OFFICIAL LIQUIDATOR Vs. MAGANLAL HIRACHAND SHAH

JUDGEMENT

(1.) In this application by the Official Liquidator for appropriate action against the respondents under S. 543 of the Companies Act, Respondents. 10-A(i) (ii), (iii) and (iv) and 10-B (i), (ii), (iii) and (iv) have questioned the legality of the proceedings against them.

(2.) It is necessary to state that Respondent-10 is a partnership firm represented by two of its partner's 'A' and 'B' who had died even before the application was filed by the Official Liquidator under S. 543 of the Companies Act (hereinafter referred to as 'the Act'). Respondents 10-A (i), (ii), (iii) and (iv) are the widow and minor children of the deceased partner S. M. Parkhe. Similarly, Respondents-10-B(i), (ii) (iii) and (iv) are the widow and minor children and mother respectively of the deceased partner A.V.Kavathekar.

(3.) The allegation by the Official Liquidator against Respondent-10 the partnership firm is that at the relevant time the partnership firm M/s. Parkhe Associates were the lessee of the Company in liquidation under an agreement dated 17-7-1964; that the respondents had managed the affairs of the Company in terms of the agreement and in the course of such management, the lessee-firm caused loss to the extent of Rs. 4,44,534-00 to the Company by selling the products of the Company to a favoured buyer at a discount, over a period of five years. It is further alleged that the lessee-firm favoured, in the course of the management, Ganesh and Company, Poona, who had other connections with the firm by buying raw-material for the business of the Company in liquidation at a higher rate than what was paid to local buyers for the raw- materials. In this behalf, it is claimed by the Official Liquidator that the Company, over a period of eight years, suffered a loss of Rs. 1,85,911-43 and most of it was attributable to the lessee-firm's mis-management.