TaxTMI 
TaxTMI 
2008 (9) TMI 561
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....V), Haryana, after recording evidence, has submitted his report dated 31-3-1995 and returned a finding that a fraud has been committed by the directors of the company in the promotion, formation and conduct of the business of the company. It is further mentioned that the creditors have claimed a sum of Rs. 11,98,724.82 which is required to be recovered from the respondents. 3. Briefly stated the facts leading to the filing of the present application are that the company, namely, M/s. Shivalik Savings and General Investment Ltd., was wound up vide order dated 27-1-1989, passed in C.P. No. 34 of 1988. The statement of affairs was filed by the ex-directors on 10-4-1990. The Official Liquidator ordered investigation by the chartered accountant on 6-7-1992. The Official Liquidator pointed out various discrepancies based upon the report of the Chartered Accountant M/s. A.K. Chadha and Co. The Official Liquidator also found that the ex-directors of the company have committed fraud in the formation and promotion of the company-in-liquidation. Based upon the aforesaid reports, the Official Liquidator filed in C.P. No. 26 of 1993 under section 478 of the Companies Act, 1956 (hereinafter r....
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....the claim of the creditors for Rs. 11,98,724.82 is also not sustainable having been made after more than six years and is barred by time." 7. It has been vehemently argued that C.P. No. 26 of 1993 stands disposed of in terms of the order dated 24-3-1994. 8. I have perused the aforesaid application and order dated 24-3-1994. 9. In C.P. No. 26 of 1993, following prayer was made :- "In view of the above stated facts and documents attached, this Hon'ble Court may kindly direct the respondents to be publicly examine with respect to the promotion, formation and management of the company under section 478 of the Act read with rules 249 to 254 and 256. It is further prayed that proceedings against the respondents be initiated under section 538 read with rule 9 of the Rules and the respondents be accordingly punished, or any other order to which the petitioner, the creditors and debtors are found entitled in law and equity be passed." 10. Two-fold prayers are made in this petition. In the first part, public examination of the respondents, was sought whereas in the second part, further prayer is made for initiating consequential penal proceedings against the respondents in ....
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....he examination." 12. In the aforesaid order, District and Sessions Judge (Vigilance), Haryana, was specifically directed to submit his report along with the record of the proceedings within two weeks from the conclusion of the public examination. The direction is clear and categorical in its terms. The District and Sessions Judge (Vigilance), Haryana, was not only required to publicly examine respondent Nos. 1, 2 and 4, but also, to record his conclusion of the examination and submit his report. It is pursuant to the directions of this Court that the report dated 31-3-1995, containing conclusion has been submitted by the officer. Order dated 24-3-1994, has not been challenged by the respondents before any appropriate forum. 13. The next question to be considered is regarding the period of limitation for initiating action in terms of section 543(2) of the Companies Act. Section 538 of the Act deals with the offences by officers of the companies in liquidation. If refers to various acts of omission and commission by such officers which constitute offences punishable under law. Section 542 of the Act empowers the Tribunal to impose liability for fraudulent conduct of business wh....
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....on (1), every person who was knowingly a party to the carrying on of the business in the manner aforesaid, shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to fifty thousand rupees, or with both. (4) This section shall apply, notwithstanding that the person concerned may be criminally liable in respect of the matters on the ground of which the declaration is to be made. Section 543. Power of Tribunal to assess damages against delinquent directors, etc.-(1) If in the course of winding up of a company, it appears that any person who has taken part in the promotion or formation of the company, or any past or present director, manager, liquidator or officer of the company- (a)has misapplied, or retained, or become liable or accountable for, any money or property of the company; or (b)has been guilty of any misfeasance or breach of trust in relation to the company, the Tribunal may, on the application of the Official Liquidator, or the liquidator, or of any creditor or contributory, made within the time specified in that behalf in sub-section (2), examine into the conduct of the person, director, manager, liquid....
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....en contended that winding up order was passed on 27-1-1989. Statement of affairs was filed on 10-4-1990 and the Official Liquidator was appointed simultaneously with the passing of the winding up order, i.e., 27-1-1989, whereas the present application for initiating proceedings under section 538, read with sections 542 and 543 was filed on 4-7-1995, through the Company Application No. 131 of 1995. Thus, the application is beyond period of five years and is liable to be dismissed on that ground. It is not in dispute that the winding up order was passed and the liquidator was appointed on 27-1-1989 and the present application has been filed on 4-7-1995, i.e., after a period of more than five years. However, from the record, it is evident that public examination of the respondents was ordered vide order dated 18-11-1993. The respondents challenged this order in an appeal (Company Appeal No. 4 of 1994) which came to be disposed of on 15-3-1994. After conclusion of the public examination, report was received by the Court on 1-4-1995. It is only after the report was received that the present application under sections 538, 542 and 543 was filed on 4-7-1995. Under these circumstances, the....