Delhi High Court
Mrs. Jamna Datwani vs Official Liquidator on 17 January, 2012
Author: A.K.Sikri
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 17th January, 2012
+ CO.APP. 12/2011
MRS. JAMNA DATWANI ..... Appellant
Through: Mr. Sudhir Makkar with Ms. Meenaakshi
Singh, Adv.
versus
OFFICIAL LIQUIDATOR ..... Respondent
Through: Mr. Ashish Makhija, Office Liquidator
with Ms. Neha Rastogi, Adv.
CORAM :-
HON'BLE THE ACTING CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
JUDGMENT
A.K.SIKRI, ACTING CHIEF JUSTICE
1. This appeal is preferred against the order dated 2 nd December, 2010
passed by Learned Company Judge in Crl. O.(CO) No.4/2006 (in CP
No.263/1997) filed by the Official Liquidator under Section 454 of the
Companies Act, for prosecution of eight Directors of M/s.Metlex Ceramics Ltd.
(in liquidation) on the ground that no Statement of Affairs had been filed by any
of these Directors inspite of the company being ordered to be wound up as far
back as on 21st July, 2004. The appellant herein had appeared in those
proceedings. Her statement was recorded by the Official Liquidator. Thereafter
the matter was heard. The contention of the appellant was that she is a
housewife and was not participating in the affairs of the company; her husband
who was mainly looking after the affairs of the company had suffered a stroke
and because of which he was paralyzed and confined to bed; in his absence she
was made to sign certain papers; otherwise she was not concerned with the
running of the company (in liquidation). The Learned Company Judge after
examining the matter has by the impugned order found that as per the
appellant‟s own admission she had been signing documents of the company and
this prima facie showed that she was looking after the affairs of the company.
With respect to the plea of the appellant in her statement recorded before the
Official Liquidator as well as the Court that the affairs of the company were
looked after by Manager, Chartered Accountants etc. and she did not know them
and that she signed the documents without reading those documents, the
Learned Company Judge has stated that this is her defence which has to be
established and examined in trial. Though the Learned Company Judge by the
impugned order found a case for proceeding against the appellant but still gave
another opportunity to the appellant. Though the appellant has not filed any
subsequent order but the counsel informs that upon the appellant failing to avail
opportunity by filing Statement of Affairs, she has been ordered to be proceeded
against.
2. The admitted position which prevails today is that the company was
ordered to be wound up on 21st July, 2004. Almost 7½ years have passed but the
statement of affairs has not been filed so far. Learned Company Judge has
recorded dismal state of affairs which are delaying the process of winding up.
We had directed the Official Liquidator to file the report about the status of
other Directors of the company. The Official Liquidator has filed the report
stating as under:-
Status Report
"R-1 Sh. Jaswant Kumar Garg The Hon‟ble Court vide its order dated
S/o Sh. Dharam Chand 10th August, 2006 deleted the name of
Garg Sh. J.K. Garg, from array of parties, as
A, 2-B, Ashok Vihar the IDBI has appointed the said
New Delhi-110 052. respondent as the nominee of IDBI on
the Board of Directors of the
Company w.e.f. 4/11/93 and withdrew
the nomination w.e.f. February
04,1998. Copy of order and letter of
IDBI are enclosed as Annexure‟A‟.
R-2 Sh. Tircky Vaidyanathan As per process server report he was
Gaveron residing on rent at the given address 8-
B-154, B.K. Dutt Colony, 10 years ago. Copy of notice along
New Delhi with process report is enclosed as
Annexure „B‟.
R-3 Sh. S.L. Chopra Sh. S.L. Chopra has filed affidavit
C-3/13, Safdarjung before the Court stating that he had
Industrial Area, New Delhi- ceased to be a Director and did not
110 006. have any information or record with
him. This office has filed reply before
the Court that Form No.32 has not
been filed. So the present proceedings
be continued against the ex-Director.
A copy of affidavit and reply are
enclosed as Annexure „C‟.
R-4 Sh. J.K. Mukhi He appeared in this office on 21.07.04
A-27, Neeti Bagh and recorded his statement under Rule
New Delhi. 130 of the Companies Court Rule,
1956 and the Hon‟ble Court vide its
order dated 14.09.07 discharged Sh.
J.M. Mukhi from the criminal
proceedings and his name is deleted
from the array of the respondents. A
copy of the statement and order is
enclosed as Annexure „D‟.
R-5 Sh. Balu Datwani As per Police report whereabouts of
71-Golf Links Sh. Balu Datwani not known. A copy
New Delhi. of the Report is enclosed as Annexure
„E‟.
