issued and stood subscribed and credited in the books of the company as fully paid. Thus, there was no difference between t....
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.... to Rs. 7,708.26. (b)The respondents herein did not take necessary steps to take out an inventory of stock-in-trade kept under look and key by the State Bank of India from March, 1969 for valuation purpose and failed to maintain proper books of account for the period from 1st April, 1968, to 22nd January, 1971. Thereby the speedy realisation of outstandings was obstructed and unnecessary incidental expenses had to be defrayed by the official liquidator. Thus the respondents herein who were aware of the critical financial position of the company were equally negligent in not calling upon the bank to sell away all the pledged assets forthwith and adjust the proceeds towards the loan. In the result, the respondents caused loss indirectly in t....
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....(1) Whether respondent No. 1 was liable to account for the cash balance of Rs. 5,748.26 claimed by the official liquidator in accordance with the report of the auditors appointed by this court together with interest thereon ? (2) Whether respondents Nos. 1 to 5 jointly and severally caused loss directly or indirectly in a sum of Rs. 91,000 by not instructing the State Bank of India to whom they had pledged the stock-in-trade and raw materials which they had handed over to the bank without specific instructionin March, 1969, to sell the said stock-in-trade and raw materials and realise the maximum price available? (3)Whether the official liquidator has proved any act or acts of misfeasance against the respondents?" In support of the case ....
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....nly argument advanced on behalf of the official liquidator by the learned counsel has been that the 4th respondent being the director-in-charge of administration did not act promptly and in the manner he ought to have done to get the pledged stock-in-trade and raw materials sold by the bank and adjusted towards the debt, which, in turn, would have reduced for the company the estimated loss of Rs. 91,000. This is founded on the fact that having regard to the evidence adduced, the value of the stock-in-trade and raw materials was estimated at Rs. 91,000 and this was put in the custody of the bank by handing over the key of the room where the stock-in-trade and raw materials were stored, to the State Bank of India in the month of March, 1969, ....
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....e had given such instructions and this court cannot ignore the same. However that may be, the Supreme Court in the case of Official liquidator v. Raghawa Desikachar [1975] 45 Comp. Cas. 136 at p. 142 has held as follows: "It may be mentioned that misfeasance action against the directors is a serious charge. It is a charge of misconduct or misappropriation or breach of trust. For this reason the application should contain a detailed narration of the specific acts of commission and omission on the part of each director quantifying the loss to the company arising out of such acts or omissions. The burden of proving misfeasance or nonfeasance rests on the official liquidator." In the instant case, there is no specific pleading against any of....