TaxTMI 
TaxTMI 
2019 (4) TMI 488
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....e any fresh funds in accordance with the sanctioned rehabilitation scheme. Hence, the BIFR has under Section 20(1) of the SICA Act, 1985 vide its order dated 16/06/1999 recommended that the sick company be wound up and had forwarded its opinion to the High Court for passing appropriate orders in accordance with the provisions of the Companies Act. 1.2 The Company in liquidation was ordered to be wound up by this Court vide order dated 12/08/1999 in Company Petition No.24/1999. 1.3 The Chartered Accountant filed his report on 13/07/2004. As per the records of the Registrar of Companies, Rajasthan, Jaipur, the following persons were Directors of the Company in liquidation as on 12/08/1999 i.e. on the date the winding up order was passed (i) Ranjan Kumar Poddar, 7, Amrita Shergil Marg, New Delhi- 110003 (ii) Rajendra Jain, Railway Station, Post Office Complex, Jaipur, Rajasthan. (iii) Chiranji Lal Biyani, r/o House No.203, Greater Kailash-1, New Delhi. 1.4 The Ex-Directors of the Company in liquidation had filed the statement of affairs under Section 454 of the Act of 1956 on 27/06/2001. The audited annual accounts and the un-audited accounts for th....
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....? ...Applicant (8) Whether the acts as mentioned in the report of the Chartered Accountant dated 13.7.2004 (Annexure R/1/1) constitute acts of misfeasance or breach of trust in relation to the Applicant company on the part of the respondents and the respondents are thus liable to what extent ? ...Applicant (9) Whether assets of the Company were sold in much lower price amounting to misfeasance ? ...Applicant (10) Whether the action of the directors was unjustified in arriving at settlement to wipe out liability of rent and mesne profits ? ...Respondents" (11) Whether the directors can be held liable for the goods found missing on 28.11.2001 when the physical possession was already taken by the Official Liquidator 28.8.99 ? ...Applicant (12) Relief ? 3. Mr. KJ Mehta, learned counsel for the applicant-OL submitted following points on various issues:- (A) Issue No.1:- On 7th July, 1999, the Company had sold certain items of fixed assets i.e. furniture, fixtures, office equipment, air-conditioners, refrigerators and electric installation items for Rs. 4,26,092.88 and incurred a loss th....
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....evealed that the Company had not obtained any balance confirmations from the parties nor had filed any recovery suits in the Courts to keep the debt alive which gave rise to an inference that the ex-directors had deliberately allowed the debt to become time barred under the Limitation Act. (E) Issue No. 5 : The Scrutiny of Annexure II of the Statement of Affairs containing the list of loans and advances and revealed that the Company was to recover a sum of Rs. 247191.61 from various Govt. Departments and parties. The summary of recoverable amount as given in the list was as under :- a) Security Deposit 89574.50 b) Earnest Money 130851.80 c) Accrued Intt. On Bank FDR 5508.00 d) Balance with Excise Deptt. 421.51 e) T.D.S. 588.00 f) Advance to Golden Paper Udyog 20247.80 These were from the various Govt. Departments between 1986-87 to 1994-95. The said list included the deposits amounting to Rs. 5861.00, Rs. 1000.00 and Rs. 10,000.00 given to M/s Industrial Refrigeration for cylinder security and M/s Motorcades for monthly Petrol bill respectively. These were not recovered. The Statement of Affairs had disclosed about Rs. 2,03,823.....
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....e year 1990 and were lying with Custom authorities. 4. He has taken this Court to the cross-examination conducted of Mr. Ranjan Kumar Poddar to submit that the Director Mr. Ranjan Kumar Poddar has shown gross negligence in taking care of the management of the Company in liquidation and had left everything for being looked after by his executives. Large amount of dues were payable to the suppliers and a poor financial condition of the Company in liquidation was brought about on account of his negligence. There were amounts which were required to be recovered from the Government Departments to the tune of Rs. 2,47,191/- but he has not shown any effort made to recover the said amount. No details were given out of making any effort. The goods were lying with Custom Department about Rs. 72 lac but the same remained unrecovered. The decision to leave the goods with the Custom Department was taken by the Board of Directors without resolution. He was not even present at the time when possession of the factory was taken over by the Official Liquidator. The office furniture and electrical instruments were sold to the landlord for adjustment of Rs. 10 lac without there being any such resol....
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....ar; change in design and advancement of technology. Thus the realization of the same could be 5% to 10% and for this reason, there is provision of depreciation @ 20% per annum in the books of accounts. In the present matter, there is meager loss of 1% of the written down value. While the liability of more than Rs. 10 lacs was wiped out. (b) The sale of electric equipments on 1.4.2000 for Rs. 19,275/- was wrong and emphatically denied, because possession of the factory was taken by the Official Liquidator on 20.8.1999. After 8 months of taking possession, the alleged sale took place, for which the Answering Respondents (former Directors) were not liable and entire record of the Company including books of accounts and vouchers were in power and possession of the Official Liquidator, therefore, the Answering Respondents were not in position to give detailed reply. (c) That so far lying of Moulds for Plastic Parts with M/s Industrial Plastic Moulders are concerned, the Company was indebted to this firm and several cheques issued by the Company were bounced from time to time. The firm initiated proceedings against the Directors of the Company, which were ultimately set....
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....it had no financial capability to take the delivery of goods, the same could not be taken." 7. Having noticed aforesaid pleadings, this Court finds that the provisions of Section 543 of the Companies Act, 1956 provide as under:- "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, liquidator or officer aforesaid, and compel him to repay or restore the money or property or any part thereof respectively, with interest at such rate as the Tribunal thinks just, or to co....
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....the loss to the Company arising but of such acts or omissions. The burden of proving misfeasance or nonfeasance rests on the Official Liquidator. The Official Liquidator, it may be mentioned, merely relied upon the evidence recorded in public examination of the Directors and on a few documents tendered in evidence. At the stage of public examination there was no charge of misfeasance against the Directors and they were not in a position to know what would be the grounds that would be alleged against them for recovering any amounts, for the loss said to have been caused to the Company by reason of such misfeasance." 10. In a similar matter under Section 543 of the Act of 1956, this Court in the case of The Official Liquidator Vs. Shri Kaushal Kishore Dalmiya & ors. (SB Company Application No.82/1996), decided on 17/05/2018, a similar case under Section 543 of the Act of 1956 has observed as under:- "12. In the instant case, the circumstances beyond the control and power of the respondents is made out. However, it is noted that the sale deeds, which were sought to have been executed on the basis of duress and force, have already been annulled by this Court. ....