TaxTMI 
TaxTMI 
2017 (10) TMI 465
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....wards the Company. 2. M/s. Swastik House Leasing Limited (the Company in Liquidation), having its registered office at 116, Agarwal Complex, Ramganj, Jaipur (Raj.) was ordered to be wound up by this Court vide order dated 08/02/2002 passed in SB Company Petition No.15/1999 and the OL attached to this Court was appointed its Liquidator from the date of the winding up order to carry out the proceedings of winding up of the said Company. 3. This Court vide order dated 13/05/2005 granted the OL powers under Section 457 of the Companies Act, 1956 to take up proceedings for examination/investigation of cases of misfeasance and/or breach of trust in relation to the Company committed, if any, by any person who had taken part in the promotion or formation of the Company which included the present Directors, Managers or Officer of the Company which had been ordered to be wound up. 4. The OL appointed Mr. NC Jain, Chartered Accountant to examine and submit his report. 5. Upon examination of books of accounts of the Company, the said Chartered Accountant submitted his report on 27/01/2007 holding prima-facie the Ex-Directors of causing misfeasance and breach of trust. The responden....
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....as on 31.03.2000 against the paid up capital of Rs. 770/-had far exceeded its net worth, therefore the Company's Board of Directors having considered the erosion in the net worth and further having no intention to carry any business in future had passed a resolution to put to an end to its business affairs and had preferred a Winding up Petition before the Hon'ble High Court which passed an order on 08.02.2002 to wind up the Company and appointed the Official Liquidator to take charge of the assets of the Company and to proceed in accordance with law for winding up of the Company. 7. Thus, it was found as under:- a) The Company had received a sum of Rs. 20.68 lakhs and Rs. 19.55 lakhs during the year 1991-1992 and had credited the same under the head "Registration fees from members/Subscribers A/c" and Installments for Subscribers A/c." respectively. The above sums were the aggregate credit outstanding in the former's account as on 31.03.1992. These deposits were collected by way of cash through the agent M/s. Tribhuvan Estates Bureau, a proprietary concern owned by Ms. Meena Agarwal., herself a Director of Company M/s. Swastik House Leasing Limited and the daughter of ....
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....o the Director of the Company Ms. Meena Agarwal. As the Company had failed to recover the amount of Rs. 1,30,638/- from the Agent who herself was a Director of the Company as such the respondent no. 1 who was managing the affairs of the Company is deemed to be responsible for the loss caused to the Company and is therefore liable to compensate the said sum to the assets of the Company in terms of the provisions of section 543 of the Companies Act, 1956. c) That, it has been further disclosed from the Report of the Chartered Accountant (Annex-1) that the Company had written off "Loans and advances" amounting to Rs. 50,300as bad debts in the books during the financial year 1998-99. The said amount was receivable as an advance in the name of Shri N.G. Narainswamy since 1992-93. However, there was no evidence on record to establish that any recovery steps had been taken up by the Company to recover this amount which thus had become barred sometime in the year 1994-95 itself. Thus, willful gross negligence in allowing the amount to become time barred was apparent and therefore the respondent no. 1 who was incharge of managing the affairs of the Company is liable to compensate t....
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....the report, it was apparent that the entire affairs of the Company were managed by the respondent No.1 alone and no specific act of negligence or misfeasance has been shown. It was pointed out that no fraudulent invent can be inferred and with reference to the allegation of wrongful payment of interest to its creditors, it is submitted that the report is contradictory while it approves the liability of interest, it doubts genuineness of deposits. It is submitted that mere inaction on the part of the Directors would not be sufficient to attract the provisions of Section 540 or 543 of the Act of 1956. As regards the liability of tax payment, the same has not attained finality and an appeal is pending before the Income Tax Appellate Tribunal. It is submitted that the allegations are not specific and are general in nature and on that count, proceedings under Section 543 of the Act of 1956 would not lie. 9. The OL has rejoined and pointed out that the Company has suffered losses and all the Directors of the Company are liable for their action as both of them were father and daughter. They together conspired and committed act of misfeasance and were therefore, jointly and severally li....
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....efore this Court which have been dismissed. It was a case of voluntary winding up and the respondents could not be held guilty thereof. 15. Learned counsel relies on the law laid down by this Court in the case reported in 2007(5) WLC 522; 2015(2) WLC 184. It is submitted that after Mr. Manik Chand Agarwal expired in 2008, even if there was some liability on the said Director, it could not fall on the legal representatives. 16. The DB Income Tax Appeal No.610/2008 (CIT Jaipur Vs. Manak Chand Agrawal) and the other DB Income Tax Appeals, preferred against the orders of the Income Tax Appellate Tribunal, have been dismissed by Division Bench of this Court in the light of the DBDT Circular dated 10/12/2015 wherein the tax effect, if found to be less than Rs. 20 lac, were directed to be dismissed. The orders passed by the Division Bench have been taken on record. 17. The claim of the OL, as per their written submission is that there has been a sham throughout on the balance-sheets. Admittedly, Smt. Meena Agarwal was Director of the Company from 1990 to 1995 during the period when the misfeasance took place. The share capital was being shown at Rs. 770/- only while the accumulat....
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....d. (In Liquidation) Vs. Shri Fateh Chand Pahwa & others: 2007(5) WLC (Raj.) 522, the coordinate Bench of this Court held in Para 6 as under:- "6. In order to establish the charge of misfeasance against the ex-directors it is required that specific acts of commission or omission and/or negligence on the part of each director are pointed out; the loss arising to the company as a result of such specific act of commission or omission or negligence shall also have to be quantified - as the order of recovery from such a director would be based on the said quantification. The liability under the provision though in the nature of tortuous liability, it yet is quashicriminal in nature and it is a particular director who has caused loss to the company by his act which would amount to mis- appropriation, breach of trust, misappreciation or retention of monies/properties of the company who would be called upon to make goo such loss. Thus, the onus is on the person who alleges such acts of misfeasance. The onus has to be discharged by cogent, reliable and specific evidence which would prove that the alleged misconduct was willful and amounted to misfeasance with culpable negligence." ....