OFFICIAL LIQUIDATOR Vs. T J SWAMY

JUDGEMENT

(1.) The application filed by the official liquidator under section 543(1) of the Companies Act, 1956, seeks a declaration that the respondents have misapplied, retained the monies and are liable or accountable for the monies and properties of the company, are guilty of misfeasance and in relation to the property of the company and for a consequential direction to the respondents to contribute jointly and severally a sum of Rs. 4.61 lakhs with interest at 6 per cent. per annum and for costs, etc.

(2.) The averments as mentioned in the application are that the company was incorporated in the year 1972 with an authorised capital of Rs. 1 lakh and thereafter it was increased to Rs. 5 lakhs divided into 5,000 equity shares of Rs. 1,000 each. By order dated 28/01/1987, this court in C. P. No. 5 of 1981, ordered winding up of the company and, consequently, the official liquidator was appointed. It is submitted by the petitioner that the respondents have misapplied, retained, have become liable or accountable for, the monies and properties of the company. The company was having six branches throughout the State and right from the commencement of the company it has started incurring losses. Even in the first year as on 30/06/1973, the loss had accumulated to Rs. 1.75 lakhs as against a paid up capital of Rs. 25,000 and thus the initial setback continued till it was ordered to be wound up. The setback is attributed to the dishonest and negligent acts of the respondents. The outstanding debts went to the tune of Rs. 35.32 lakhs and no proper documentation was obtained from the debtors. The respondents have not taken any action to recover the amounts due from the debtors. They also violated the provisions of the A. P. Chit Funds Act. The security deposits of the employees were not deposited in the scheduled banks and confirmation letters were not obtained from the debtors or creditors, and no proper accounts were maintained. In spite of the contraventions having been brought to the notice of the respondents, no appropriate action was initiated. Heavy amounts were spent on tours and travels and on administrative expenses. The negligent act on the part of the respondents was also established that when one of the creditors filed a petition for winding up, the managing director admitted the inability which resulted in the winding up. Even after a winding up order has been passed, the respondents have flouted section 454 of the Act. The statement furnished by the company was not complete. In the majority of the cases the debtors were not traced. The assets of the company were allowed to be taken away by the creditors indiscriminately. The account books of the Vijayawada branch were not delivered to the official liquidator. Thus, the respondents committed various acts of misfeasance.

(3.) Counter-affidavits have been filed by the respondents alleging that the petition is not maintainable and the same is misconceived. It is also barred by limitation. It is specifically averred by the respondents that no specific act of misfeasance or negligence on the part of the director or managing director have been made in the petition. The allegations made against the directors and the managing director en masse cannot be enquired into by this court unless individual specific allegations are made against each respondent. There is no material to support the act of mismanagement or misfeasance. Hence, the respondents party that the application be dismissed.