Delhi High Court
Ujval Sagar Suri vs Ganga Sagar & Co. Pvt. Ltd. & Anr. on 20 August, 2014
$~1
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 20th August, 2014
+ CO.APP. 6/2013 & CM Nos.1543 & 45/2013
UJVAL SAGAR SURI ..... Appellant
Through : Mr. Girdhar Govind and
Mr. Noor Alam, Advs.
versus
GANGA SAGAR & CO. PVT. LTD.
& ANR. ..... Respondents
Through : Mr. Rajiv Bahl, Official
liquidator.
CORAM:
HON'BLE MS. JUSTICE GITA MITTAL
HON'BLE MR. JUSTICE SUNIL GAUR
GITA MITTAL, J. (Oral)
CM No.1545/2013
Heard. For the reasons stated, the stated delay of 43 days in
filing the appeal is hereby condoned.
The application is allowed.
CO.APP. 6/2013
1. We have heard learned counsels for the appellant as well as
Mr. Rajiv Bahl, official liquidator who is present on behalf of the
respondents.
Co.App.No.6/2013 page 1 of 9
2. By way of the instant appeal, the appellant has assailed the
order dated 11th October, 2012 passed by the learned Company
Judge on the Report No.575/2012 filed by the official liquidator
directing depositing of an amount of Rs.44,14,214.17 by the ex-
directors of the company. The appellant also assails the order
dated 26th November, 2012 passed by the learned Company Judge
rejecting application being Co. Appl.No.2190/2012 whereby the
review of the order dated 11th October, 2012 was sought.
3. On a reference dated 27th June, 2000 of the Board of
Industrial and Financial Reconstruction with regard to M/s. Ganga
Sagar and Company Private Limited, the learned Company Judge
proceeded to pass an order dated 20th August, 2002 directing
winding up of the company. The official liquidator thereafter
proceeded in the matter. It appears that the ex-directors of the
company under liquidation, that is the present appellants, set up a
plea that the Madhya Pradesh Financial Corporation had taken over
the possession of the factory of the company located in District
Dhar and had also taken over the records of the company which
were lying in the factory premises.
Co.App.No.6/2013 page 2 of 9
For this reason, the appellants were not in a position to
handover the record of the company to the official liquidator.
4. The MPFC had appeared before the learned Company Judge
and filed a reply dated 4th September, 2009. It was submitted
therein that MPFC had taken over the factory in exercise of its
authority under Section 29 of the State Financial Corporation Act
on the 16th of October, 1997. At the time of taking over the
possession, inventory of the land, building, machinery and other
properties of the company lying in the factory premises were
prepared. The inventory dated 16th October, 1997 was prepared in
the presence of Senior Manager of M/s. Ganga Sagar and Company
Private Limited. The MPFC has disclosed that there was no
mention of any books of accounts or of any other records of the
company. After taking over of the possession of the property of
the company, it was advertised for sale in the newspaper on 'as is
where is basis' and sold to third party M/s. Gatiman Auto Private
Limited.
Co.App.No.6/2013 page 3 of 9
Pursuant to the said sale, the land, building and all other
assets lying therein were handed over to the said purchaser.
5. We further find that in para 6 of its reply, the MPFC stated
no notice of any kind was received by the MPFC with regard to
any books of accounts or statutory record of the company lying in
factory premises. MPFC also referred to a letter dated 25th July,
2009 received from M/s. Gatiman Auto Private Limited informing
the MPFC that while taking possession, no record of the company
was found in the said premises.
In this background, MPFC was not liable for handing over or
in possession of any record of the company under liquidation.
6. In its Report No.575/2012, the official liquidator disclosed
the conduct of the appellants who failed to produce any of the
records, including the statutory records of the company. The
official liquidator disclosed that in this background, no proper
statement of affairs was filed as required by law.
