9911796707
TMI Blog2012 (5) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent No.1, and Srt Vishwanath Hegde, learned counsel for respondent Nos.2 to 5 and perused the material on record. 4. The Company-in-liquidation was ordered to be wound up by this Court vide the order dated 31.10.1996 passed in Co.P.No.22/1993. The first respondent thereafter filed the Statement of Affairs on 10.11.1997 while the other respondents filed on 11.06.2001. From the details gathered from the General ledger, Balance Sheet, Cash book and the Bank Book, the applicant is of the opinion that the respondents have misapplied the funds belonging to the company to the extent of Rs. 1,88,60,835/-and are therefore guilty of misfeasance and breach of trust, 5. The amounts under different heads is detailed in para-7 (i) to (xi) in the application. In that regard, it is contended that the vehicle maintenance expenses have been indicated for the periods 1995-96 and 1996-97 though the vehicles had been sold on 10,08.1995 and 31.08.1995. Reference is made to the Balance sheet as on 31.03,1993 at schedule 10 relating 10 loans and advances of Rs. 17,69,754/- to R.C. Exports (P) Ltd the company under the same management The entries in that regard in the Annual Report and the an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Company in liquidation without even receiving salary from the beginning. Insofar as the winding up proceedings are concerned, it is stated that the order dated 31,10,1996 is an ex parte order and was not within the knowledge of the first respondent. In any event, it is asserted that there is no transactions between the periods 31.10.1996 (the date of the winding up order upto 31.03.1997 which has been inadvertently shown in the books of account. The first respondent himself has exonerated the respondent Nos.2 to 5 by stating that he himself was responsible for the affairs of the company. However, the role of the other respondents in providing unsecured loan to the extent of Rs.23,59,626/- is referred to indicate the sacrifices made by the Directors for the sake of the company so as to contend that in such circumstance, the question of Directors misutilizing the funds of the company for themselves does not arise. The first respondent is stated to have filed the statement of affairs based on the accounts prepared by an Accountant and ail transactions were closed on 31.10.1996. The Trial Balance sheet for the year 1996 was prepared on that basis and the balance sheet ending on 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e given by the company to BISCAYNE India and MCE Capacitors being creditors to the extent of Rs. 13,48,397/- and Rs. 1,02,653/- respectively, and the settlement made for cash payment of Rs.3,05,477/- is for the benefit of the company since they have agreed for not claiming their dues. The said cash payment was made prior to receipt of the ex parte order on 07.12,1996. The payments could not he made by bank drafts since the accounts of the company had been frozen. 9. The reasons for making the journal entries into RC International for the year 1995-36 has been set out in the objection statement. The companies indicated in Annexure-2 are from whom the amounts are not realisable as they were either overdue interest charged but not agreed to by the parties or the amount towards the supplies of rejected materials and the said amount of Rs.30.42,852/- are bad debts. Asian Electronics who were also 50% equity shareholders In the Company-in-liquidation and the other companies were supplying raw materials and also marketing the products and as such, certain adjustments have been made correspondingly to the sundry debtors and the sundry creditors. The details of which have been set out. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2 to 5 have also filed a detailed objection statement, in my view, it is not necessary to refer to the same, since the first respondent has not only exonerated the said respondents by taking upon him the entire responsibility but also due to the fact that the first respondent has provided detailed explanation which in itself could be considered by this Court to come to an opinion one way or the other, 13. In the light of the rival contentions, one Ms.P.Suchitra working as Junior Technical Assistant in the office of the Official Liquidator was examined as PW. 1. The evidence has been tendered by wav of affidavit, A perusal of the same would indicate that the contentions raised in the applications have been reiterated. The statements based on which the claim have been raised and have been marked as Exhs.Pl to P7 and the lease deed between the Company-in-liquidation and Shakti Enterprises has been marked as Ex, P8. The said witness has been cross-examined in detail. Though the witness has asserted that the journal entries is on 31,03.1997 i.e., after the date of winding up order, it has been extracted that the vehicle maintenance charges have not been indicated after 31.10.1996 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicated as expenses towards vehicles, without owning such vehicles, certain amounts are paid to R C Exports and R C International which are sister concerns wherein the first respondent is also a Director and certain payments made to Asian Electronic company. 16. On behalf of the respondents, there is no denial of the fact that there are certain journal entries relating to the sister concerns. However, details are furnished to justify that the said entries are prior to the date of winding up but erroneously indicated as 31.03.1997 as if made for the entire financial year. In that view, each of the entries referred to in the points of claim has been referred in the objection statement which has been noticed in detail. The specific amounts as against the debits and credits not only in relation to sister concerns but with regard to the other sundry debtors and creditors have been explained. From the explanation put forth it is seen that in fact the sister concern had provided assistance to the Company-in-liquidation and the Company-in-liquidation was due the amounts indicated to the sister concern. All the efforts appears to be to revive the company during its hard days. In that vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first respondent on accepting the entries as pointed out by the applicant referring to each of the entries and the manner in which the payments and adjustments were made in the course of the business will not show misdemeanour. The same further does not indicate that it has been done with intent to defraud the company and appropriate amounts for personal benefit. Except for the undisputed fact that the first respondent was also a Director in the sister concern, the adjustment of amounts by Journal entries cannot be considered as a benefit derived by the first respondent for himself. Even in respect of. such journal entries, it has been pointed out that tire sister concerns had rendered financial help to the Company-in-liquidation to the extent more than what has been adjusted by journal entries. Insofar as the other transactions, the explanations relating to the payments and also the wrong entries of the expenses as receivables is convincingly provided. That apart the pleadings would disclose the efforts and the sacrifice made by the first respondent and also the difficulties faced personally by him and by the company which is not controverted by any other material. Hence, it w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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