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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 ..... sold the said properties. Taking into consideration that the company application fails to detail narration of the specific acts of commission or omission on the part of each director and further the official liquidator has not been able to prove the case of misfeasance or committing any breach of trust in discharge of functions and duties and the respondents have been able to justify their action in not making available the records and selling their properties in duress, issues as framed by this court are not found to be proved and are answered in favour of the respondent. It is noted that non-handing over the possession of current stock, books of account is on the basis of reasonable excuse and this court is satisfied that keeping in view the law laid down by the apex court in the case of Official Liquidator v. Raghawa Desikachar [1974 (8) TMI 120 - SUPREME COURT OF INDIA], no case for holding the respondents guilty of section 543 of the Act of 1956 of misfeasance or breach of trust within the meaning of section 543 of the Act of 1956 is made out. - S. B. Company Application No. 82 of 1996. - - - Dated:- 17-5-2018 - Sanjeev Prakash Sharma J. For the Petitioner : Sohal S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 3,712 equity shares of ₹ 100 each fully paid-up. It was further stated that the company was promoted by Shri Kaushal Kishore Dalmia, Kailash Prasad Dalmia, Ashok Dalmia, Satyendra Prasad and Raj Kamal Banka and were also named as first directors of the company. This fact is also confirmed from the record of the Registrar of Companies. These ex-directors were handling the day-to-day affairs of the company. It was further stated in the affidavit that the company was engaged in the business of manufacturing and trading in edible and nonedible oils, oil cakes, etc., and commenced its business activity in the first year from their Tel Mill situated at Hindaun Road, Kherli, District Alwar (Rajasthan) and the registered office of the company was situated at D Villa, 3, Chankyapuri, Behind Teej Tourist Bungalow, Banipark, Jaipur. It was further stated that N. C. Jain, chartered accountant submitted his report. From the record more particularly being the copy of the winding up petition and misc. application filed by M/s. Bhagwan Das Gopal Das and the report of the chartered accountant, it transpires that the ex-directors had transferred the plant and machinery of Tel Mill bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and address about the debtors and creditors, etc., which has to be filed within 21 days from the date of winding up order or provisional winding up order whichever is earlier. Further, the ex-directors also did not hand over the books of account and other records including statutory records maintained by the company and also the properties and assets belonging to the company to the official liquidator to enable him to conduct liquidation proceedings in accordance with the provisions of the Act of 1956. The ex-directors were grossly negligent in discharging their duties towards the company since after statutory notice and reminders they have neither filed the statement of affairs nor handed over the books of records and properties of the company to the liquidator for conducting the liquidation proceedings. It is further stated that the respondents-directors did not maintain books of account and thus committed offence under section 209(1) of the Act of 1956 and were additionally liable for prosecution under section 541 of the Act of 1956. 4. In all, nine documents were exhibited as exhibits 1 to 9 which included report of the chartered accountant. The chartered accountant Mr. N. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Gopal Prasad, the petitioner in winding up petition being S. B. Company Petition No. 4 of 1991 had preferred and application under section 450 of the Act of 1956 for appointment of the provisional liquidator and the same was registered as S. B. Civil Misc. Company Application No. 23 of 1991. He, as a director of the company, did file reply to the said company application which, inter alia, contained the tight liquidity position and the inability to meet which the demands of the traders who had sold the raw material and the situation that these traders held ex-directors of the company, i. e., himself Rajkamal Banka, Kausal Kishore Dalmia and Satyendra Prasad as hostages at Kherli at gun point and asked them to execute and have the sale deeds registered in their favour and at the gun point they were compiled to execute the agreement for sale of machinery and other movable assets of the company. The said deeds were not executed by free will but under coercion at the threat of gun point and hence all these sale deeds be treated as nullity. It was further stated that the official liquidator had filed S. B. Civil Misc. Company Application under section 446 of the Act of 1956 for decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that they were forced by gun point and to get the sale deed executed by the 32 creditors and they had to run away and did not have possession of the documents relating to the company nor they have the same in possession. On a query relating to their duty as directors, both have feigned ignorance that they were new directors. They have admitted that they had executed the sale deed but the said sale deed was cancelled and annulled by the court. They have also admitted that no valuation was conducted by the excuse which has been consistently taken is that sale was executed on account of force and coercion. 9. Learned counsel for the respondents, in defence, stated that the official liquidator has carried on the report submitted by the chartered accountant and he did not independently conduct any enquiry. He has also relied on the cross examination where the official liquidator states that the chartered accountant had conducted examination of the bank statement/entries relating to the transactions conducted by the company and submitted that Mr. N. C. Jain, chartered accountant, in his cross-examination, refuses to having examined the transactions and bank statement of the company. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld have. Once a show-cause notice was given to respondents Nos. 1 to 4 the official liquidator did not lead any evidence nor rely upon any other documents, nor did respondent No. 5, who was instrumental in initiating the misfeasance case against respondents Nos. 1 to 4, lead any evidence. 12. In the instant case, the circumstances beyond the control and power of the respondents is made out. However, it is noted that the sale deeds, which were sought to have been executed on the basis of duress and force have already been annulled by this court. Sufficient mitigating grounds, as noted above, are made out. Merely on the basis of report of N. C. Jain, chartered accountant, who has admittedly not examined the books of account, which makes it obvious that the case for initiating proceedings and punishing the respondents under section 543 of the Act of 1956 is not made out. It is also stated that the official liquidator had already sold the said properties. 13. Taking into consideration that the company application fails to detail narration of the specific acts of commission or omission on the part of each director and further the official liquidator has not been able to prove the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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