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TMI Blog2018 (5) TMI 1859X X X X Extracts X X X X X X X X Extracts X X X X ..... jointly and severally liable for compensating the company in liquidation for Rs. 14,99,111.81, i. e., the pecuniary loss suffered by it along with interest at 18 per cent. per annum. 2. Issues were framed for adjudication of this company application vide order dated March 18, 2016 : "(1) Whether the respondents disposed of the properties of the company even without getting valuation to the detriment of the creditors of the company ? . . . applicant. (2) Whether the respondent have handed over the possession of the current stock, record and books of account to the official liquidator on the passing of the winding up order ? . . . non-applicant. (3) Whether the respondents have caused breach of trust and loss to the company to the extent of Rs. 14,99,111.81 by retaining properties and assets belonging to the company ? . . . applicant. (4) Whether there is any specific event on part of respondents Nos. 3 and 4 relating to misapplication, retention or act of misfeasance of breach of trust in relation to the company ? . . . applicant." 3. The official liquidator got himself examined on oath after having filed his affidavit wherein he stated that M/s. Ashoka Oil Products P. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he date of presentation of the winding up petition, i. e., March 13, 1991. Therefore, the alleged transfer of properties under various sale deeds had not been made in the ordinary course of business of the company and were in the nature of fraudulent transaction within the meaning of section 531 of the Act of 1956 and voidable against the liquidator as provided under section 531A of the Act of 1956. It was further stated that from the record it also transpires that the ex-directors deliberately did not get the properties of the company valued from an approved valuer and also avoided to put the sale through an advertisement for their personal gains which was not in the interest of the company. The High Court vide order dated August 2, 1996 set aside the sales and the sale deeds dated December 5, 1990, December 11, 1990 and December 12, 1990 were declared null and void. Thus, it is clear that the ex-directors who were engaged in managing affairs of the company were guilty and have committed breach of trust in discharge of their function and duties. Their acts for transfer of property in preference to the other creditors reflects their fraudulent intent and prove their acts of mismana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asthan with his association. Since mustard seeds were sown/grown/produced in abundance in Kherli and nearby areas, he along with others floated the company and in 1988 had purchased the land, plant and machinery in the name of the company by utilization of the share capital as well as the unsecured loans. He further stated that for the purpose of setting up of the mill, acquisition of land, building, plant and machinery, no financial assistance from any bank/financial institution was obtained by the company. He further stated that for the financial year ended March 31, 1988 till which the account were prepared and thereafter till August, 1989, the business operations were smooth but gradually the receivables in respect of finished goods, i. e., mustard oil sold in State of Uttar Pradesh, Bihar where it had bulk consumption, started blocking and resultantly, the payment of raw material, i. e., mustard seeds started delayed. In the month of October November 1989 all the suppliers of the raw material at Kherli became united under the umbrella of "Kherli Vyapar Mandal" and created such a tryannical and inescapable position for the directors of the company including him and under tyrann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iquidator and about 12 articles lying at Jaipur office premises of the company situated at 3D, Villa, Chankya Puri, Jaipur were also taken into possession by the official liquidator and there did not remain any books of account, vouchers, other records relating to the company. He does not recall about having received any communication from the office of the official liquidator in the matter of books of account, which in view of the problems at work place of the factory at Kherli which were not in existence and whatever was available at Jaipur office were possessed by the official liquidator and hence, he being ex-director of the company did not remain in possession of the assets, books of account, vouchers, etc., of the company under liquidation. 7. The respondent-Mr. Raj Kamal Banka has reiterated what has been submitted by the respondent-Mr. Ashok Dalmiya. He has further stated that he does not recall having received any communication from the office of official liquidator in the matter of books of account, which in view of the problems at the work place of the factory at Kherli which were not in existence and whatever was available at Jaipur office were possessed by the officia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ator did not have any order passed under section 454 of the Act of 1956 against the respondents. The issues as raised by the official liquidator against the respondents have not been proved by the official liquidator. 10. Heard learned counsel for the parties. 11. It is noted that the Supreme Court in the case of Official Liquidator v. Raghawa Desikachar, AIR 1974 SC 2069 ; [1975] 45 Comp Cas 136 (SC), held as under (page 142) : "It may be mentioned that misfeasance action against the directors is a serious charge. It 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's there was no charge of misfeasance against the directors and they were not in a position t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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