1965 (12) TMI 63 - HC - Companies Law

Summary

Issues Involved:
1. Competency of petition under section 518 of the Companies Act, 1956.
2. Status of liquidator as an officer of the company.
3. Allegations of misconduct and breach of trust.
4. Validity of the statement filed with the Registrar of Companies.
5. Relief under section 281 of the Indian Companies Act, 1913.

Issue-wise Detailed Analysis:

1. Competency of petition under section 518 of the Companies Act, 1956:
The respondent argued that no petition was competent under section 518 of the Companies Act, 1956, since the company had been wound up and dissolved in 1961. However, the court considered the provisions under which relief had been sought and concluded that relief could be granted even after the dissolution of the company. The Attorney-General's opinion supported the view that a liquidator was an officer of the company and was entitled to seek relief under the relevant provisions.

2. Status of liquidator as an officer of the company:
The petitioners contended that they were acting honestly and reasonably in their capacity as liquidators. The court acknowledged that the liquidator was considered an officer of the company and entitled to seek relief under the relevant provisions. This status was affirmed by the Government of India's opinion and the Registrar of Companies' affidavit, which admitted the petitioners' role and actions.

3. Allegations of misconduct and breach of trust:
The petitioners were accused of filing a false statement with the Registrar, showing Rs. 30,000 paid to the Custodian of Enemy Property, Bombay, when only Rs. 18,718 was paid by cheque, and Rs. 11,282 was spent on expenses. The petitioners maintained that the statement was correct, supported by affidavits and leading firms of chartered accountants. The court found no material evidence from the respondents to rebut the petitioners' explanation and accepted their statement that the expenses were necessary for obtaining clearance from Pakistan authorities.

4. Validity of the statement filed with the Registrar of Companies:
The court examined the statement filed in Form No. 58, which showed Rs. 30,000 as paid to the Custodian. The explanation provided by the petitioners, supported by affidavits, was that Rs. 18,718 was paid by cheque, and Rs. 11,282 was incurred as expenses for professional services and other necessary formalities. The court found the explanation convincing and noted the lack of material evidence from the respondents to dispute the petitioners' claims.

5. Relief under section 281 of the Indian Companies Act, 1913:
The court considered the scope and ambit of section 281, which allows relief from liability if the person acted honestly and reasonably. The court referenced English and Indian case law, affirming that relief could be granted against possible criminal prosecution under section 281(2). The court was satisfied with the petitioners' explanation regarding the expenses incurred and granted relief from any apprehended liability for which proceedings could be instituted under sections 282 and 282A of the Act.

Conclusion:
The court allowed the petition, accepting the petitioners' explanation for the expenses incurred and relieving them from any apprehended liability under sections 282 and 282A of the Act. The parties were left to bear their own costs.