DR VP MAINRA v. M/S DAWSONS LEASING LTD. & ORS.

1. These applications are moved on behalf of the Official Liquidator seeking certain directions against the Ex- Management/Directors of the respondent company (in liquidation), who are arraigned as respondent Nos. 1 to 4 besides respondent No. 5, who had initially purchased the property in question of the company in liquidation and later sold it to respondent Nos. 6 & 7. This is as per the memo of appearance in CO. APPL. 1195/2012 & 2735/2014.

2. The present winding up petition under Section 433(e) and 435 of the Companies Act, 1956[1] was moved on behalf of the petitioner against the respondent company (in liquidation) and the winding up The Act proceedings were ordered to be initiated in terms of the order dated 16.02.2000, leading to the appointment of a Provisional Liquidator vide order 09.11.2022, and eventually, the final order for the liquidation of the company was passed by this Court vide order dated 23.11.2000.

3. The Co. Application 1195/2012 is in the nature of a status report filed by the Official Liquidator to the effect that on inspection of the records of the company maintained with the office of the ROC[2], it was found that following persons were the Directors of the company, namely Mr. Mukesh Hans, Mrs. Rashmi Hans, Mr. Sanjeev Hans, Mr Harsh Bhasin, Mr. Kapil Bhasin, Mr. Hardeep Oberoi and Ms. Hema Oberoi; and during the course of winding up proceedings undertaken by the Official Liquidator, notices were issued to the Ex- Directors to file the statement of affairs, which were responded by Mr. Mukesh Hans and Mrs. Rashmi Hans, who had appeared on 16.04.2002, 18.03.2003 and 16.10.2006 before the OL and their statements were recorded in terms of Rule 130 of the Companies (Court) Rules, 1959. The OL states that inter alia, it was revealed that the company (in liquidation) had been running its Head Office from the premises situated at 198/12-13, Ramesh Market, East of Kailash, New Delhi. Apart from finding several blemishes on the part of the Ex-Directors/Management, it was found that the aforesaid property at Ramesh Market had been sold by way of a registered Sale Deed dated 10.03.1999 for a total consideration of Rs.3,60,000/- to respondent No.5, but the sale consideration was not reflected in the books as well

4. Subsequently, Co. Application No. 2735/2014 was filed seeking action against the instant set of opponents under Section 531-A, 536, 537 and 538 of the Act and Rule 9 of the Companies (Court) Rules, 1959 on behalf of the Official Liquidator along with another application seeking condonation of delay of 43 days in filing the application. This application for condonation of delay has remained pending for long and since there is no objection to this, the same is allowed.

5. Evidently, it was found that the sale of the aforesaid property had been effected within a year of the presentation of the winding up petition on 07.09.1999 and further, the status that came forth was that one part of the property was later on sold by respondent No.5 to respondent No.6 vide registered Sale Deed dated 15.12.1999 and the other part of the property was sold to respondent No.7 vide registered Sale Deed dated 08.07.1999. However, the amount of sale consideration was not reflected in any of the bank accounts of the respondent company in liquidation, although details of as many as 14 bank accounts were submitted with the Official Liquidator by respondent No.1 & 2. Hence, the OL has prayed for prosecution of the Ex-Directors/Management of the company (in liquidation) under Section 538 of the Act and/or other appropriate directions.

6. Shorn of unnecessary details, evidently, respondent No.1 to 4 were the directors of the company in liquidation at the time of sale of the property in question to respondent No. 5 on 10.03.1999. It is also brought to the fore that there were two shops at 198/12-13, Ramesh Market, Garhi, East of Kailash, New Delhi, which were sold for a total consideration of Rs. 3,60,000/-. At the cost of repetition, this amount has not been accounted for, and therefore, a prayer has been made to set aside the sale of the shops No. 198/12-13 in favour of respondent No. 5 and later to respondent No. 6 & 7 in terms of Section 531-A of the Act as well as launching prosecution against the Ex-Directors under Section 5383 of the Act.

538. Offences by officers of companies in liquidation.-

(i) If any person, being a past or present officer of a company which, at the time of the commission of the alleged offence, is being wound up, whether by [the Tribunal] or voluntarily, or which is subsequently ordered to be wound up [by the Tribunal] [ Substituted by Act 11 of 2003, Section 98, for " by the Court".] or which subsequently passes a resolution for voluntary winding up,- (a) does not, to the best of his knowledge and belief, fully and truly discover to the Liquidator all the property, movable and immovable, of the company, and how and to whom and for what consideration and when the company disposed of any part thereof, except such part as has been disposed of in the ordinary course of the business of the company; (b) does not deliver up to the Liquidator, or as he directs, all such part of the movable and immovable property of the company as is in his custody or under his control, and which he is required by law to deliver up; (c) does not deliver up to the Liquidator, or as he directs, all such books and papers of the company as are in his custody or under his control and which he is required by law to deliver up; (d) within the twelve months next before the commencement of the winding up or at any time thereafter, conceals any part of the property of the company to the value of one hundred rupees or upwards, or conceals any debt due to or from the company; (e) within the twelve months next before the commencement of the winding up or at any time thereafter, fraudulently removes any part of the property of the company to the value of one hundred rupees or upwards; (f) makes any material omission in any statement relating to the affairs of the company;(g) knowing or believing that a false debt has been proved by any person under the winding-up, fails for a period of one month to inform the Liquidator thereof; (h) after the commencement of the winding up, prevents the production of any book or paper affecting or relating to the property or affairs of the company; (i) within the twelve months next before the commencement of the winding up or at any time thereafter, conceals, destroys, mutilates or falsifies, or is privy to the concealment, destruction, mutilation or falsification of, any book or paper affecting or relating to, the property or affairs of the company; (j) within the twelve months next before the commencement of the winding up or at any time thereafter makes, or is privy to the making of, any false entry in any book or paper affecting or relating to the property or affairs of the company; (k) within the twelve months next before the commencement of the winding up or at any time thereafter, fraudulently parts with, alters or makes any omission in, or is privy to the fraudulent parting with, altering or making of any omission in, any book or paper affecting or relating to the property or affairs of the company;

