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TMI Blog2008 (9) TMI 561X X X X Extracts X X X X X X X X Extracts X X X X ..... iod of two months from today. No costs. - C.A. NO. 131 OF 1995, C.P. NOS. 34 OF 1988 AND 26 OF 1993 - - - Dated:- 15-9-2008 - PERMOD KOHLI, J. Aman Chaudhary for the Petitioner. K.D. Aggarwal for the Respondent. JUDGMENT 1. The present Company Application No. 131 of 1995 has been preferred by the Official Liquidator attached to this Court against respondent Nos. 1, 2 and 4 with the following prayers : ( i )as the respondents be called upon to make good the loss of Rs. 11,98,724.82 caused to the company (in liquidation); ( ii )the respondents may be directed to restore the property, movable and immovable held by them out of the funds of the company; ( iii )they may also be punished with imprisonment under section 538( p ) of the Companies Act, 1956; and ( iv )any such other order being fit and proper in the circumstances of the case may also kindly be passed. 2. It is stated that the learned District and Sessions Judge (V), Haryana, after recording evidence, has submitted his report dated 31-3-1995 and returned a finding that a fraud has been committed by the directors of the company in the promotion, formation and conduct of the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the business of the company as propounded in the application moved by the Official Liquidator. 5. On the basis of the aforesaid report, present application has been filed for the reliefs mentioned above. 6. In the reply filed by the respondents, they have sought dismissal of this application on the following grounds : (1) That the only prayer made in C.P. No. 26 of 1993 was for public examination and the relief having been granted, the said petition stands disposed of. Hence, no action is warranted through the fresh application. (2) That the application is beyond limitation. It has been stated that under section 543(2) of the Companies Act, an application under sub-section (1) of the Act can be filed within a period of five years from the date of the passing of the winding up order. The period of five years expired on 25-1-1994. (3) That the District and Sessions Judge (V), Haryana, was not required to give his findings in the report. (4) That the claim of the creditors for Rs. 11,98,724.82 is also not sustainable having been made after more than six years and is barred by time. 7. It has been vehemently argued that C.P. No. 26 of 1993 stands disposed of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the judgment is not relevant on the issue sought to be raised. In this judgment, the Hon ble Apex Court has held that object of section 478 is not to consider any accusation of an offence. The allegations are only for the purposes of holding the enquiry and cannot amount to accusation under article 20(3) of the Constitution of India. This judgment has no application to the present case and the plea raised. This plea also seems to be misdirected. This Court vide its order dated 18-11-1993, directed the public examination of the respondents which order was upheld in appeal. Thereafter, another order came to be passed on 24-3-1994. The concluding part of the order reads as under : The Official Liquidator and the respondents are directed to appear before the District and Sessions Judge (Vig.), Haryana, on 2-5-1994, who will after publicly examining respondent Nos. 1, 2 and 4 submit his report along with record of the proceedings within two weeks from the conclusion of the examination. 12. In the aforesaid order, District and Sessions Judge (Vigilance), Haryana, was specifically directed to submit his report along with the record of the proceedings within two weeks from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arge or any interest in any mortgage or charge on any assets of the company held by or vested in him, or any person on his behalf, or any person claiming as assignee from or through the person liable or any person acting on his behalf. ( c ) The Tribunal may, from time to time, make such further order as may be necessary for the purpose of enforcing any charge imposed under this sub-section. ( d ) For the purpose of this sub-section, the expression assignee includes any person to whom or in whose favour, by the directions of the person liable, the debt, obligation, mortgage or charge was created, issued or transferred or the interest was created, but does not include an assignee for valuable consideration (not including consideration by way of marriage) given in good faith and without notice of any of the matters on the ground of which the declaration is made. (3) Where any business of a company is carried on with such intent or for such purpose as is mentioned in sub-section (1), every person who was knowingly a party to the carrying on of the business in the manner aforesaid, shall be punishable with imprisonment for a term which may extend to two years, or with fine whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for acts of misfeasance and malfeasance, such money or property as may be found retained by such person on account of any act of misapplication, wrongful detention or fraudulent act of misfeasance, malfeasance or breach of trust in relation to the affairs of the company. The punishment referred to in this section, however, can be imposed on the application of the Official Liquidator or the liquidator or any creditor or contributory within the time specified under sub-section (2) of section 543. Sub-section (2) provides the period of limitation for making such application which is five years from the date of the order for winding up or of the appointment of the liquidator or of the act complained of whichever may be longer. 15. Mr. K.D. Aggarwal has vehemently argued that limitation for initiating action under sections 542 and 543 of the Act has since expired, no action is permissible beyond the period of limitation of five years prescribed under section 543 of the Act. It has been contended that winding up order was passed on 27-1-1989. Statement of affairs was filed on 10-4-1990 and the Official Liquidator was appointed simultaneously with the passing of the winding up order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s complained of came to surface and became known. The limitation of five years will, thus, commence from 31-3-1995. The present application was filed on 4-7-1995 and, thus, has to be treated within the prescribed period of limitation. 17. For various acts of malfeasance, misfeasance, breach of trust, etc., the ex-directors are liable for criminal prosecution under section 542(3) as also for action under section 543(1) of the Companies Act. In the report of the learned District and Sessions Judge (Vigilance), Haryana, it has come that an amount of Rs. 11,98,724.82 was illegally and fraudulently retained and misutilised by the ex-directors. In fact, this is a public money in the hands of the company. The ex-directors have misutilised the amount and, thus, are liable to reimburse the same to the company. 18. In view of the above, the present application is allowed and I direct the ex-directors of the company to reimburse a sum of Rs. 11,98,724.82 along with interest at the rate of 6 per cent per annum with effect from the date of the report of the learned District and Sessions Judge (Vigilance), Haryana, i.e., 31-3-1995, till actual payment, within a period of two months fro ..... 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