9911796707
TMI Blog2002 (12) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... as may be held liable jointly or severally to repay various loans and advances made to themselves and/or their friends and/or relatives and others with interest at reasonable market rate and to contribute such amount to the assets of the Company by way of compensation as may be determined. (4)For the purpose of ascertaining the liability of all or any of the respondents, necessary accounts and inquiries may be directed to be taken and made and they may be examined. (5)For an order that the respondents do pay the costs of and incidental to this application." 2. Before dealing with the aforesaid prayers, it is necessary to have some bare facts giving rise to the present application. The Company, namely, Gujarat Investment Trust Ltd., (in liquidation), was incorporated on 1st December 1934. The company was ordered to be wound up by this Court on 15th December 1976 and the Official Liquidator attached to this Court was appointed as the Liquidator of the said Company. The Official Liquidator vide his letter dated 28-4-1981 had retained M/s. Haribhakti Co., Chartered Accountants to investigate the books of account of the said company for the purpose of initiating misfeasance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n settlement of the dues. Thus the funds of the Company have been invested in non-earning and not realisable assets as the subsidiary Company is also facing financial crisis and have incurred heavy loss. 13.6 As discussed in para (5.11), the Company has not charged interest on certain parties and have given undue advantage to the Secretary in granting remission and also not charging interest for a certain period on the advances granted to him. The Company has incurred heavy loss in not charging interest on Over-draft A/cs. from 1-7-1974 onwards. 13.7 As discussed in para (7.1), the Company has given interest-free advance of Rs. 1,24,322.70 on 23-11-1971 to the Broker M/s. Mansukhbhai Bhaidas with the intention of not recovering the said amount. 13.8 As discussed in para (8.1), the Company has not taken proper care in granting Over-draft and B.P. facilities to various parties and allowed the said debt to become doubtful of recovery by not taking any steps for recovery and thereby rendering heavy loss to the Company. 13.9 As discussed in para (9.1), the Company has utilised Suspense A/c. for giving facility of advances to certain persons including Secretary of the Company wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, in not depositing the unclaimed dividend in a separate bank account, in contravention of the provisions of section 205A of the Act and in entering into improper transactions with other companies etc. 6. As stated above, the present application was filed way back in 1981 and during the pendency of this application, the respondent Nos. 1 and 3 have expired. The respondent No. 2 did not appear to have been served as the office endorsement shows that direct service affidavit is not filed and at the time when this application is taken up for hearing, it is conveyed to the Court that respondent No. 5 is in the hospital. The respondent No. 4 has already filed his affidavit-in-reply in April 2001. 7. Heard Mr. Navin K. Pahwa, learned advocate appearing for the petitioner, Mrs. Sonal D. Vyas, learned advocate appearing for respondent No. 4, and Mr. Percy Kavina, learned advocate appearing for respondent No. 5. Mr. Pahwa has based his arguments on the Chartered Accountant s report and he has taken me to the various pages of the said report and emphasized that the respondents had not discharged their duties in a just and proper manner and they have misused their fiduciary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated above, out of the 5 respondents, two have already expired and one does not appear to have been served. The respondent No. 4 in his affidavit-in-reply has stated that the present application filed under section 543(1) of the Act is not maintainable in the eye of law as there is no iota of evidence with regard to the allegations made in the said application against him as well as other respondents. It was further stated in the affidavit-in-reply that the respondent No. 4 was inducted as director with effect from 1st March, 1976 and when he was inducted as a director the company was in much financial crisis and within a short time after his induction as a director, the company had gone into liquidation. It was further stated that allegations regarding transactions which had taken place prior to 1976 could not be dealt with by him in any manner. Even otherwise these allegations were not supported by any documentary evidence and hence the application deserves to be dismissed in limine . He has also raised an issue that two of the five directors have expired and the Official Liquidator has not taken any steps to bring the legal heirs and legal representatives on record and on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... glance at the provisions contained in section 543(1) of the Act, which reads as under : "543. Power of Court to assess damages against delinquent directors, etc. (1) If in the course of winding up a company, it appears that any person who has taken part in the promotion or formation of the company, or any past or present director, manager, liquidator or officer of the company ( a )has misapplied, or retained, or become liable or accountable for, any money or property of the company; or ( b )has been guilty of any misfeasance or breach of trust in relation to the company; the Court may, on the application of the official liquidator, or the liquidator, or of any creditor or contributory, made within the time specified in that behalf in sub-section (2), examined into the conduct of the person, director, manager, liquidator or officer aforesaid, and compel him to repay or restore the money or property or any part thereof respectively, with interest at such rate as the Court thinks just or to contribute such sum to the assets of the company by way of compensation in respect of the misapplication, retainer, misfeasance or breach of trust, as the Court thinks just." 11. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the delinquent Directors, etc. If the money or the property of the Company has been misapplied or there has been misfeasance or breach of trust in relation to the company by a Director, an officer or other persons mentioned in the section the Court, after examining the matter, can compel him to repay or restore the property with interest at such rate as the Court may think fit or to contribute such sums to the assets of the company by way of compensation in respect of the misapplication, retainer, misfeasance or breach of trust, as the Court thinks fit. It has been expressly declared that the section shall apply notwithstanding that the offence is one for which the offender may be criminally responsible...." (p. 831) The Hon ble Supreme Court had also an occasion to deal with this issue in the case of O.L. v. Raghava Desikachar AIR 1974 SC 2069, and observed as under: "...It may be mentioned that misfeasance action against the Directors is a serious charge. It is a charge of misconduct or misappropriation or breach of trust. For this reason the application should contain a detailed narration of the specific acts of commission and omission on the part of each Direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication or even there is no submission to that effect before this Court that the Directors have acted dishonestly, in a mala fide manner and have applied the funds of the company for their personal benefits. Not a single act or omission is attributed to any of the Directors in his individual capacity. Except the Report of the Chartered Accountant, no other document is produced before this Court. Even the Chartered Accountant has also made a grievance in his Report that they were handicapped with non-availability of document, complete set of books of account and relevant vouchers. They have, therefore, requested the Official Liquidator that the report be read subject to modification on availability of further information, document, record or explanations from the other persons in management. More than 20 years have gone and yet no further information or documents or records are made available in support of the present application. It appears that the applications are moved to the Court by the Office of the Official Liquidator only with a view to save limitation and without collecting proper details and information in the matter, and as a result thereof the Court is left with no ot ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
