BABULAL LATH Vs. OFFICIAL LIQUIDATOR

JUDGEMENT

(1.) Heard the learned Counsel for the petitioners and the Counsel for the respondent.

(2.) It is claimed that petitioners 1 and 2 were the directors of M/s Texas Industries Limited, which is the company in liquidation and which was ordered to be wound up by order dated 3.10.2002 and the Official Liquidator was appointed as the liquidator. Before filing of the winding up petition, it is claimed that the company in liquidation had six directors, out of which, three directors had resigned from the directorship from 16.3.1999 and another director resigned on 20.10.1997. Petitioners 1 and 2, continuing as directors as on the date of the winding up order, were permanent residents of Mumbai and it was the other directors, who were in charge of the management and the day to day affairs of the company. The first petitioner claims to be permanently disabled and aged. It is further stated that the company in liquidation had stopped functioning since Nov. 1997 and other four directors having resigned from directorship, all the activity had come to a stand still. It is pursuant to the order of winding up, the respondent herein had issued a notice dated 27.11.2002 under Sec. 454 of the Companies Act, 1956 (Hereinafter referred to as the 'Act', for brevity) demanding that the petitioners file State of affairs along with an affidavit and that in case of failure, the respondent would be compelled to initiate action under Sec. 454 of the Act. A representation had been made seeking time to furnish documents pursuant to the notice and the petitioners made efforts to produce whatever documents that were available in their custody and it was brought to the attention of the respondent that all the documents had been submitted on 5.3.2003, namely,

(3.) It was specifically stated that the company had come to a standstill and it had stopped functioning from Nov. 1997, after the State Bank of India having taken over possession of the assets of the company and hence, the petitioners sought extension of time to file any other documents that could be retrieved, by letter dated 10.3.2003. It is in the above circumstances that the respondent is said to have filed a complaint before the Special Court for Economic Offences under Sec. 538(1)(c) of the Act read with Rule 9 of the Companies (Court) Rules, 1959 in CC No.131/2008 against the petitioners along with four other directors, who had ceased to be directors. The petitioners were named as accused nos.4 and 5 while the ex-directors were named as accused nos.1,2,3 and 6. It was alleged that the present petitioners and other ex-directors had failed to comply with the directions issued in filing the statement of affairs etc. Those proceedings were sought to be stayed by recourse to an application in CA 1578/2013 which was allowed by an order dated 12.11.2013 and all further proceedings before the Special Court for Economic Offences in CC 131/2008 have been stayed. It is further stated that the petitioners inspite of their disability in view of their non-participation in the management of the affairs of the company having filed the above documents had approached this court by way of an application in CA 75/2007, while the respondent filed an application in CA 70/2003, seeking that cognizance ought to be taken of the lapse on the part of the petitioners in not having complied with Sec. 454 of the Act. These applications were disposed of by a common order holding that the petitioners herein had complied with the requirement of rectifying the defects in the statement of affairs. It is in this background that it is contended that the proceedings as against the petitioners are rendered infructuous and hence the proceedings ought to be closed both in respect of the allegations of non- compliance under Sec. 454 of the Act and the alleged offences said to have been committed under Sec. 538(1)(c) of the Act.