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TMI Blog2009 (7) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the object of the said company and the transactions which have taken place from the date of its incorporation, viz., May 28, 2004, till date and file a report to enable this court to pass final orders in the above applications. The petitioning creditor/applicant shall deposit an amount of ₹ 10,000 (rupees ten thousand only) with the official liquidator towards expenses relating to the said investigation within one week from this date. - COMPANY APPLICATION NOS. 1625 TO 1628 AND 1935 OF 2006 IN COMPANY PETITION NO. 387 OF 2003 - - - Dated:- 21-7-2009 - P. JYOTHIMANI, J. T.K. Bhaskar for the Appellant. B. Giridhar Rao and R. Saravanakumar for the Respondent. JUDGMENT P. Jyothimani, J. The company applications, C. A. Nos. 1625 to 1628 of 2006 are filed by the petitioning creditor, who was the petitioner in C. P. No. 387 of 2003, for a direction against respondents Nos. 3 to 8 therein to file the statement of affairs, to take cognisance of the offence under section 454(5) of the Companies Act, 1956, against respondents Nos. 3 to 8, to direct the official liquidator to examine the conduct of the affairs of the first respondent-company by respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 in the creditor's application and respondents Nos. 1 to 6 in the official liquidator's application to file the statement of affairs within three weeks. The winding up order thus came into effect from the date of presentation of the application, viz., December 9, 2003. 6. It is stated that the official liquidator on May 25, 2006, after intimation to the ex-directors and the petitioning creditor took possession of the assets, books of account, records, etc., from the sixth respondent, one of the ex-directors in the presence of representative of the petitioning creditor at No. 204, Chella Mall, Second Floor No. 11, Sir Thyagaraya Road, T. Nagar, Chennai. The official liquidator sold the movables by way of auction on October 17, 2006, for a sum of Rs. 1,62,300 subject to the confirmation of the court. On information from the sixth respondent Mr. S. Ramesh that the premises was taken on lease and it belongs to Mr. M. A. Mohammed Uliyas, M. M. Mohammed Salman Sherier, c/o. Jamals, Mount Chambers, Second Floor No. 758, Anna Salai, Chennai and the first respondent-company under liquidation paid Rs. 3,50,000 towards rental advance and the monthly rent of Rs. 55,000 was paid up to A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of the furniture and fittings is Rs. 7,00,000, however, the official liquidator is able to sell and realise a sum of Rs. 1,62,300 only and therefore, the ex-directors are liable to account for the difference amount of Rs. 5,37,700. (6) The ex-directors have stated that under the preferential creditors category, a sum of Rs. 3,37,784 is due and payable to the Income-tax Department under fringe benefit tax, TDS payable. Since the ex-directors have admitted this amount, they are to account for the same. (7) Under the unsecured creditors category, the ex-directors have stated that a sum of Rs. 2,0095,123.09 is due to various parties. However, no document has been furnished. Since the amount is admitted by the ex-directors, it would amount to mismanagement and mal administration and they are liable to account for the same." Since during the course of winding up proceedings, it is found that the directors have administered the company to defraud the creditors and acted against the interest of the company, and hence, the ex-directors are liable for misfeasance based on the facts and figures stated in the statement of affairs dated July 27, 2006. Enclosing the statement of affairs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises on May 25, 2006 and the particulars were not available and finally, the statement of affairs with the available details was filed on June 28, 2006 and therefore, there is no deliberate delay in filing the statement of affairs. 10. The allegation that the second respondent-company, viz., M/s. Scanwell Logistics P. Ltd., was constituted with a design to divert the business of the first respondent-company under liquidation is denied as false. It is stated that M/s. Scanwell Freight Express (India) P. Ltd., the first respondent-company in liquidation, was acting as a shipping agent in India of its principal company, viz., M/s. Scanwell Freight Express (Hongkong) Ltd., Hongkong. According to the said respondent, the principal company in Hongkong decided to terminate the agency with the first respondent-company under liquidation and started its own subsidiary in India. The said M/s. Scanwell Freight (Hongkong) Ltd., Hongkong started M/s. Innoplas Ltd., incorporated in British Virgin Islands and it was that company, viz., M/s. Innoplas Ltd., which formed the second respondent-company, M/s. Scanwell Logistics P. Ltd., which is 100 per cent, subsidiary of M/s. Innoplas Ltd., and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent-company are, Mr. Hassan Adam Bin, Mr. Sin Wai Shing, Mr. Tang Keen Fei, Mr. S. Ramesh and Mr.V. Sivakumar out of whom, the first, fourth and fifth directors are respondents Nos. 3, 7 and 8 in the application who are stated to have subsequently resigned from the first respondent-company. 