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TMI Blog1967 (8) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... urn in the prescribed form before the Registrar of Companies stating that a general body meeting of the Nidhi was held on July 11, 1966, and that the balance-sheets and profit and loss accounts for the years 1963, 1964 and 1965 were passed. The case of the applicant is that no such general body meeting was held and the returns that were sent by the 2nd respondent were false and in this behalf the Registrar was also apprised of the position. The applicant has sent several reminders to the Registrar including a complaint to the Company Law Board, New Delhi, as well. The applicant's further grievance is that the extraordinary general meeting said to have been convened on February 26, 1967, was not properly convened, that the election of the 2nd respondent as the voluntary liquidator of the Nidhi by the members present at the said meeting ought not to be implemented and that, in any event, for the reasons stated in his application, the 2nd respondent ought not to continue as such voluntary liquidator. He has also catalogued many other grievances in his application. But at the time of the hearing, learned counsel for the applicant rested his contention for the removal of the 2nd respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returns prepared by the other office-bearers of the Nidhi; but those returns were sent by him at the time when he was not keeping good health for about 1 years. As he was not, completely posted with the affairs of the Nidhi at that time, he believed the persons who brought for his signature the prescribed forms and he was a party to that impugned document bona fide and not with the intention of creating any false report or a false document in connection with the affairs of the Nidhi. The second respondent alleges that, as the Nidhi was not profitably running due to internal dissensions brought about at the instigation of the applicant and three of his men, the applicant was unable to hold the post of a director, and he had to stay out from that office. In fact, when the applicant was the chairman of a meeting held on May 22, 1966, it was resolved that the Nidhi should be wound up voluntarily. The 2nd respondent states that for the meeting held on February 26, 1967, valid notices were sent to all the shareholders including the applicant and his three partisans and that the latter attended the said meeting. The 2nd respondent's case is that the applicant and his three followers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 2nd respondent was the secretary of the Nidhi and possibly because the applicant entertains an apprehension in his mind that the 2nd respondent will pursue legitimately action against him in accordance with law for the dues said to be due and owing by him to the Nidhi and in connection with the other affairs of the Nidhi. It is with this background that we should consider this application filed by the applicant for the removal of the 2nd respondent as voluntary liquidator who has been so elected unanimously or by a majority of votes at a meeting held on February 26, 1967. The applicant is seeking to remove the 2nd respondent, the voluntary liquidator, duly appointed by the members at a duly constituted meeting therefore, on the ground that prior to his appointment as secretary he sent a return to the Registrar of Companies which is admittedly not true. The 2nd respondent duly explained the circumstances under which he had to send such returns to the Registrar. Though his explanation was duly served on the Registrar no steps appear to have been taken against the alleged delinquent. For what one knows, whether any action is going to be taken at all is not clear. The explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a man of due and proper character, and unfit to hold the office of trust bestowed on him by the members ? Courts are loath to interfere with the scheme of self-determination by the members of a company. For such an inroad to be made and particularly resulting in the removal of a voluntary liquidator appointed by the members, weighty evidence is required. Excepting for the bare uncorroborated version of the applicant, there is no proof as at present of any deliberate overt act on the part of the 2nd respondent, to avoid his statutory duties now thrust on his shoulders by reason of the choice of the members of the Nidhi. The 2nd respondent's case is that he was physically and mentally weak when he signed the impugned returns and forwarded them to the Registrar. In such circumstances, can it be said that the applicant has "shown cause" to remove the voluntary liquidator? The expression "on cause shown" is not to be understood as an equivalent or substitute for "if the court thinks fit." Though an element of discretion is apparent in section 515 of the Act, yet such judicial discretion should be judiciously exercised. It is not every act in the past of the voluntary liquidator that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at is not the definition of due cause shewn. In order to define 'due cause shewn' you must look wider afield, and see what is the purpose for which the liquidator is appointed. To my mind the Lord Justice has correctly intimated that the due cause is to be measured by reference to the real, substantial, honest interests of the liquidation, and to the purpose for which the liquidator is appointed. Of course, fair play to the liquidator himself is not to be left out of sight, but the measure of due cause is the substantial and real interest of the liquidation. " Therefore, it is necessary to have a wider perspective. In the instant case, it cannot be disputed that the general body of members chose the 2nd respondent even though he is 69 years of age and although he is said to have indulged in some laches prior to the liquidation. It is not to be forgotten that such laches were fresh in the mind of the members when they appointed him. As a matter of fact, the members first and foremost had the interest of the liquidation at heart and were prepared to condone the erstwhile shortcomings of the 2nd respondent. They did not want to brand him as an unfit person. In fact, nothing has be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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