- (1.) The respondents ex-directors of M/s. San India Electro Chem Private limited (in liquidation) are being pursued by the Official Liquidator (OL) under Sections 543 of the Companies Act, 1956 (hereinafter 'the Act of 1956') in the facts stated in his application for recovery of an aggregate amount of Rs.20,19,500/- odd along with interest @ 8% per annum for their alleged misfeasance and breach of trust.
(2.) The case of the OL is that the three respondents were directors at the time of passing of the order of winding up by this court qua M/s. San India Electro Chem Private limited on 20-3-1997 in company petition No.24/1996. It has been submitted that pursuant to the power granted by the company court to the OL under Section 457 of the Act of 1956 he appointed one M/s. PC Modi & Company, Chartered Accountant (CA) to examine the accounts of the company in liquidation for determining as to whether any misfeasance/ breach of trust was made out. The Chartered Accountant accordingly having inspected and perused the accounts of the company in liquidation as also the statement of affairs of the company in liquidation furnished by the ex directors, submitted his report on 27-12- 2001. According to the said report the directors failed to recover an amount Rs.4.67 lacs from trade debtors and an amount of Rs.9.16 lacs advanced to various suppliers even though the goods ordered were not supplied. No concrete steps were taken by the directors in the discharge of their fiduciary duties on the aforesaid account. It is also alleged that inventory of varied goods valuing about Rs.6.34 lacs had not been accounted for. Further an amount Rs.500/- deposited as security towards Oxygen cylinder and Rs.3000/- deposited as security with sales tax office of which no address was given by the directors were also lost for lack of requisite recoveries. It has been submitted that the aforesaid sums were lost to the company in liquidation both for reason of dereliction of duty and deliberate action of the directors of M/s. San India Electro Chem Private limited (in liquidation) rendering them liable under Section 543(1) of the Act of 1956. The said amounts were thus liable to be personally recovered from them jointly/ severally.
(3.) In reply to the application, under consideration, the respondent- directors submitted that the fixed assets of the company in liquidation i.e. land, plant and machinery were at the relevant time mortgaged to RIICO against the term loan availed by the company now in liquidation. Business losses and resultant financial crisis led to defaults in payment of the term loan to RIICO. Consequently in the exercise of powers under Section 29 of the State Financial Corporation Act, 1951 (hereinafter 'the Act of 1951') on 3-9-1996 all immovable assets of M/s. San India Electro Chem Private limited (in liquidation) mortgaged to RIICO as also its stock were taken possession of by the RIICO. So to were the records and books of accounts of the company in liquidation maintained at factory site. The respondents then the company's directors were excluded from all access. Subsequently on 20-3-1997 in winding up petition No.24/1996 the company was wound up by this court and the OL required to take charge of all manner of assets of the company in liquidation. It was submitted that it was the duty of the OL following the winding up order dated 20-3-1997 to take over all assets of the company in liquidation from RIICO, including the books of account kept at the factory site, which he did not. Hence the respondents directors being out of possession effective 3-9-1996 could do little and were not even in a position to submit the requisite statement of affairs to the OL under Section 454(3) of the Act of 1956 within 21 days of the passing of the winding up order dated 20-3-1997. It was only subsequently that the directors were allowed access to the record in possession of RIICO under the orders of the Company Court and filed the statement of affairs on 28-9-2001. Resultantly the proceedings taken against them under Section 454(5) of the Act of 1956 were concluded in the facts of the case and they were visited with a fine of Rs.45,000/- which was deposited by them with the OL.;