TaxTMI 
TaxTMI 
2019 (4) TMI 488
X X X X Extracts X X X X
X X X X Extracts X X X X
....nctioned 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 the year 1998-99 and 1999-2000 (01/04/1999- 12/08/1999) and other record....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reach 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 thereon for Rs. 3,498.68. The W.D.V. of the items sold viz. Furniture and fixtures was Rs. 3,03,935.92. Office equipment was Rs. 48,229.82, air-conditions and refrigerators was Rs. 17,974.95 and of electric installations was Rs. 59,450.87 respe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 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. 2,03,823.00 as being doubtful of recovery against total dues of Rs. 2,47,191.61 (F) Issue No. 6 and 7 : The scrutiny of the list plant and machinery items enclosed as Annexure VI to the Statement of Affairs at page No. 47, had revealed that certain Plant items belonging to the Company had been shown as lyin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mount 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 resolution after the Company in liquidation had gone into liquidation and thus, it is stated that the respondents are jointly and severally liable to compensate with interest the loss caused by them to the Company in liquidation. 5. It is submitted that the sale was conducted at the level of the Directors without tender or valuation. The sale of goods lying in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pments 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 settled between the parties. The company is no longer indebted to the firm and the moulds for plastic parts may be taken over by the Official Liquidator, who made no efforts in this regard. So far moulds for plastic parts with another firm M/s Precision Plastic is concerned, the Company was indebted Rs. 1,52,413/- as on 12.8.1999, the date of passing of winding up order. (d) That al....
X X X X Extracts X X X X
X X X X Extracts X X X X
....otion 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 contribute such sum to the assets of the company by way of compensation in respect of the misapplication, retainer, misfeasance or breach of trust, as the Tribunal thinks just. (2) An application under sub-section (1) shall be made within five years from the date of the order for winding up, or of the first appointment of the liquidator in the winding up, or of the misapplication, retainer, misfeasance or breach of trust as the case may be, whic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ould 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. Sufficient mitigating grounds, as noted above, are made out. Merely on the basis of report of Mr. N.C. Jain, Chartered Accountant, who has admittedly not examined the books of accountants, which makes it obvious that the case for initiating proceedings and punishing the respondents under Section 543 of the Act of 1956 is not made out. It is also stated that the OL had already sold the said properties. 13. Taking into consideration that the Company Application fails to detail narration of the s....