2005 (8) TMI 374 - HC - Companies Law

Summary

Issues Involved:
1. Extension of time for lifting materials.
2. Ownership disputes and misappropriation of goods.
3. Complaints and allegations against the applicant Society.
4. Role and responsibility of the Official Liquidator and Security Agency.
5. Inquiry and investigation into the alleged misappropriation.

Issue-wise Detailed Analysis:

1. Extension of Time for Lifting Materials:
The applicant, Jubilee Mills Limited Employees Co-operative Society Limited, sought an extension of one month to lift materials sold to them, citing reasons such as the marriage season, labor shortage, and disturbances. The Court noted that the application for extension was belated and the period for lifting the materials had already expired by the time the application was filed. Consequently, the extension of time was not granted.

2. Ownership Disputes and Misappropriation of Goods:
The Official Liquidator reported disputes between Calico Mills and Jubilee Mills regarding ownership of certain assets. Complaints were received alleging that the applicant Society had taken items belonging to Calico Mills. The Court observed that the goods delivered to the applicant Society under 49 Gate Passes/delivery Challans did not always match the Inventory Report or Statement of Affairs. The Court concluded that the applicant Society had lifted more goods than were sold to them, including items belonging to Calico Mills.

3. Complaints and Allegations Against the Applicant Society:
Complaints were made by Mr. Jeevanlal F. Parmar, an ex-worker of Calico Mills, alleging that the applicant Society had taken items beyond those sold to them. The Court found these complaints credible, noting specific items from Calico Mills that were missing. The applicant Society's denials were not sufficient to counter the evidence presented.

4. Role and Responsibility of the Official Liquidator and Security Agency:
The Court criticized the Official Liquidator and the Security Agency for failing to protect the assets of Calico Mills. The explanation provided by the Liquidator's staff was deemed insufficient, and it was noted that there was access between the units of Jubilee Mills and Calico Mills, contrary to the Liquidator's claims. The Court held the Liquidator's office responsible for not ensuring that only the goods sold to the applicant Society were lifted.

5. Inquiry and Investigation into the Alleged Misappropriation:
The Court acknowledged the need for a detailed investigation into the matter. Although the Court initially considered conducting an inquiry during the proceedings, it decided to include this issue in a broader investigation directed by the Central Government into the affairs of the Official Liquidator's office over the past ten years. This broader investigation would also cover the current issue.

Conclusion:
The application for extension of time was denied. The Court found that the applicant Society had taken additional goods not sold to them and directed the Official Liquidator to recover Rs. 2 lakhs from the applicant Society, to be credited to Calico Mills Limited. The Court also noted the failure of the Official Liquidator and Security Agency to protect the assets and called for a broader investigation into the matter. The request for a stay of the order was rejected.