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TMI Blog2005 (9) TMI 317X X X X Extracts X X X X X X X X Extracts X X X X ..... causing severe losses to the company. 3. On a creditor's winding up petition in Company Petition No. 58 of 1997 by M/s. GTC Industries Ltd., M/s. Parasrampuria Trading and Finance Ltd. (in liquidation) was wound up on 25-3-1998. G.T.C. Industries Ltd. v. Parasrampuria Trading & Finance (P.) Ltd. [2001] 104 Comp. Cas. 368 (All.). The ex-directors of the company filed the "statement of affairs" under section 454 of the Act showing huge losses. 4. In the year 1994, the company was subjected to an inspection by the Central Government under section 209A of the Companies Act, 1956. The Deputy Director (Inspection) in the Regional Directorate, NR, Department of Company Affairs, Ministry of Law, Justice and Company Affairs, vide his letter dated 19-12-2001, requested the official liquidator, annexing therewith copy of the inspection report with the findings against the ex-directors to be guilty of violating sections 43A, 227, 269/390/198, 211, 292, 295, 299/301 and 372 of the Companies Act, 1956, to take action against them and to file an application for misfeasance and misappropriation of funds against the ex-directors. The official liquidator in pursuance of the letter, has filed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quantifying the loss to the company arising out of such acts or omissions. The burden of proving misfeasance or non-feasance rests on the official liquidator. The official liquidator, it may be mentioned, merely relied upon the evidence recorded in public examination of the directors and on a few documents tendered in evidence. At the stage of public examination there was no charge of misfeasance against the directors and they were not in a position to know what would be the grounds that would be alleged against them for recovering any amounts for the loss said to have been caused to the company by reason of such misfeasance. The application made by the official liquidator did not give sufficient particulars which, in our view, it should have. Once a show-cause notice was given to respondent Nos. 1 to 4 the official liquidator did not lead any evidence nor rely upon any other documents, nor did respondent No. 5 who was instrumental in initiating the misfeasance case against respondent Nos. 1 to 4 lead any evidence. In our view, there was no justification whatsoever for the District Court to reject the evidence which the respondents had intended to lead or to disallow the production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring the balance-sheets. Auditors have not cared even for the converted status of the company and have audited balance-sheet of private limited company even after conversion on 1-10-1985. The misuse of funds by the directors and their relatives to the tune of such extent which is three/four also be considered as sufficient and just and fair for petition under section 433/439 also. It may be supported by the facts that agency of the company with GTC Industries has now come to an end and company has no proposal for diversification or adoption of new business. The specific contraventions of the Act have already been discussed in paras, above. However, the facts remains that the company is a closely held company of the Parasrampuria family members. The inspection of group companies as suggested at para. 5.1 may also be considered." 9. The report is in three parts. Part A of the report consists of preliminaries with regard to inspections which includes the main objects of the company, its capital structure and shareholding pattern, financial position and working results, and thereafter the report proceeds with the contravention of the Companies Act, 1956 and the accounting policies. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. Similarly, it traded in shares of Nath Mercantile Ltd. and invested Rs. 2,205, Rs. 10,300 in shares of Ambar Mercantile Ltd. during the year ending 31-3-1991, and investment of Rs. 10,000 in shares of SBI during the year ending 31-3-1994. In the year 1994 certain investment like shares of Kalpana Mercantile Vishwa Jyoti Marketing Pvt. Ltd., Nath Mercantile Ltd. and Ambar Mercantile Ltd. were sold by the company. 13. The company failed to make the statutory entry of the investment with Registrar within seven days. In para 5.3 the contravention with regard to section 299/301 of the Companies Act was recorded. It was also found that in para 5.4 of the companies contravened section 43A of the Compa- nies Act inasmuch as during the year ending 30-6-1983, 30-6-1984 and 30-6-1985, the turnover was Rs. 6,64,483, Rs. 1,23,27,937 and Rs. 2,16,36,263 respectively. This turnover attracted the provisions of section 43A of the Companies Act and that the company became public limited company with effect from 1-10-1995, but the management and auditors of the company treated the company as a private company till the year 1998-99 and up to 27-11-1999, the date on which ROC changed the certifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,16,36,263 the average of the three consecutive financial years exceeded Rs. 1 crore and attracted section 43A of the Companies Act, 1956, failed to inform the ROC within three months of the date when the company became a public company which information was given to the Registrar of Companies only on 30-4-1990 and thereby continued to treat the company as a private company till date in violation of sections 295, 211, 269, 227 and 43A of the Companies Act, 1956 and thus committed offence under sections 542 and 543 of the Companies Act punishable under section 542(3) of the Companies Act. 3. That you, Sri Gopal Pandey, Sri Vishnu Kant Misra, Smt. Chandra Kala Parasrampuria and Sri Sudhir Kumar Parasram Puria, ex-directors of M/s. Parasrampuria Trading and Finance Ltd. (in liquidation) took loans from the company from time to time in your own names and in the names of your relatives and friends without disclosing the maximum amount due from the directors in the balance-sheet, without any interest and failed to repay the same which is so found in paras 5.1, 5.4 and 5.7 of the Assistant Inspecting Officer's report dated 31-7-1995, appointed by the Central Government under section 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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