LIQUIDATION OFFICIAL LIQUIDATOR Vs. HARIDAS MUNDHRA

JUDGEMENT

(1.) This matter has come up for public examination of (1) Haridas Mundhra, (2) Daulat Singhi, (3) Nandlal More, (4) Shiv Bux Mohatta and (5) Herbert Hill, directors of Shri Madhav Mills Ltd., which is in liquidation (hereinatfer referred to as "the company") under section 478 of the companies Act, 1956. The last named director is abroad, but it was decided to proceed with the public examination of the other four director who were present. Before the public examination of the said directors could be proceeded with Mr. J. C. Bhatt who appeared on behalf of the said Mundhra (respondent No. 1 to the misfeasance summons) raised certain preliminary objections which were argued at great length and the present order relates to all those preliminary objections.

(2.) The facts necessary for the purpose of the present order are that on that on the 5th of August, 1959 the company was ordered to be wound up. It may at this stage be mentioned that according to the official liquidator, Haridas Mundhra was the director-in-charge of the said company till the date of the winding-up order. On the 20th of December, 1960, the official liquidator made a preliminary report top the court under section 455(1) of the Companies Act. On the 26th of April, 1962, an auditor by name Tandon was appointed by the court to investigate into the affairs of the company. The statement of arrears which under section 453(3) of the Act should have been filed within 21 days from the date of the winding-up order was actually filed by the said Mundhra only on the 28th of September 1963. This delay in the filing of the statement of affairs had been sought to be explained on behalf of the said Mundhra on the ground that from 17th January, 1961, to 1st June, 1963, the said Mundhra was undergoing sentence of imprisonment in jail in connection with some other matter. The said auditor, Tandon made his reports on the 22nd of January, 1964, and the 28th June, 1964. On the 15th July, 1964, on a report filed by the official liquidator of the company my brother, K. K. Desai directed him to take out a misfeasance summons against the directors of the company, but authorised the official liquidator to keep the proceedings therein pending till the private and/or public examination of the directors were concluded. Pursuant to that order, the official liquidator filed a misfeasance summons, supported by the necessary affidavit, on the 3rd of August, 1964, but the same has not yet been served on any of the directors, My brother Kantawala, by his order, dated the 2nd of December, 1964, made on another report filed by the official liquidator, directed him "to proceed to have the directors examined publicly" under the provisions of the Companies Act, and it is pursuant to that order that this matter has come up before me for public examination of the directors. On the 16th of December, 1964, the requisite notice under rule 250 of the Companies (Court) Rules, 1959, specifying the time and place when the public examination would be held was issued. All the directors, except the said Haridas Mundhra were served with that notices, but it is apparent from the facts on record that the said Mundhra evaded service of the notice and the official liquidator had ultimately to obtain on the 14th of June, 1965, an order for substituted service of the notice on the said Mundhra by publication in the newspaper. Even thereafter, the said Mundhra failed to attend at the time and place appointed from time to time for holding the public examination. It so happened that Mundhra was required as a witness in a suit which was on my board and after some drastic order were made by me in regard to the same his presence was secured to give evidence in that suit. The public examination in the present case was also on board on the same day but after his evidence in the said suit was over an application was made on behalf on Mundhra that the public examination should not be proceeded with till inspection of the voluminous record was taken by and on behalf of the said Mundhra. I granted that application and thereafter further adjournments were taken from time to time ostensibly also for the purpose of that inspection on an undertaking being given by the said Mundhra to be present at each date fixed for the public examination, and on his furnishing the bond of a Bombay resident to secure his presence. Mundhra, however, failed at attend, and it was only when another drastic order was made by me on 10th September, 1969, directing the issue of a non-bailable warrant for the arrest of the said Mundhra under rule 256 of the Companies (Court) Rules, 1959, and directing the head bailiff of the sheriff of Bombay to go to Calcutta to execute that warrant that the presence of the said Mundhra could be secured, Ultimately when the matter reached before me on 13th October, 1969, Mr. Bhatt on his behalf raised certain preliminary objections. It may be mentioned that those objections have nothing to do with inspections of the record for which adjournments were applied for by the said Mundhra from time to time. Since those preliminary objections have been raised by counsel on his behalf I am however bound to deal with the same.

(3.) The preliminary objections raised by Mr. J. C. Bhatt on behalf of Mundhra were as follows :