2013 (10) TMI 1253 - HC - Companies Law

Winding up - Mistake in inventory - Held that - agreement itself stipulated that an inventory would be prepared of the articles lying at the factory site in the presence of the representative of the Respondent No.1. Admittedly, such exercise was never performed and the Appellant cannot be allowed to take advantage of this breach committed by the Appellant itself - list of missing items, which was prepared on 19th September, 2003, was made after comparing with the inventory prepared in the year 1994 when the O.L. had taken possession of the factory premises on his appointment as the provisional liquidator. It is further noted that admittedly, from 1994 to 1996 some other security agency was deployed at the factory premises and the applicant came on the scene in the year 1996 and before giving the security arrangement to the applicant, no inventory was prepared. The learned Single Judge has also noted that a Local Commissioner was also appointed at the request of the applicant to visit the factory premises and his report indicated that the theft, if any, which took place in the meantime cannot be attributed to the applicant inasmuch as the premises were sealed by the O.L. at the time of deploying the applicant as security agency, which seals were intact even at the time when the Local Commissioner visited the premises - Appeal dismissed.

Summary

Issues:
1. Appellant challenging the order passed by the Company Judge in C.P. No.113/94 regarding M/s. India Insulator Ltd. (in liquidation).
2. Dispute over missing assets from the factory premises and liability of the security agency, Respondent No.1.
3. Interpretation of the agreement between the parties regarding inventory preparation and security services.
4. Evaluation of the evidence and reports regarding the missing assets and the involvement of the security agency.
5. Judicial findings on the responsibility of the security agency for the missing assets and the decision on the appeal.

Issue 1:
The Appellant contested the order passed by the Company Judge in C.P. No.113/94 concerning M/s. India Insulator Ltd. (in liquidation), seeking relief regarding the missing assets and the liability of the security agency, Respondent No.1. The Appellant, a financial institution, had taken over the units and appointed security services, leading to a dispute over missing items from the factory premises.

Issue 2:
The main contention revolved around the agreement between the parties, emphasizing the preparation of an inventory of assets in the presence of the security agency's representative. The Appellant argued that the Respondent No.1 was responsible for safeguarding the assets as per the agreement terms, while the Respondent denied liability for the missing items, citing lack of inventory verification.

Issue 3:
The Court analyzed the agreement clauses and communications between the parties to determine the obligations regarding inventory preparation and security services. Despite the Appellant's claims of providing inventory copies to the security agency, the Court found the lack of actual inventory verification to be a crucial breach that couldn't be exploited by the Appellant.

Issue 4:
After evaluating reports and evidence, including the Local Commissioner's findings, the Court noted the timeline of events regarding the missing assets and the involvement of different security agencies. The Court highlighted that the security agency couldn't be held accountable for the theft as the premises were sealed by the official liquidator during their tenure, as confirmed by the Local Commissioner's report.

Issue 5:
Ultimately, the Court dismissed the appeal, upholding the lower court's decision. The judgment emphasized the lack of merit in the Appellant's contentions, affirming that the security agency couldn't be blamed for the missing assets due to the sealed premises during their security tenure. The Court concluded by dismissing the appeal without any cost orders.

This detailed analysis covers the issues raised in the legal judgment, providing a comprehensive overview of the dispute, the legal arguments presented, and the Court's reasoning leading to the final decision.