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TMI Blog2006 (9) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... bts and other liabilities of the company; and ( ii )to make further such other declaration for the purpose of giving effect to the aforesaid declaration; ( iii )to punish the ex-directors with such sentence as may be thought fit and proper in the facts and circumstances of the case and further direct the respondents to repay/restore the monies and properties which have not been handed over to the official liquidator with interest; ( iv )to further direct the ex-directors to contribute the assets of the company by way of compensation with such, sum in respect of their misapplication, retention and misfeasance and breach of trust. 2. Contextual facts depict that M/s. Shield Shoe Company Private Limited having its registered office a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he books and record from the Commercial Manager on 29-8-1986 and it was found that Commercial Manager interpolated/changed many entries in the books to cover up his misdeeds. He further stated that he delivered all the records and books of account including minutes books of Board of directors and General Body to the official liquidator on 29-9-1989 with comprehensive details and explanatory notes. He requested for allowing audit by company s statutory Auditor but there was no response. He also handed over shares of Reckit and Coleman. Bonus shares were allotted directly to official liquidator. He did not have any tangible or intangible assets of the company. The official liquidator had taken over possession of factory and other assets in Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim in support of Judge s summons contended that the provisions of section 543(1) of the Act are applicable to the facts of the case and ex-directors must be compelled to make good monies with interest which they have retained or become liable or accountable for the property of the company in liquidation. 5. Per contra , Mr. V.L. Mathur, learned counsel after reading excessively from the affidavit filed by Mr. Pahwa, ex-director, canvassed that the points of claim being totally vague, general and the official liquidator having failed to make out any case against the individual directors, the application deserves to be rejected. 6. In order to establish the charge of misfeasance against the ex-directors it is required that specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sts on the official liquidator. The official liquidator, it may be mentioned, merely relied upon the evidence recorded in public examination of the directors and on a few documents tendered in evidence. At the stage of public examination there was no charge of misfeasance against the directors and they were not in a position to know what would be the grounds that would be alleged against them for recovering any amounts, for the loss said to have been caused to the company by reason of such misfeasance. . . ." (p. 2073) 8. Following principles were laid down by the Supreme Court in Official Liquidator, Supreme Bank Ltd. v. P.A. Tendolkar AIR 1973 SC 1104 : "It is certainly a question of fact, to be determined upon the evidence in e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se loss to the company and at the same time resulting in personal gain. Not all acts which result in loss to the company can be treated as acts of misfeasance, making a director liable under section 543 of the Act because while carrying on business there is every likelihood that loss may be incurred in a transaction or a number of transactions. It is only when such loss to the company results in wrongful gain to the director that it would fall within the scope of section 543 of the Act. 10. It is therefore to be seen as to whether the respondents individually or jointly had committed any specific act of commission or omission or had misapplied or retained any monies/properties of the company in liquidation. 11. Sh. O.P. Tiwari, Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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