2008 (1) TMI 612 - HC - Companies Law

Winding up - Delivery of debtors ledger for 1995-1996 and other books of account and records of the company to liquidator - Held that - When first respondent alleges that books of account of the company were destroyed by militant labour and the said statement remains unrebutted this Court can draw an inference that the debtors ledger for 1995-1996 is also one of the documents which was destroyed by militant labour either at Peddakaparthi or at Hayathnagar plant. A direction therefore cannot be issued to respondents to perform impossible by producing the records which were destroyed or damaged by militant labour and workers and thereby make respondents criminally liable under section 538(1)(c) of Companies Act. Application dismissed.

Issues Involved:
1. Delivery of debtors' ledger for 1995-1996 and other books of account and records.
2. Jurisdiction and limitation of the court to entertain the application.
3. Prima facie entitlement of the company to the records.
4. Allegation of destruction of records by militant labor.
5. Legal implications of non-delivery of records.

Detailed Analysis:

1. Delivery of debtors' ledger for 1995-1996 and other books of account and records:
The Official Liquidator (OL) filed an application under Section 468 of the Companies Act, 1956, seeking a direction to the respondents to deliver possession of the debtors' ledger for 1995-1996 and other books of account and records of the company. The OL, acting as the liquidator of M/s. Safe Pack Polymers Ltd., claimed that the absence of these records hindered the recovery of debts, specifically an amount of Rs. 3,24,000 from M/s. The Waterbase Limited. The respondents, including the Ex-Managing Director and former Directors, contended that all available records were handed over in 1999 and that the missing documents were destroyed by militant labor.

2. Jurisdiction and limitation of the court to entertain the application:
The respondents argued that the application was barred by limitation and that the court lacked jurisdiction to order the delivery of the records. However, the court highlighted that Section 468 of the Companies Act allows the court to require any contributory or officer of the company to deliver any money, property, or books and papers to the liquidator "at any time after making a winding up order," implying that no limitation period applies. The court concluded that it had the jurisdiction to direct the respondents to deliver the records, rejecting the limitation argument.

3. Prima facie entitlement of the company to the records:
The court examined whether the company in liquidation was prima facie entitled to the debtors' ledger for 1995-1996 and other records. The OL took possession of the company's assets and records in 1999, and it was only during subsequent proceedings that the absence of the debtors' ledger was noticed. The OL argued that the respondents were withholding the ledger, but the respondents maintained that the records were either handed over or destroyed by militant labor. The court found no conclusive evidence that the respondents were withholding the ledger and noted that the OL did not pursue the matter diligently at the time of taking possession.

4. Allegation of destruction of records by militant labor:
The respondents claimed that many records were destroyed by militant labor and workers, a point mentioned in their communications to the OL. The court acknowledged this claim, noting that the OL did not provide evidence to refute it. The court inferred that the debtors' ledger for 1995-1996 could have been among the destroyed documents, and thus, directing the respondents to produce it would be unreasonable.

5. Legal implications of non-delivery of records:
Section 468 of the Companies Act empowers the court to direct the delivery of records to the liquidator, and failure to comply can lead to criminal liability under Section 538(1)(c). However, the court emphasized that the law does not compel individuals to perform impossible tasks. Given the respondents' claim of destruction of records by militant labor, the court concluded that it would be unjust to hold them criminally liable for not producing the debtors' ledger.

Conclusion:
The court dismissed the application, stating that the respondents could not be compelled to produce records that were allegedly destroyed. The court recognized the practical difficulties and the lapse of time since the winding-up order, applying the maxim "lex non coget ad impossibilia" (the law does not compel a man to do that which he cannot possibly perform). No costs were awarded in this case.

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