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Judgment
A.S. Bopanna, J.—The instant application is filed by the Official Liquidator under Section 543 of the Companies Act seeking this Court to declare that the respondents are jointly and severally liable to pay to the Official Liquidator a sum of Rs. 83,25,332/- with interest at 18%p.a.
The applicant company was ordered to be wound up by this Court on 11.04.2000 in Co. P. No. 18/1999. Subsequent to the Official Liquidator taking over the assets of the company and in the process of the liquidation proceedings has taken into consideration the report submitted by M/s. H.N.S. Rao and Company, Chartered Accountants. In the conclusion portion of the said report filed by the Chartered Accountant, the particulars of the amount due to the company has been indicated under different heads. The Official Liquidator taking note of the same has filed this application seeking to claim the said amount and in the very prayer column, it has been indicated that the claim as made is as per the report of the Chartered Accountant.
Respondents No. 1 and 3 have appeared and filed their objection statement. Respondents No. 2 and 5 died during the pendency of this application and therefore the claim against them stands abated. Respondent No. 4 though served with notice did not choose to appear.
Respondents No. 1 and 3 through their objection statement have disputed the claim as put forth in this application. It is their contention that as on the date of winding up order and prior to the same they were not in-charge of the affairs of the company and the affairs of the company were being managed by the second respondent. In that light, they have contended that they cannot be held liable for the amount which is sought to be claimed in the application. Even otherwise, they have sought to contend that the claim as made based on the report of the Chartered Accountant is not justified and reference is also made to the writ petition which had been filed as against the claim that was put forth by the forest department and with regard to the claim of the employees for which the amount had been borrowed.
The matter was accordingly set down for evidence. Since the entire basis of the claim in the application is on the report of the Chartered Accountant, the Chartered Accountant from the said firm was examined as P.W. 1. In the affidavit evidence tendered by him, he has in fact referred to the very same nature of the averments that have been made in the application. He had been subjected to cross-examination on 01.06.2012. In the cross-examination made on behalf of respondents No. 1 and 3, he has at the outset admitted that as seen from the records, the respondents No. 1 and 3 were not in-charge of the day-to-day affairs of the company. He has thereafter proceeded to admit in the cross-examination that the loss incurred to the company is not due to any act of commission or omission of the respondents No. 1 and 3. Further, he has also admitted in his cross-examination that the borrowing as made from M/s. Woodchem Trade Links (India) Pvt. Ltd. was to pay the workers liability as per the High Court order in W.P. No. 13896/1997. In addition, he has also stated that on verification of the records, the amount as claimed by the forest department is towards seigniorage value of timber supplied by the forest department prior to 1988. He has categorically stated in his cross examination that the said amount is not payable in view of the judgment passed in W.P. Nos. 15778-789/1988. In that regard, it is to be noticed that the said writ petitions are stated to have been filed on behalf of the Association of the Timber Industries challenging the Government Policy with regard to levy of seigniorage value and in the said proceedings, the position of law was settled and therefore, the amount was held as not liable to be paid.
In that view, having taken note that the claim as made in the application is based on the report of the Chartered Accountant, the admissions in the cross-examination of the said Chartered Accountant who is the author of the report would be the relevant piece of evidence to come to the conclusion as to whether the amount as claimed should be declared as payable by the respondents. In any event, the position of law is well settled that when a claim under Section 543(1) of the Companies Act is made, the fact that the respondents who are arraigned in the application should also be proved to have misappropriated the said amount with the intention of appropriating the said amount to themselves.
If this aspect is kept in view, when the Chartered Accountant has in no uncertain terms admitted in cross-examination that respondents No. 1 and 3 were not in-charge of the affairs of the company as on the date of winding up order or immediately prior thereto, the liability in any event cannot be fastened on them. Since respondents No. 1 and 3 have also contended that respondent No. 2 was in-charge of the affairs of the company, the claim against respondent No. 2 in any event stands abated due to his death. Though respondent No. 4 has not chosen to appear and dispute the claim, keeping in view the nature of the claim made and the Chartered Accountant admitting the above noticed aspects in his cross-examination, the claim in any event would not be sustainable.
Therefore, I am of the opinion that the prayer as made in the instant application cannot be granted.
The application is accordingly dismissed.