M/S JAIPUR SPINNING AND WEAVING MILLS LIMITED (IN LIQUIDATION) THROUGH ITS OFFICIAL LIQUIDATOR Vs. GANESH NARAIN R. PODDAR (SINCE DECEASED)]

JUDGEMENT

(1.) This company application under section 543(1) of the Companies Act, 1956 has been presented by the Official Liquidator (OL) appointed for the Jaipur Spinning and Weaving Mills Limited (company in liquidation).

(2.) The company in liquidation was ordered to be wound up by this order vide order dated 02/12/1983. The OL was accordingly appointed in terms of Section 449 of the Act, 1956. The non-applicants No.1 to 5 are the Directors of the Company in liquidation and the non-applicant no.6 is Secretary-cum-Financial Controller. The non-applicant no.1 expired and his legal representatives were taken on record apart from non-applicant no.2 who was also a Director.

(3.) Initially, the respondents raised preliminary objection relating to limitation. The same was, however, rejected by this Court vide order dated 19/04/1991. The said order was upheld by the Supreme Court. The case of the OL is that the company has suffered losses on account of the respondents. It had taken services of M/s. N.C. Jain and Associates, Chartered Accountants, Jaipur for the purpose of conducting investigation of books of accounts and to find out instances which may fall within the purview of Section 543 of the Act, 1956 and the OL submits that the respondents were guilty of misfeasance and breach of trust in relation to the company in liquidation. As on 31/12/1980 the total sundry debtors amount is Rs. 114.27 lac. A sum of Rs. 34,63,880/- was recoverable from 75 sundry creditors. However, the debt had become time barred long back as it related to period from 1973 to 1978. The non-applicant no.1-Director, for the first time, informed the Board of Directors in its meeting held on 09/05/1981 about the lapses of the company in not filing suits for recovery of the aforesaid amount. Thus, the non-applicants allowed the debts of the huge amount of Rs. 34 lac to become time barred. No steps were taken to recover such huge amount of the company although it was their prime duty and therefore, they are jointly and severally liable for the said amount. It was on account of shortage of goods supplied by the company to the said debtors from Jaipur Factory as well as Panipat Office. The shortage is revealed from the register maintained as as Central Excise Register known as R.G.1 Register. The goods from Panipat Office were found to have re-booked by Praveen Road Lines to Jaipur Factory but no received, hence the shortage and thus guilty of misfeasance.