OFFICIAL LIQUIDATOR KARNATAKA HIGH COURT Vs. R C MARATHE

JUDGEMENT

(1.) This application is filed by the official liquidator of this court under s. 543(1) of the Companies Act, 1956 (hereinafter referred to as "the Act"), alleging against five of the former directors of M/s. Coaram Chemicals Private Ltd. (in liquidation) for acts of misfeasance. One of the five directors, who is the 1st respondent in the application, was the managing director up to February 8, 1969. The 4th respondent was the administrative director with effect from February 8, 1969, on which date, the 1st respondent-managing director was designated as technical director. The other respondents, who were ordinary directors, did not have direct concern in the matter of day-to-day administration of the company in liquidation.

(2.) The official liquidator has alleged that the company in liquidation was originally incorporated on 5th May, 1966, with an authorised capital of Rs. 2,00,000 divided into 200 equity shares, each valued at Rs. 1,000. The said capital was at all material times issued and stood subscribed and credited in the books of the company as fully paid. Thus, there was no difference between the authorised capital and the subscribed capital. By an order dated January 22, 1971, in Company Petition No. 21 of 1970, the company was ordered to be wound up by this court and the official liquidator was appointed as the liquidator of the company in liquidation. On July 13, 1973, in Company Application No. 168 of 1973, this court appointed M/s. K. V. Narasimhan and Company as special auditors to complete the books of accounts of the company and also to examine and report whether there had been any acts of misfeasance, misapplication, retainer or breach of trust in relation to the company by the 1st respondent-managing director and other respondents-directors. This application under s. 543(1) of the Act is the result of the report of the auditors so appointed by this court.

(3.) The official liquidator has made the allegation of misfeasance against all the respondents depending on the report of the auditors, which is extracted here below.