TaxTMI 
TaxTMI 
2009 (7) TMI 789
X X X X Extracts X X X X
X X X X Extracts X X X X
....lications. 2. Application No. 1935 of 2006 has been filed by the official liquidator under sections 460(4), 542 and 543 of the Companies Act, 1956, to examine the conduct of respondents Nos. 1 to 6 therein, who are ex-directors of the company in liquidation under sections 542 and 543(1) of the Companies Act, 1956 and order their liability to the extent of Rs. 4,37,57,654 and future claims of the creditors with interest at the rate of 12 per cent, per annum and to declare that respondents Nos. 1 to 6 are personally liable for all debts and liabilities of the company in liquidation and to direct constitution of first charge on the property and effects in possession of respondents Nos. 1 to 6 in respect of Rs. 4,37,57,654. 3. The petitioning creditor in applications nos. 1625 to 1628 of 2006 has filed C. P. No. 387 of 2003 for winding up of the first respondent-company, M/s. Scanwell Freight Express India P. Ltd., under section 433(e) read with section 434(1)(a) of the Companies Act on the ground of inability of the first respondent to settle the outstanding amount of HK $ 1162595.74 together with interest at 18 per cent, per annum and the said company was wound up by order of this ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....anwell Logistics P. Ltd., which is the second respondent in the applications filed by the petitioning creditor, as per the letter of the first respondent dated July 15, 2004 and the company is in arrears of rent to the extent of Rs. 1,65,000 for May, June, July, 2006 apart from the electricity and maintenance charges. 7. It is stated by the official liquidator in his report that the ex-directors have not produced the vital records and statutory records, however, one of the ex-directors, viz., Mr. S. Ramesh has filed the statement of affairs on June 27, 2006 and subsequently, another director, V. Babu also concurred with the said statement of affairs. On verification of the statement of affairs, the official liquidator has found the following discrepancies : "(1) The ex-directors have stated that a sum of Rs. 8,56,647 is available as bank balance in HSBC Bank, No. 96, Dr. Radhakrishnan Salai, Chennai-14 in ground No. 041379878001. On verification from the bank, it is found that only a sum of Rs. 2,96,170.60 was available. Therefore, the ex-directors are liable to account for the balance amount of Rs. 5,60,476.40. (2) The ex-directors have mentioned that a sum of Rs. 402 is availa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....name, M/s. Scanwell Logistics P. Ltd., on May 28, 2004, during the pendency of the company petition which was filed on December 9, 2003, in the same premises of the first respondent-company under liquidation with the directors, (i) Mr. Hassen Adam Bin, (ii) Mr. Sin Wai Shing, (iii) Mr. Tang Keen Fei, (iv) Mr. S. Ramesh and (v) Mr. V. Sivakumar. Out of the said directors the first, fourth and fifth were the directors of the first respondent-company under liquidation, who are respondents Nos. 3, 8 and 7, respectively, and transferred the property and business of the first respondent-company under liquidation. Therefore, they are liable under section 536 of the Companies Act. They are also liable for breach of fiduciary duty towards the first respondent-company under liquidation and the conduct of the respondents also amounts to misfeasance and liable for action under section 543 of the Companies Act. It is also stated that when the second respondent-company was fraudulently floated on May 28, 2004, itself, in the counter affidavit filed by the first respondent-company sworn in October, 2004 there is no whisper about the constitution of the new company which shows the fraudulent desig....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the first respondent-company have only facilitated the formation of the second respondent-company and they resigned from the first respondent-company immediately after the second respondent-company came into existence. It is stated that the second respondent is a 100 per cent, subsidiary of M/s. Innoplas Ltd., a company incorporated in British Virgin Islands with the shareholding pattern, Harbans Singh Dillon : 99.99 per cent, and others : 0.01 per cent. Therefore, according to the said ex-director, the first and the second respondents are different companies and the director/respondents did not derive any benefit directly or indirectly from the business of the second respondent and there is no breach of duty on the part of the director/ respondents. 12. In the counter affidavit filed by the second respondent in the application filed by the petitioning creditor, the director of the second respondent M/s. Scanwell Logistics India P. Ltd., Mr. Alwin Andrew Hong Yu Shu has stated that the application is not maintainable since in the main company petition the second respondent is not a party. While stating that the allegations against the ex-directors are not known, the second respond....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n as on March 31, 2004 and March 31, 2005. It is stated that the business of the second respondent is purely service oriented and the customers cannot be forced to avail the second respondent's services and therefore, there is no diversion of business or funds of the first respondent-company. 16. Mr. T. K. Bhaskar, learned counsel appearing for the petitioning creditor would submit that the conduct of the ex-director of the first respondent-company who filed counter affidavit in October 2004, in which there is no disclosure about the constitution of the second respondent-company on May 28, 2004, itself shows the evil design. He would rely upon various provisions of the Companies Act, 1956, especially sections 542 and 543 and also the details of directors of the newly constituted company to show the fraudulent design on the facts of the case. According to him, the ex-directors of the company in liquidation, especially respondents Nos. 3, 7 and 8 cannot disown their responsibility in the company affairs and when a strong suspicion was created in the constitution of the second respondent-company, that would be a cause for complete investigation into the affairs of the second responde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....el for the respective parties, it is clear that the first respondent-company under liquidation was constituted with the object of carrying on the business of general carriers, forwarding agents, commission agents, agents for carriers, agents for air freighting cargo, etc., and the said company was incorporated in the year 1996 with sixth respondents stated in the application as its promoters and directors. The second respondent-company was registered in India on May 28, 2004, with five directors which includes three respondents herein, viz., Mr. Adam Bin Hassan, Mr. Sivakumar and Mr. Ramesh. Even though it is stated in the counter affidavit of the second respondent that the business of the second respondent-company is purely service oriented and therefore, the customers cannot be forced to avail the second respondent's service, there are no records produced to show as to what is the object of the second respondent-company which was registered in India on May 28, 2004. 21. It is relevant to note that the company application was presented by the petitioning creditor on December 9, 2003 and the order of winding up was passed on March 22, 2006, by this court. By virtue of section 441 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... hardship to the creditors of the first respondent-company under liquidation or with a collusive idea of transferring the business as well as the assets of the first respondent-company in favour of the second respondent-company. 24. It is true that in the statements of accounts of the second respondent-company for the year 2004-05 and 2005-06, the income is shown as "nil", but the statements as well as the auditor's reports do not contain all the names of the directors of the company and two directors, viz., Mr. Sin Wai Shing and Mr. Tang Keen Fei have signed the statements. Further, it is also admitted by the second respondent itself in the counter affidavit that three ex-directors of the first respondent-company, viz., Mr. Hassen Adam Bin, Mr. Ramesh and Mr. Sivakumar have resigned on June 21, 2005, June 22, 2005 and June 21, 2005, respectively. 25. On the above said admitted facts and circumstances, a reasonable suspicion arises about the formation of the second respondent-company and it is necessary that an investigation has to be ordered in respect of the affairs of the second respondent-company. In fact, lifting the corporate veil is an established principle in the corporat....