14. It is stated that the third respondent Mr. Hassan Adam Bin resigned on June 21, 2005, Mr. Ramesh resigned on June 22, 2005 and Mr. Sivakumar resigned on June 21, 2005. According to the second respondent, the present directors of the second respondent-company are Mr. Sing Wai Shingh, Mr. Tank Keen Fei, Mr. A. J. R. Anderson, Mr. T. T. A. Bongso and Mr. A. A. H. Shu and the present shareholders are M/s. Innoplas Ltd. and Mr. Sivakumar, the seventh respondent herein. It is stated that the second respondent-company is situated at No. 205, Chella Mall Complex, Second Floor No. 11, Sir Thyagaraya Road, T. Nagar, Chennai while the office of the first respondent is at No. 204, Chella Mall Complex, Second Floor, No. 11, Sir Thyagaraya Road, T. Nagar, Chennai and therefore, the first and the second respondents are not functioning in one and the same place. 15. It is stated that the second resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the income-tax return, there was no income in 2005-06 and the winding up order in respect of the first respondent-company was passed on March 22, 2006 and therefore, absolutely there is no need for ordering investigation. It is also stated that the business of the second respondent is personal in nature and there is no possibility of diversion of funds or business as it is service oriented business and it is only the quality of work which is a factor to be considered and the injunction petition is filed only to avoid competition. He would submit that no useful purpose would be served in directing investigation into the affairs of the second respondent-company. 19. It is the submission of Mr. R. Saravanakumar, leaned counsel appearing for respondents Nos. 6 to 8 in the petitioning creditor's application and respondents Nos. 4 to 6 in the official liquidator's application that the statement of affairs was filed though belatedly due to the reason that the company premises was sealed by the official liquidator on May 25, 2006 and the particulars were not readily available and hence, there is no fault committed by the said respondents. It is also stated that the second respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... winding up order was passed on March 22, 2006 and by legal fiction as per section 441 of the Companies Act, it is deemed to have commenced from the date of presentation, viz., December 9, 2003, there may not be any possibility for the ex-directors to have the knowledge about the winding up application in normal circumstances. A reference to the affidavit filed by the petitioning creditor shows that the first respondent-company filed its counter affidavit in the main company petition and the affidavit was sworn in October, 2004. If, on behalf of the first respondent-company in liquidation, a counter affidavit was filed in October, 2004 and admittedly, before, that date, viz., on May 28, 2004, the second respondent-company was incorporated along with the directors of the first respondent-company, it is certainly incumbent on the part of the directors of the first respondent-company to have revealed the said fact in the counter affidavit and there cannot be any excuse on the part of the directors of the first respondent-company in not revealing the same. 23. Adding to that, even assuming that the second respondent-company is a 100 per cent, subsidiary of M/s. Innoplas Ltd., when a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court in Singer India Ltd. v. Chander Mohan Chadha [2004] 122 Comp Cas 468 ; [2004] 7 SCC 1, by quoting a passage of its earlier judgment in Delhi Development Authority v. Skipper Construction Co. P. ltd. AIR 1996 SC 2005 ; [1997] 89 Comp Cas 362 (page 381 of 89 Comp Cas) : "28. The concept of corporate entity was evolved to encourage and promote trade and commerce but not to commit illegalities or to defraud people. Where, therefore, the corporate character is employed for the purpose of committing illegality or for defrauding others, the court would ignore the corporate character and will look at the reality behind the corporate veil so as to enable it to pass appropriate orders to do justice between the parties concerned." 26. In such circumstances, I direct the official liquidator of this court to investigate about the affairs of the second respondent-company, viz., M/s. Scanwell Logistics P. Ltd., especially with reference to the object of the said company and the transactions which have taken place from the date of its incorporation, viz., May 28, 2004, till date and file a report to enable this court to pass final orders in the above applications. The petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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