2012 (12) TMI 650 - HC - Companies Law

Repayment and restoration to the Company in liquidation - liquidation proceedings - arlier the name of Sh.GC Bhandari, who was one of the promoter director of M/s B.T. Conductors Pvt. Ltd was dropped being died during pendency of the proceedings - whether in the capacity of legal representative, she can be impleaded as a respondent in the original Company Application No.29/1993. Held that - As already noticed, even after application came to be filed seeking deletion of the name of late GC Bhandari from the array of respondents, time was granted to the counsel to inform regarding legal representative of the deceased, if any but the counsel also shown his inability regarding the legal representative and even after best efforts made from the office of OL, it could not be traced out and by introducing O.22 R.10-A CPC, the legislative intention behind was that it is the duty of the pleader to communicate to the Court regarding death of a party and to subsist the contract between pleader and the deceased party for the purpose and in these circumstances, the decision taken by the Court on the application filed by the Official Liquidator deleting name of the deceased respondent late GC Bhandari on 05/12/2008, requires re-consideration. The order passed way back on 05/12/2008 deleting name of respondent No.1 late GC Bhandari, in these facts and circumstances, deserves to be recalled.

Summary

Issues:
Recall of order deleting the name of deceased director as respondent in a company application.

Analysis:
1. The Official Liquidator filed an application seeking to recall the order deleting the name of a deceased promoter director from a company application. The original application was filed under Sections 542 & 543(1) of the Companies Act, 1956 for repayment and restoration to the Company in liquidation, with the deceased director being impleaded as a respondent.

2. Despite the death of the director during the proceedings, efforts were made to identify his legal representative. The deceased's brother and counsel failed to disclose crucial information about the existence of a daughter who could be the legal representative. Subsequently, the name of the deceased director was deleted from the respondents' list.

3. A later application was filed to include the legal representative, which was initially allowed but later recalled due to objections raised regarding the deletion of the deceased director's name. The Official Liquidator sought to recall the order deleting the deceased director's name, emphasizing the co-extensive liability of legal representatives in such cases.

4. The daughter and legal representative of the deceased director opposed the recall application, arguing that once the name was deleted, no error was committed. She contended that she had not inherited the deceased's property, making her inclusion in the proceedings unnecessary.

5. The Court considered the arguments presented by both parties and reviewed the legal principles governing proceedings against directors under Sections 542 & 543 of the Companies Act, 1956. It cited a Supreme Court judgment emphasizing that proceedings against legal representatives could continue but be limited to the estate of the deceased.

6. The Court noted the failure to disclose crucial information about the deceased director's legal representative and the subsequent attempts to rectify the oversight. It highlighted the duty of parties and their representatives to provide accurate information to the Court.

7. After a thorough analysis of the facts and legal principles involved, the Court allowed the Official Liquidator's application to recall the order deleting the deceased director's name as a respondent, concluding that the order deserved to be reconsidered in light of the new information presented.

8. Consequently, the Court allowed the application and recalled the order deleting the name of the deceased director as a respondent in the company application, emphasizing the importance of accurate disclosure and the co-extensive liability of legal representatives in such proceedings.