7. Some records relating to the company were obtained from
the Registrar of the Company. The last available balance sheet
disclosed that there were sundry debtors to the tune of
Co.App.No.6/2013 page 4 of 9
Rs.8,22,0228.62 fixed deposit of Rs.1,44,000/- and loan and
advances of Rs.31,13,835.55. A sum of Rs.44,14,214.17 is the
money which is to be recovered by the company.
In these circumstances, the learned Company Judge directed
the ex-directors to deposit the said amount within three weeks of
11th October, 2012.
8. The ex-directors thereafter filed an application bearing Co.
Appl.No.2190/2012 seeking review of the above order again taking
a stand that MPFC had taken a wrong stand in its affidavit.
The learned Company Judge has noted that more than one
decade had passed since passing of the winding up order dated 20 th
August, 2002 and yet statutory compliances have not been made by
the Ex-directors. The application was therefore, consequentially
dismissed with costs which was quantified at Rs.10,000/- and the
two ex-directors - present appellants were directed to appear in the
office of the Official Liquidator to get their statements recorded
under Rule 130 of the Company Court Rules. The learned
Company Judge also granted one last opportunity to file their
statement of affairs within 21 days failing which all necessary legal
Co.App.No.6/2013 page 5 of 9
consequences would follow.
9. Given the above narration, we find no justification at all as
to why the Ex-directors could not produce the record which ought
to be in their power and possession. Even otherwise, the Ex-
directors were not able to explain and give details of the entries in
the balance sheet.
10. In terms of the provisions of Section 209 of the Companies
Act, 1956 the books of accounts and statutory records of the
company are required to be kept at the registered office of the
company which was located at Sagar Apartments, Tilak Marg,
New Delhi.
11. We are informed orally that so far as registered office is
concerned, a plea was taken by the Ex-directors that the same was
demolished by the NDMC in 2002. The appellant no.1 is a
resident of the very building in which registered office was located
while appellant no.2 lives barely one kilometre away. It is
unbelievable they were not aware of the proposed demolition
action, if any, or could not retrieve the records of the company.
Co.App.No.6/2013 page 6 of 9
12. It is obvious that the appellants have taken a wrong plea that
the records were at the factory in Madhya Pradesh. The MPFC has
disclosed that no request was ever received from the appellants that
the records of the company under liquidation were lying in the
factory or that they should be handed over to them.
13. The plea taken by the Ex-directors is completely
unacceptable.
For all these reasons, we find no merit in this appeal which is
hereby dismissed.
At this stage, Mr. Girdhar Govind, learned counsel for the
appellant prays for one last opportunity to appear before the
official liquidator and to comply with the directions made by the
learned Company Judge.
The ex-directors are given one very last opportunity to
appear before the official liquidator on 28th of October, 2014 at
03:00 p.m. with all relevant records.
14. A further prayer is made by Mr. Girdhar Govind, learned
counsel for the appellants, that the appellants may be permitted to
deposit the amount of Rs.44,14,214.17 in monthly equated
Co.App.No.6/2013 page 7 of 9
instalments of Rs.3 lakhs each as the appellants are in financial
difficulties.
We deem this offer on behalf of the appellants to be
reasonable. It is therefore directed that subject to the appellants
depositing the said amount of Rs.44,14,214.17 in monthly equated
instalments of Rs. 3 lakhs each with the official liquidator
commencing from 15th September, 2014, the Official Liquidator
shall not proceed with regard to punitive action against the ex
directors. The instalments shall be deposited on or before the 15 th
day of each month. In the event of any two defaults in deposit of
the instalments, the official liquidator shall forthwith proceed
against the appellants in accordance with law.
The ex directors shall file an undertaking before the
company court of compliance of the above within two weeks from
today.
Dasti.
Co.App.No.6/2013 page 8 of 9
CM No.1543/2013
In view of the dismissal of the appeal, this application is
dismissed.
GITA MITTAL
(JUDGE)
SUNIL GAUR
(JUDGE)
AUGUST 20, 2014
mk
Co.App.No.6/2013 page 9 of 9