(l) after the commencement of the winding up or at any meeting of the creditors of the company within the twelve months next before the commencement of the winding up, attempts to account for any part of the property of the company by fictitious losses or expenses; (m) within the twelve months next before the commencement of the winding up or at any time thereafter, by any false

7. On notice, separate replies have been filed on behalf of the respondent Nos.5, 6 & 7 besides respondent Nos. 2 and 3 and the position that emerges is that the amount for sale consideration of Rs. 3,60,000/- had been credited in the account of the company (in liquidation) at Bank of Rajasthan, Karol Bagh Branch, New Delhi, the details of which (bank account) had not been disclosed by the Ex- Directors/Management pursuant to the inquiries, which were initially conducted by the Official Liquidator.

8. Having heard the learned counsels for the respondent Nos. 5, 6 & 7 as well as respondent Nos. 1 and 2/Ex-Directors, namely Mr. Mukesh Hans and Mrs. Rashmi Hans, it is categorically brought out that the true and correct information had not been supplied by representation or other fraud, obtains on credit, for or on behalf of the company, any property which the company does not subsequently pay for; (n) within the twelve months next before the commencement of the winding up or at any time thereafter, under the false pretence that the company is carrying on its business, obtains on credit, for or on behalf of the company, any property which the company does not subsequently pay for; (o) within the twelve months next before the commencement of the winding up or at any time thereafter, pawns, pledges or disposes of any property of the company which has been obtained on credit and has not been paid for, unless such pawning, pledging or disposing is in the ordinary course of the business of the company; or (p) is guilty of any false representation or other fraud for the purpose of obtaining the consent of the creditors of the company or any of them, to an agreement with reference to the affairs of the company or to the winding up, he shall be punishable, in the case of any of the offences mentioned in clauses (m), (n) and (o), with imprisonment for a term which may extend to five years, or with fine, or with both, and, in the case of any other offence, with imprisonment for a term which may extend to two years, or with fine, or with both: Provided that it shall be a good defence-(i)to a charge under any of the clauses (b), (c), (d), (f), (n) and (o), if the accused proves that he had no intent to defraud; and (ii) to a charge under any of the clauses (a), (h), (i) and (j), if he proves that he had no intent to conceal the true state of affairs of the company or to defeat the law.(2) Where any person pawns, pledges or disposes of any property in circumstances which amount to an offence under clause (o) of sub-section (1), every person who takes in pawn or pledges or otherwise receives the property, knowing it to be pawned, pledged, or disposed of in such circumstances as aforesaid, shall be punishable with imprisonment for a term which may extend to three years, or with fine, or with both. (3) For the purposes of this section, the expression "officer" shall include any person in accordance with whose directions or instructions the Directors of the company have been accustomed to act. respondent Nos. 1 to 4 during the course of winding up proceedings by the Official Liquidator in as much as the aspect of the sale and its consideration, that had been deposited in the Bank of Rajasthan, Karol Bagh Branch, New Delhi, was not disclosed.

9. All said and done, it stares on the face of the record that in so far as the property in question is concerned, third party rights have already been created much before the initiation of the instant winding up proceedings. There is no iota of allegations by the Official Liquidator that there was any collusion between the Ex-Directors of the company (in liquidation) and respondent No.5 and/or for that matter, the respondent Nos.[6] and 7 in any manner and by all means, that they bonafidely purchased the property in question when there was pending no winding up petition.

10. However, respondent Nos. 1 to 4, namely Mr. Mukesh Hans, Mrs. Rashmi Hans, Mr. Hardeep Oberoi and Ms. Hema Oberoi, who were the Ex-Directors during the relevant time of the company (in liquidation), are guilty of fraudulent concealment and have misappropriated the funds as well. Resultantly, such an amount has not been made available for the satisfaction of the outstanding dues of the secured creditors etc.

11. Taking on record the OLR No. 91/2023 and in view of provisions of Section 538 of the Act, it is directed that the aforesaid respondent Nos. 1 to 4 are held accountable and liable to pay Rs. 3,60,000/- with penal interest @ 12% per annum from the date of execution of the Sale Deed i.e. 10.03.1999, jointly and severally, which shall be paid to the Official Liquidator within 30 days from today. Failing which, the Official Liquidator shall be at liberty to initiate an appropriate complaint for the prosecution of the respondent no. 1 to 4, namely Mr. Mukesh Hans, Mrs. Rashmi Hans, Mr. Hardeep Oberoi and Ms. Hema Oberoi under Section 538 of the Companies Act.

DHARMESH SHARMA, J. FEBRUARY 08, 2024