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TMI Blog2010 (11) TMI 843X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 2007, viz., after three years from the valuation, and the reason for lesser realisation of value cannot be imputed on the respondents, especially when the official liquidator with the existing value of the assets could settle 92 per cent. of the liabilities of the secured creditors and workmen creditors, which is of utmost importance. Having regard to the seriousness of the provisions and there being no material against the ex-directors, the allegations stand unproved. This application does not merit acceptance and therefore, the same stands dismissed. - C.P. NO. 215 OF 2003 - - - Dated:- 3-11-2010 - P. JYOTHIMANI, J. M. Jayakumar for the Applicant. V. Ramakrishnan for the Respondent. JUDGMENT 1. This application is taken out by the official liquidator to take action for misfeasance against the ex-directors of the company under liquidation and for further reliefs. 2. Based on the orders of the Board for Industrial and Financial Reconstruction and the subsequent order passed by this court dated September 9, 2004, in C. P. No. 215 of 2003, M/s. Lakshmi Synthetics Machineries Manufacturers Ltd., came to be wound up and the official liquidator, as liquidator of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,75,943.62 ; investments other than marketable securities of Rs. 15,00,000 ; realisable vehicle value of Rs. 6,16,500 ; realisable assets specifically charged, viz., land and buildings, plant and machinery, raw materials, components, etc., with liabilities to the secured creditors shown as Rs. 31,89,33,610.98 ; and the liabilities to the workmen creditors shown as Rs. 72,42,434 and the amount payable to unsecured creditors was shown as Rs. 43,43,567 and the final deficiency was shown as Rs. 23,85,70,100. 8. As per the latest balance-sheet filed by the ex-directors for the period ending March 31, 2003, the accumulated loss has been shown at Rs. 28,63,38,609. 9. On the official liquidator calling for the claims from the creditors of the company in liquidation, 139 claims were received and the claims of 111 workers have been adjudicated under section 529A of the Companies Act, 1956, by admitting a sum of Rs. 66,83,214. The claim received from the secured creditors and the amount paid to them as per the report of the official liquidator is as follows : S. No. Name of the bank Amount claimed Rs. Amount admitted Rs. Amount paid Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he three other secured creditors, viz., the State Bank of India, Corporation Bank and Union Bank of India only Rs. 25 lakhs out of the total liability of Rs. 6.76 crores, as the banks have lent money/loan on current assets valued at Rs. 29.10 lakhs only and against the meagre allocation and payment, the State Bank of India has also filed an appeal. 13. The Commercial Tax Department has filed a claim for Rs. 7,96,10,577 and the ordinary creditors like suppliers and service providers have filed claims for Rs. 91,55,963 and as there is no scope for payment to the preferential and other creditors, these creditors have been deprived of their dues. It is stated that the Commissioner of Customs has claimed a sum of Rs. 62,687 and therefore, according to the official liquidator, the ex-directors are liable to pay an amount of Rs. 8,88,29,227 in the following manner : Rs. Payment to ordinary creditors - 91,55,963 Payment to the Commercial Tax Department - 7,96,10,577 Commissioner of Customs (section 530) - 62,687 8,88,29,227 14. It is stated tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntentional act on the part of the respondents or deliberate conduct of the ex-directors. It is stated that the realisable value of movable and immovable assets given as at 2004 to the extent of Rs. 26.67 crores in the statement of affairs covers not only the land, but also buildings, machinery, computer equipment, furniture and office equipment, library, material handling equipment, jigs and fixtures, dies and patterns, lab and testing equipment, capital work in progress, machinery in transit, stock in trade work in progress, material in transit customs duty, etc. It is stated that the estimated realisable value of the land amounted to only Rs. 65 lakhs, while the remaining amount relates to the above said items. 20. It is the case of the sixth respondent that even though the realisable estimate was given by the directors in the year 2004, the sale was effected by the official liquidator only in the year 2007 and therefore, in the course of these three years time, since the above materials were kept idle, the value would have definitely deteriorated and that cannot be imputed on the directors. It is also stated that the value was given by the directors based on the valuation rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1956, is made relating to allegations of fraud or breach of trust or misapplication, to prove such allegation, which is criminal in nature, it is necessary that there should be mens rea on the part of the erstwhile directors either in committing fraud or causing loss to the company in liquidation. The charges in these sort of cases have to be specific and it must be brought to the notice of this court that the term misfeasance or breach of trust is certainly relatable not only to intentional act of the directors, but also to the deliberate conduct of the ex-directors which has resulted in the loss to the company under liquidation, for the rule actus non facit reum nisi mens sit rea is applicable in these cases of misfeasance. 27. This court in Official Liquidator v. V. Selvaraj [2011] 106 SCL 56 (Mad.) (Mag.) while construing sections 542 and 543 of the Companies Act, 1956, has held as follows (page 185) : " . . . it is clear that when an application under sections 542 and 543 of the Companies Act is made relating to the allegation of fraud or breach of trust or misappropriation, to prove such allegation which is being criminal in nature, it is necessary that there should be m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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