2008 (4) TMI 511 - HC - Companies Law

Winding-up - Exercise and control of liquidator s powers - Held that - The applicant is permitted to assist the official liquidator or his advocate in any proceedings which are filed by or against the company at his own cost. The applicant is also permitted to address any court, authority or forum as a representative of the official liquidator, to protect the interest of the company in liquidation. It is, however, clarified that wherever the official liquidator has filed any matter or initiated any proceedings before any court, authority or forum against the applicant or where the applicant s interest and the interest of the company in liquidation are in conflict with each other, the applicant will not have any say for the company in that particular matter. It is also made clear that the assistance that may be rendered by the applicant to the official liquidator shall be at his own cost and consequences. The applicant is further permitted to point out to the official liquidator all such matters which are disposed of either ex parte or in absence of any representation on behalf of the official liquidator and any further action is required to be taken in those matters. On pointing out such matters by the applicant to the official liquidator, the official liquidator shall take prompt and immediate action in the best interest of the company in liquidation. The applicant shall be allowed to represent the official liquidator at his own cost. The applicant shall not have any access to the records of the company in liquidation. He has to make a request in writing to the official liquidator, which shall be examined by the official liquidator on its merits and if he finds such request to be acceptable, he shall provide necessary inspection to such records.The applicant s prayer for initiating contempt proceedings against the official liquidator is hereby rejected.

Issues Involved:
1. Permission to represent the company in liquidation.
2. Directions to the official liquidator for various legal actions.
3. Contempt proceedings against the official liquidator.
4. Compensation for losses due to the official liquidator's negligence.

Issue-wise Detailed Analysis:

1. Permission to Represent the Company in Liquidation:
The applicant, an ex-chairman and managing director of the company in liquidation, sought permission to represent the company in various legal proceedings. The court had previously denied a similar request in Company Application No. 285 of 2006, emphasizing that the official liquidator is the custodian of the company's properties and responsible for legal representation. However, the applicant argued that the official liquidator failed to adequately represent the company, resulting in adverse judgments. The court acknowledged the applicant's offer to assist the official liquidator at his own cost and permitted him to assist in legal proceedings, provided there is no conflict of interest.

2. Directions to the Official Liquidator for Various Legal Actions:
The applicant requested the court to direct the official liquidator to take specific actions, including challenging an order dated 12-9-2007 from the City Civil Court at Ahmedabad, representing the company in various pending proceedings, and defending the company in counterclaims. The court recognized the applicant's concerns about the official liquidator's negligence and allowed the applicant to assist the official liquidator in these matters, emphasizing that the applicant's assistance should be at his own cost and should not replace the official liquidator.

3. Contempt Proceedings Against the Official Liquidator:
The applicant sought to initiate contempt proceedings against the official liquidator for allegedly violating court orders in Company Application No. 285 of 2006 and Company Application No. 97 of 2006. The court rejected this request, noting that the applicant's primary objective was to ensure proper representation of the company in liquidation and that initiating contempt proceedings was not necessary to achieve this goal.

4. Compensation for Losses Due to the Official Liquidator's Negligence:
The applicant argued that the official liquidator's negligence had caused significant losses to the company in liquidation and sought compensation from the official liquidator and the Government of India, Ministry of Corporate Affairs. The court did not directly address this issue in the final judgment but focused on allowing the applicant to assist in legal proceedings to prevent further losses.

Conclusion:
The court partly allowed the application, permitting the applicant to assist the official liquidator in legal proceedings at his own cost and under specific conditions. The court emphasized that this decision was based on the peculiar facts of the case and should not be considered a precedent. The request for contempt proceedings and direct compensation was rejected.

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