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TMI Blog2006 (9) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... diately the money and other properties, assets, actionable claims of the company in liquidation, as appearing in the balance sheet dated 30-6-1981 amounting Rs. 11,96,091 forthwith to the Official Liquidator along with interest and other relief in the form of damages as this Hon ble Court may deem just, proper and expedient in the facts and circumstances of the present case; ( ii )the non-petitioners be further directed to contribute such sum to the assets of the company in liquidation by way of compensation as may be thought fit and proper in the facts and circumstances of the present case; ( iii )the non-petitioners be further directed to immediately restore to the Official Liquidator the properties and assets of the company in liquid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting in contravention of the provisions of the Act and the company is commercially insolvent and is unable to pay-off its debts in full. Shri Om Prakash Agarwal, UDC and Shri Heera Ballabh, LDC were appointed under section 457(2)( v ) of the Act to take over the possession of the company, they went at the registered address of the company and gave a report that Company has gone away five to six years back after vacating the premises and the premises are in possession of one Shri Shyam Printers (Press). There was no assets of the company. The statutory notices sent to non-petitioners for submitting statement of affairs of the company in liquidation received back undelivered. Ultimately on a notice, shri Dhanna Lal (Non-petitioner No. 2) sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. The directors who were controlling affairs of the company are liable to the company jointly and severally. The ex-directors have retained the properties of the company in liquidation and they are accountable for the same. The ex-directors are guilty of misfeasance and breach of trust in relation to the company. 3. Mr. Dhanna Lal, ex-director of the company in liquidation filed reply and stated that he already resigned from the company on 1-10-1979 and he was not managing the affairs of the company. He never retained movable and immovable properties and after his resignation the same were under the control of non-petitioner No. 1. He submitted that he had no knowledge about the application under sections 439(5) and 433(E) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Since the records and account books of the company were already destroyed in the year 1982 the non-petitioner has not committed any offence under section 454 of the Act. Lastly prayed to dismiss the petition. 4. Mr. Gopal Garg, learned counsel appearing for the Official Liquidator after extensively reading from the points of claim 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, learned counsel for non-petitioners after reading excessively from the reply filed by ex- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 director quantifying the loss to the company arising out of such acts or omissions. The burden of proving misfeasance or non-feasance rests 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n may lawfully do. A director while carrying out an activity which he is otherwise empowered to carry out under the law, performs it in such a manner that the same is improper and such impropriety has to be wilful so as to cause loss to the company. The act of commission or omission or negligence should be with the intent and knowledge to cause 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 wrongfu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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