R-6 Sh. Raghuber Sareen Nigam He appeared in this office on 30.09.04
S/o Sh. Shiv Sharan Lal and recorded his statement under Rule
Nigam 130 of the Companies Court Rule,
Vaishali, Pitampura 1956 and also given a letter on
New Delhi. 30.09.04 stating that for a very short
time (2-3 weeks) he was appointed as
Special Director in this company by
the BIFR. Copy of statement and letter
dated 30.09.04 are enclosed as
Annexure „F‟.
R-8 Sh. Rajiv Bohra As per the Police report Mr. Rajiv
S/o Sh. Johrimal Bohra Bohra is not residing at the given
G-159, Sarita Vihar address. A copy of report is enclosed
New Delhi as Annexure „G‟."
3. It is clear from the above that R-1 Sh. Jaswant Kumar Garg and R-6 Sh.
Raghuber Sareen Nigam were appointed to the Board of Directors as nominee of
IDBI and on the direction of BIFR respectively. In so far as R-4 Sh. J.K. Mukhi
is concerned he was discharged by the Company Judge vide order dated 14 th
September, 2007 and his name had been deleted from the array of the
respondents. R-2 Sh. Tircky Vaidyanathan Gaveron is not available at the given
address and his present whereabouts are not known. Same is the position of R-5
Sh. Balu Datwani; though he is stated to be a resident of 71, Golf Links, New
Delhi. We are informed that he was a resident of UK and residing in UK for the
last more than 30 years. In these circumstances, it cannot be said that even he
was handling the affairs of the company at the material time.
4. This leaves us with R-3 Sh. S.L. Chopra and R-8 Shri Rajiv Bohra. Even
though Sh. Rajiv Bohra is shown as Managing Director in the Crl.O filed by the
Official Liquidator, even he is not residing at the given address and his present
address is not known as per the Police report. In so far as Shri S.L. Chopra is
concerned, his statement was recorded in which he stated that he ceased to be
Director and did not have any information or record with him. However at the
same time, the Form 32 was not filed before the Registrar of Companies and
therefore in the report filed by the Official Liquidator it is stated that for the
purpose of present proceedings he could be treated as ex-Director responsible
for the affairs of the company. No order so far has been passed by the Learned
Company Judge in respect of Shri S.L. Chopra. The Official Liquidator should
place these facts before the Learned Company Judge so that the Learned
Company Judge is able to pass appropriate orders in respect of other Directors
as well.
5. In so far as present appeal is concerned, we find that prima facie there is
material to proceed against the appellant under the aforesaid provision. Mr.
Makkar, Learned counsel for the appellant has relied upon the Full Bench
judgment of this Court in M/s Security & Finance Pvt. Ltd. v. B.K. Bedi 10
(1974) DLT 181 and Division Bench judgment in Devindar Kishore Mehra v.
Official Liquidator 16 (1979) DLT 150 and on the basis of these judgments his
submission is that there should be some evidence on record before the Learned
Company Judge decides to proceed against a person under Section 454(5) of the
Companies Act. These judgments are discussed at length by the Learned
Company Judge in the impugned order. The Learned Company Judge has also
referred to and has distinguished those judgments.
6. We have deliberately referred to the position qua other Directors and have
pointed out that as of today except Sh. S.L. Chopra it would not be possible to
proceed against any other Directors. If the appellant or Sh. S.L. Chopra are also
allowed to go scot free and are not even tried, the effect of that would be as if
none of the Directors had any responsibility and/or duty to file the statement of
affairs; such a situation cannot be accepted at all. It cannot be said that not even
one Director was responsible for running the company and the company was
managed by some other persons who were not Directors. Once the appellant
assumed the position of a Director and some evidence has come on record in the
form of signing the documents, prima facie it would lead to the conclusion that
she was taking part in the day to day affairs of the company. Learned Company
Judge has rightly held that whatever she had stated in her defence can be looked
into at the time of trial. We are therefore of the opinion that there is no merit in
this appeal; the same is accordingly dismissed. However we again impress upon
the Official Liquidator to take up the matter before Learned Company Judge
against Sh. S.L. Chopra. The Official Liquidator shall also take correct address
and positive steps for serving Sh. Tircky Vaidyanathan Gaveron and Shri Rajiv
Bohra.
No order as to costs.
ACTING CHIEF JUSTICE
RAJIV SAHAI ENDLAW, J
JANUARY 17, 2012/„pp‟
