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2009 (10) TMI 541 - HIGH COURT OF KERALAWhether the appellants were at fault in not producing the books of account before the sales tax authorities, the failure of which has resulted in the ‘best judgment’ order passed by the said authorities, adding substantial amounts towards the deemed turnover in respect of the period in question, which in turn has attributed to the alleged loss to the Company under liquidation? Held that:- Whether the Company was wilfully avoiding production of registers is not seen properly considered, particularly in view of the specific case of the appellants that they were not in a position to produce those records, which were stated as stealthily removed by the employees and for the very same reason, the Company Court had acquitted the very same Directors in the relevant proceedings filed by the Official Liquidator seeking to prosecute them for non-production of the records; the finality of which verdict is not seen disputed from the part of the Official Liquidator. That apart, the proceedings under section 543 of the Companies Act is rather ‘quasi-criminal’ in nature, where degree of proof and adequacy of evidence are matters, which are to be considered with more circumspection. The way in which the Company Court appreciated the case does not appear to be correct or proper in a proceeding of this nature, so as to have fixed the liability upon the shoulders of the appellants. In the above facts and circumstances, we find that the order impugned in the appeal, fixing liability upon the appellants to pay a sum of ₹ 38,94,950, with interest at the rate of 6 per cent per annum from 7-12-1988, is not correct or sustainable under any circumstance. As such, we set aside the impugned order and the appeal is allowed.
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