Ujval Sagar Suri v. Ganga Sagar & Co. Pvt. Ltd. & Anr.

1. We have heard learned counsels for the appellant as well as Mr. Rajiv Bahl, official liquidator who is present on behalf of the respondents. 2014:DHC:4009-DB

2. By way of the instant appeal, the appellant has assailed the order dated 11th October, 2012 passed by the learned Company Judge on the Report No.575/2012 filed by the official liquidator directing depositing of an amount of Rs.44,14,214.17 by the exdirectors of the company. The appellant also assails the order dated 26th November, 2012 passed by the learned Company Judge rejecting application being Co. Appl.No.2190/2012 whereby the review of the order dated 11th October, 2012 was sought.

3. On a reference dated 27th June, 2000 of the Board of Industrial and Financial Reconstruction with regard to M/s. Ganga Sagar and Company Private Limited, the learned Company Judge proceeded to pass an order dated 20th August, 2002 directing winding up of the company. The official liquidator thereafter proceeded in the matter. It appears that the ex-directors of the company under liquidation, that is the present appellants, set up a plea that the Madhya Pradesh Financial Corporation had taken over the possession of the factory of the company located in District Dhar and had also taken over the records of the company which were lying in the factory premises. For this reason, the appellants were not in a position to handover the record of the company to the official liquidator.

4. The MPFC had appeared before the learned Company Judge and filed a reply dated 4th September, 2009. It was submitted therein that MPFC had taken over the factory in exercise of its authority under Section 29 of the State Financial Corporation Act on the 16th of October, 1997. At the time of taking over the possession, inventory of the land, building, machinery and other properties of the company lying in the factory premises were prepared. The inventory dated 16th October, 1997 was prepared in the presence of Senior Manager of M/s. Ganga Sagar and Company Private Limited. The MPFC has disclosed that there was no mention of any books of accounts or of any other records of the company. After taking over of the possession of the property of the company, it was advertised for sale in the newspaper on ‘as is where is basis’ and sold to third party M/s. Gatiman Auto Private Limited. Pursuant to the said sale, the land, building and all other assets lying therein were handed over to the said purchaser.

5. We further find that in para 6 of its reply, the MPFC stated no notice of any kind was received by the MPFC with regard to any books of accounts or statutory record of the company lying in factory premises. MPFC also referred to a letter dated 25th July, 2009 received from M/s. Gatiman Auto Private Limited informing the MPFC that while taking possession, no record of the company was found in the said premises. In this background, MPFC was not liable for handing over or in possession of any record of the company under liquidation.

6. In its Report No.575/2012, the official liquidator disclosed the conduct of the appellants who failed to produce any of the records, including the statutory records of the company. The official liquidator disclosed that in this background, no proper statement of affairs was filed as required by law.

7. Some records relating to the company were obtained from the Registrar of the Company. The last available balance sheet disclosed that there were sundry debtors to the tune of Rs.8,22,0228.62 fixed deposit of Rs.1,44,000/- and loan and advances of Rs.31,13,835.55. A sum of Rs.44,14,214.17 is the money which is to be recovered by the company. In these circumstances, the learned Company Judge directed the ex-directors to deposit the said amount within three weeks of 11th October, 2012.

8. The ex-directors thereafter filed an application bearing Co. Appl.No.2190/2012 seeking review of the above order again taking a stand that MPFC had taken a wrong stand in its affidavit. The learned Company Judge has noted that more than one decade had passed since passing of the winding up order dated 20th August, 2002 and yet statutory compliances have not been made by the Ex-directors. The application was therefore, consequentially dismissed with costs which was quantified at Rs.10,000/- and the two ex-directors – present appellants were directed to appear in the office of the Official Liquidator to get their statements recorded under Rule 130 of the Company Court Rules. The learned Company Judge also granted one last opportunity to file their statement of affairs within 21 days failing which all necessary legal consequences would follow.

9. Given the above narration, we find no justification at all as to why the Ex-directors could not produce the record which ought to be in their power and possession. Even otherwise, the Exdirectors were not able to explain and give details of the entries in the balance sheet.

10. In terms of the provisions of Section 209 of the Companies Act, 1956 the books of accounts and statutory records of the company are required to be kept at the registered office of the company which was located at Sagar Apartments, Tilak Marg, New Delhi.

11. We are informed orally that so far as registered office is concerned, a plea was taken by the Ex-directors that the same was demolished by the NDMC in 2002. The appellant no.1 is a resident of the very building in which registered office was located while appellant no.2 lives barely one kilometre away. It is unbelievable they were not aware of the proposed demolition action, if any, or could not retrieve the records of the company.

12. It is obvious that the appellants have taken a wrong plea that the records were at the factory in Madhya Pradesh. The MPFC has disclosed that no request was ever received from the appellants that the records of the company under liquidation were lying in the factory or that they should be handed over to them.

13. The plea taken by the Ex-directors is completely unacceptable. For all these reasons, we find no merit in this appeal which is hereby dismissed. At this stage, Mr. Girdhar Govind, learned counsel for the appellant prays for one last opportunity to appear before the official liquidator and to comply with the directions made by the learned Company Judge. The ex-directors are given one very last opportunity to appear before the official liquidator on 28th of October, 2014 at 03:00 p.m. with all relevant records.

14. A further prayer is made by Mr. Girdhar Govind, learned counsel for the appellants, that the appellants may be permitted to deposit the amount of Rs.44,14,214.17 in monthly equated instalments of Rs.[3] lakhs each as the appellants are in financial difficulties. We deem this offer on behalf of the appellants to be reasonable. It is therefore directed that subject to the appellants depositing the said amount of Rs.44,14,214.17 in monthly equated instalments of Rs. 3 lakhs each with the official liquidator commencing from 15th September, 2014, the Official Liquidator shall not proceed with regard to punitive action against the ex directors. The instalments shall be deposited on or before the 15th day of each month. In the event of any two defaults in deposit of the instalments, the official liquidator shall forthwith proceed against the appellants in accordance with law. The ex directors shall file an undertaking before the company court of compliance of the above within two weeks from today. Dasti. CM No.1543/2013 In view of the dismissal of the appeal, this application is dismissed.

GITA MITTAL (JUDGE)