TaxTMI 
TaxTMI 
TaxTMI 
2009 (7) TMI 760
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....ny under liquidation. The said company was incorporated in the year 1994 having its registered office originally at Anna Nagar East, Chennai and subsequently at flat No. A-1, Ashok Aiswaralayam, 13, Habibullah Road, T. Nagar, Chennai-17, with the share capital of Rs. 60,000. The object of the company was to carry on the business to import, export, buy, sell, etc., the goods, products, articles, merchandise and machinery and to carry on business and to act as merchants, commission agents, etc., in India or in any part of the world. On the date of liquidation, the respondents remained as directors of the company. 3. After the liquidation, the ex-directors were directed to file statement of affairs within 21 days. The first respondent filed the statement of affairs and from the same, various irregularities were found, viz., in the trade debtors category, a sum of Rs. 97,000 is due from a company but the address or relevant documents relating to the said company were not furnished to the Liquidator. It is stated that with the said company, the transactions were made in the years 1994-95 and 1995-96 and the ex-directors let the debts to become time-barred. 4. In respect of loans and a....
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....rrect addressees. Regarding the head, loans and advances, the same is denied stating that the company under liquidation has never made any profit and in spite of the efforts taken, they could not recover the amount and, therefore, there is no intentional act or deliberate conduct on the part of the respondents/ex-directors. 10. It is the contention of Mr. Murali, learned counsel for the ex-directors that while there are no unsecured creditors as it was found on facts, in respect of recovery from third parties who have received money either as trade debts or loans and advances, steps were taken by the ex-directors with the addresses furnished by the said persons and in spite of the efforts taken, it was not possible to find out the whereabouts of those persons and, it is not intentional especially in the circumstances that there are no secured creditors of the company and, therefore, it cannot be construed as misfeasance. He would rely upon the judgment of the Delhi High Court in Official Liquidator, Milan Chit Fund & Finance (P.) Ltd. v. Joginder Singh Kohli [1978] 48 Comp. Cas. 357 and the order of this Court in Official Liquidator v. Gautham Dhiraj Mal Ranka [2008] 141 Comp. Cas....
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....ompensation in respect of the misapplication, retainer, misfeasance or breach of trust, as the Court thinks just. (2) An application under sub-section (1) shall be made within five years from the date of the order for winding up, or of the first appointment of the Liquidator in the winding up or of the misapplication, retainer, misfeasance or breach of trust, as the case may be, whichever is longer. (3) This section shall apply notwithstanding that the matter is one for which the person concerned may be criminally liable." 14. The term misfeasance or breach of trust is certainly relatable not only to intentional act of the directors, but also to the deliberate conduct of the ex-directors which has resulted in the loss to the company under liquidation. Therefore, to constitute misfeasance under the said provision, the intentional act or deliberate conduct which is detrimental to the interest of the company under liquidation on the part of the ex-directors is a sine qua non. 15. Similarly, section 542 of the Companies Act also relates to the fraudulent conduct of business in which case, on recording evidence or hearing the parties on the application by the Official Liquidator, th....
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....lication must, therefore, be dismissed in relation to these two respondents as well." (p. 366) 17. That was also the view of this Court in Gautham Dhiraj Mal Ranka's case (supra), wherein S. Rajeswaran, J. under similar circumstances by referring to the judgment of the Supreme Court in Official Liquidator v. Raghawa Desikachar [1975] 45 Comp. Cas. 136, wherein it was held that misfeasance against a director being a serious charge of misconduct or breach of trust, must contain the detailed narration of specific acts of commissions and omissions and the burden of proof of misfeasance or non-feasance rests on the Official Liquidator, has held that if the specific instance of dishonesty or misappropriation of an individual director is not pinpointed and sweeping and general allegations are made, the same cannot be a ground for this Court to proceed under section 543 of the Companies Act. In fact, the learned Judge has quoted the judgment of the Delhi High Court in Security and Finance (P.) Ltd. v. B. K. Bedi [1991] 71 Comp. Cas. 101, wherein, while dealing with sections 542 and 543 of the Companies Act, the Delhi High Court has explained the significance of the words "any person who w....
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...., the Court is vested with jurisdiction to examine the conduct of the past or present director, manager, Liquidator or any other officer of the company to find out whether he has misapplied or retained or become liable or accountable for any money or property of the company; or he has been guilty of any misfeasance or breach of trust in relation to the company and, where any such conduct is found attributed to any such person, then, to compel him to repay and restore the money or property, or any part thereof to the company. In other words, under this section, the court is to examine the conduct of an individual director or officer and to pass an order against him, if such a person is personally found to be liable for misapplication, etc., of the money or property of the company or, otherwise, is guilty of any misfeasance or breach of trust in relation to the company. It is thus clear that, to enable the court to examine the conduct of an individual director or officer and to pass an effective order to make him personally liable for misapplication, etc., of the money or the property of the company, there has to be positive and specific evidence and pleadings in respect of the indiv....