9911796707
TMI Blog1998 (11) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to contribute to such assets as the Court may deem fit together with interest on such sums at the rate of 12 per cent per annum from 6-12-1973, till the date of payment; ( c )costs of the present proceedings; and ( d )such other and further orders as may be deemed just and proper in the facts and in the circumstances of the case. 2. Brief facts. The petitioner-company was incorporated under the Act, as a public limited company in the year 1969 having its registered office at Nalagarh. Ever since its incorporation, the petitioner-company has been incurring losses. As per the balance-sheet for the financial year ending March, 1976, the accumulated losses of the petitioner-company amounted to Rs. 68,59,652. The petitioner-company raised loans from various financial institutions, such as, banks and hire purchase financial corporation for the smooth running of its business. The unsecured loan owed by the company as on 30-4-1976, was to the tune of Rs. 50,18,544. This was in addition to the secured loans raised by the company. The petitioner-company, vide orders dated 16-5-1978, passed in Company Petition No. 1 of 1977 was ordered to be wound up and the Official Liquid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 20, who functioned as directors and officials of the company, did not take any legal steps against respondent No. 1, Shri J.C. Bhatia for the recovery of the amounts found due from him. Allegations against respondent No. 16, Shri Kuldip Prakash. This respondent became the managing director of the company after the resignation of respondent No. 1, Shri J.C. Bhatia, and he continued to be so till the date of order of winding up of the company. He failed to hand over complete charge of the company to the Official Liquidator. He on 1-5-1977, had sold pine-tar naked worth Rs. 11,657 to Dinesh Carbons (P.) Ltd., Chandigarh, without prior permission of the Official Liquidator. Allegations against respondent No. 19, Shri V.K. Gupta. The branch office of the company at Delhi was being looked after by this respondent. Some furniture belonging to the company was in his possession. He was asked by the Official Liquidator to hand over such items of furniture. This respondent on 25-4-1977, intimated that the items of furniture belonging to the company and in his possession had been handed over by him to respondent No. 17, Shri Pradeep Gupta. When approached in this behalf by the Offici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pleaded that no acts of fraud, misfeasance and/or breach of trust have been committed by them. The Official Liquidator apart from himself having appeared as his own witness as P.W.-2, has examined P.W.-1, Shri J. P. Bhasin, Chartered Accountant of K. N. Chandla Co., Chandigarh. Respondent Nos. 12, 15 and 20 tendered into evidence only documents exhibit D-1 to D-5. No evidence has been led by the other contesting respondents. 6. I have heard the learned counsel for the parties and have also gone through the record of the case. 7. Section 541(1), which is material for the purpose of the present case, reads : " Liability where proper accounts not kept. (1) Where a company is being wound up, if it is shown that proper books of account were not kept by the company throughout the period of two years immediately preceding the commencement of the winding up, or the period between the incorporation of the company and the commencement of the winding up, whichever is shorter, every officer of the company who is in default shall, unless he shows that he acted honestly and that in the circumstances in which the business of the company was carried on, the default was excusable, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 10. Section 542(1) provides : " Liability for fraudulent conduct of business. (1) If in the course of the winding up of a company, it appears that any business of the company has been carried on, with intent to defraud the creditors of the company or any other persons, or for any fraudulent purpose, the Court, on the application of the Official Liquidator, or the liquidator or any creditor or contributory of the company, may, if it thinks it proper so to do, declare that any persons who were knowingly parties to the carrying on of the business in the manner aforesaid shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the Court may direct. On the hearing of an application under this sub-section, the Official Liquidator or the liquidator, as the case may be, may himself give evidence or call witnesses." A bare reading of the above provision shows that before a person can be held liable thereunder it must be shown that such person had carried on the business of the company, with intent to defraud the creditors of the company, or any other persons, or for any other fraudulent purpose. Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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