TaxTMI 
TaxTMI 
2013 (4) TMI 335
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....d by the Ex-Directors in Schedule Rs. 4' worth Rs.3,66,04,620/- and as such they are liable to make good the loss to the said extent since they have failed to discharge their fiduciary position and they have acted against the interest of the shareholders and have thus committed 'Breach of Trust'. It is further contended that Certificates worth Rs. 12,500/- namely National Savings Certificate, which was shown as "Investments other than Marketable Securities" was also not handed over to the Official Liquidator as required by them and as such they should make good the said loss together with interest at 18% p.a. 2. Heard Sri. V. Jayaram, learned counsel appearing for the Official Liquidator and Smt. Nalina Mayegowda, learned counsel appearing....
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....ads as under since same has a direct bearing on the defence raised: "The original National Savings Certificates are available with the respective Sales Tax Department as Security Deposit and hence, we are unable to produce the originals. The details of such certificates have been provided by us in the `Statement of Affairs' filed with you. Request you to instruct the concerned department for production of the same. Investments other than the marketable securities has been shown as 'nil' in the Statement of Affairs because as per the audited accounts for the year ended 31.03.2003 the management has decided to provide for the diminution in value of the investment. However, the company still carries the equity shares in the company and the o....
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....y by misapplying or retaining in his own hand any monies of the Company or by which the Company's property has been wasted or the Company's credit is improperly pledged or otherwise. It must be some act resulting in actual loss to the Company. Whether the Directors of the Company (in liquidation) closed their eyes wantonly or consciously to the acts of mismanagement or if they abstain from taking any steps as being expected of a prudent person or approves such acts of mismanagement, then in such eventualities, their conduct will amount to misfeasance. 5. The liability enforced under Section 543 of the Companies Act is a liability in the nature of a tort or quasi-criminal and of serious nature. Since the proceedings under this Section are o....
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....ors when the company becomes insolvent. 6. Keeping these principles in mind, when the facts on hand are examined, the records would indicate that Company, on being ordered to be wound-up by this Court in Company Petition No.205/2001 on 19.12.2002, Official Liquidator had called upon the Ex-Directors on 03.02.2003 to file the Statement of Affairs and handover the books and records. In response to the said notice/letter, first respondent herein has filed the Statement of Affairs of the Company (in liquidation) on 03.03.2003. This was undisputedly scrutinized and discrepancies were noticed and it was informed to ex-directors by the Official Liquidator by communication dated 07.04.2003. These facts are not in dispute. Thereafter, while rectify....
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....ld not indicate about Official Liquidator either rejecting the explanation given by the Ex-Directors or the Ex-Directors having been called upon to handover the original Share Certificates. As such, the plea now put forward by the Official Liquidator that on account of non-handing over of the Certificates, the Ex-Directors have committed `Breach of Trust' and said amounts covered under Share Certificates could not be recovered would be too farfetched plea, which cannot be accepted. 7. Be that as it may, in the instant case, the Official Liquidator has never raised any objection with regard to non-handing over of the Share Certificates by the Ex-Directors. Admittedly, in the communication dated 02.05.2003 referred to supra, the second respo....