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Misfeasance and breach of trust by ex-directors leading to the winding up of a company. Analysis: The case involved a Judge's summons under section 543 of the Companies Act, 1956, where the Official Liquidator sought to hold the non-petitioners liable for restoring money, properties, assets, and actionable claims of the company in liquidation. The company, M/s. Subh Laxmi Savings & Finance Private Limited, was directed to be wound up in 1989, with the non-petitioners being accused of misfeasance and breach of trust. The non-petitioners were alleged to have retained company assets and not cooperated with the liquidation process. The Registrar of Companies had filed a winding-up petition due to irregularities in statutory filings and commercial insolvency of the company. The ex-directors failed to submit required documents and were accused of not handing over company records and assets. The Chartered Accountant's report highlighted mismanagement by the ex-directors, leading to losses and contravention of RBI guidelines. The ex-directors were found guilty of misfeasance and breach of trust. However, one ex-director claimed to have resigned earlier and denied involvement in the company's affairs post-resignation. The other ex-director argued that the company had ceased operations due to RBI restrictions and that records were destroyed by the landlord. The Official Liquidator sought recovery based on the ex-directors' alleged misfeasance. The court emphasized the need for specific evidence to prove misfeasance, quantifying losses caused by the directors' actions. Citing previous judgments, the court highlighted that misfeasance is a serious charge requiring detailed evidence. The court noted that not all losses incurred by a company constitute misfeasance, and the act must be wilful, causing loss with personal gain. The court found insufficient evidence of specific acts of misfeasance by the ex-directors, leading to the rejection of the application under section 543(1) of the Act. In conclusion, the court rejected the Official Liquidator's application, as there was a lack of specific evidence to prove misfeasance by the ex-directors. The court emphasized the importance of detailed evidence to establish misfeasance under the Companies Act.
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