Delhi High Court
Robin Garg vs M/S Vij Constructions Ltd on 27 February, 2018
$~CP-29
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 27.02.2018
+ CO.PET. 247/2012
ROBIN GARG ..... Petitioner
Through None
versus
M/S VIJ CONSTRUCTIONS LTD ..... Respondent
Through Mr.Anand K.Mishra, Adv. for
Mr.Vinod Vij, Ex. Director.
Ms.Ruchi Sindhwani, Sr.Standing
Counsel Ms.Megha Bharaa, Adv. for
OL.
CORAM:
HON'BLE MR. JUSTICE JAYANT NATH
JAYANT NATH, J.(ORAL)
CA No.1951/2017
1. By this application, the applicant seeks condonation of delay of 114
days in filing the reply. For the reasons stated in the application, the same is
allowed and the delay in filing the reply is condoned. Reply is taken on
record.
CA No.1833/2014
2. This application is filed by the OL under sections 446, 542 and 543 of
the Companies Act, 1956 seeking a direction to Mr.Vinod Vij to remit the
amount of Rs.16,31,174/- along with 18% interest from the date of receiving
the amount to the OL. Other connected reliefs are also sought.
3. The background facts of this case are that on 15.02.2013 provisional
liquidator was appointed in this case. One of the work sites of the
respondent company was at Batra Hospital Sidhra, Udhampur (J&K). The
provisional liquidator took symbolic possession of the same. The parties,
namely, the petitioner and the respondent settled the disputes on 29.08.2013
and the provisional liquidator was discharged on 03.09.2013. The bank
account of the respondent company was de-freezed.
4. However, subsequently on account of default on the part of the
respondent company in payments of the settled amount to the petitioner and
on account of inability of the respondent to pay the OL the expenses
incurred on the winding up process, the winding up order was passed against
the respondent on 03.03.2014. On 18.03.2014 notices were issued to the
Ex.Directors of the respondent company to appear before the OL to file the
statement of affairs and for recording their statement. On 28.03.2014,
Mr.Vinod Vij, Ex.Director of the respondent company got his statement
recorded in part. Recording of his further statement was deferred for
15.04.2014. However, on the said date he did not appear before the OL.
5. In the meantime, it appears that on 16.04.2014 and 22.04.2014 from
Batra Hospital said Mr.Vinod Vij had collected a sum of Rs.16,31,174/-. It
is this amount, which the OL is asking the Ex.Director to refund.
6. This court on 25.07.2017 had directed Mr.Vinod Vij to file an
affidavit as to when the payments were credited in the accounts of the
company. This court had on the said date, noted the contention of the
learned counsel for the Ex.Director Mr.Vinod Vij who had submitted that
the payments were received during the period the amounts were de-freezed,
hence cannot be remitted.
7. The Ex.Director has now filed his reply, which is on record. A perusal
of the reply would show that alongwith the reply, the statement of account
has been placed on record. It transpires from a reading of the statement of
accounts and submission of the learned counsel for the Ex.Director that the
entire sum of Rs.16,31,174/- has been credited into the account of the
respondent Company on 16.04.2014 and 22.04.2014, namely, after the order
of winding up passed by this court. Further the said amount appears to have
been transferred to the account of one Sh.Charan Jeet Singh, in Jammu and
Kashmir bank. This is apparent from a perusal of the statement of accounts
of Sh.Charan Jeet Singh of Jammu and Kashmir bank. The said account
shows a credit from M/s Vij Constructions Pvt.Ltd. on 16.04.2014 for Rs.8
lacs and on 22.04.2014 for Rs.8,31,174/-.
8. I have heard the learned counsel for the OL and Mr.Vinod Vij,
Ex.Director of the respondent company.
9. The learned counsel for the Ex.Director has stressed that the action of
the Ex.Director was bonafide and that he was not aware about the winding
up order or the consequences thereof. He has further stressed that Sh.Charan
Jeet Singh being an employee of the respondent company the entire money
was transferred to his account to enable him to make payment of the
outstanding dues of the respondent company. It is pleaded that most of the
payments have been made by cheques to the Contractors, Suppliers etc. from
whom the work material had been taken for the purpose of completion of the
project. Hence, it is pleaded that money has been expanded for the
respondent company only and no direction can be passed against the
Ex.Director.
10. I may note that despite an opportunity by this court vide order dated
25.07.2017 to file an affidavit, there is nothing on record to show that
Sh.Charan Jeet Singh is an employee of the respondent company. Further as
per the statement of account which has been filed as an Annexure, there are
payments which have been made to the various entities, namely, Rana Kant,
Rajesh, Mahuddin, K.K. Water Supplier etc. from the account of Mr.Charan
Jeet Singh. However, no details whatsoever have been provided to show as
to who these entities were and as to whether payments have been made to
these entities bonafidely for any of the works carried out or material
supplied for the said Batra Hospital.
11. One cannot help to come to a conclusion that this kind of procedure in
releasing funds by a limited company cannot be accepted and is contrary to
normal accounting procedure. A company which bonafidely expands its
fund for its project would make payments from its own account based on
invoices raised by the suppliers/contractors giving details of the purpose for
which the payments are being released. This ad hoc and haphazard manner
of providing account cannot obviously be accepted.
12. Section 543(1) of the Companies Act, 1956 reads as follows:
"543. Power of Court to assess damages against delinquent
directors, etc.
(1) If in the course of winding up a company, it appears that any
person who has taken part in the promotion or formation of the
company, or any past or present director, managing agent,
secretaries and treasurers, manager, liquidator or officer of the
company-
(a) has misapplied, or retained, or become liable or accountable
for, any money or property of the company; or
(b) has been guilty of any misfeasance or breach of trust in
relation to the company; the Court may, on the application of the
Official Liquidator, of the liquidator, or of any creditor or
contributory, made within the time specified in that behalf in sub-
section (2), examine into the conduct of the person, director,
managing agent, secretaries and treasurers, manager, liquidator or
officer aforesaid, and compel him to repay or restore the money
or property or any part thereof respectively, with interest at such
rate as the Court thinks just, or to contribute such sum to the
assets of the company by way of compensation in respect of the
misapplication, retainer, misfeasance or breach of trust, as the
Court thinks just."
13. Hence, where in the course of winding up of a company, it appears
that any person who has misapplied, or retained, or become liable or
accountable for, any money or property of the company, the court can direct
the said person to repay or restore the money. I may only note that under
section 446 of the Companies Act where winding up order has been made,
the OL takes into custody and control all the property of the company of
which the company is entitled to.
14. It is apparent from the facts as stated above that Mr. Vinod Vij, the
Ex-Director of the Company after passing of the winding up order taken
money from the Batra Hospital which he was not entitled to receive in terms
of the aforenoted provisions of the Companies Act. He further claims to
have disbursed the amount for the bona fide payment of debts of the
respondent Company which he could not have done. Further this fact itself
of having disbursed the funds to discharge the bona fide debts of the
respondent Company is a doubtful contention. Further there is no merit in
the plea of Mr. Vij that he was not aware that he cannot operate the accounts
of the company to make bona fide payments for and on behalf of the
company.
15. Accordingly, I allow the present application and pass a direction to
Mr. Vinod Vij to deposit with the OL the said amount of Rs.16,31,174/-
within four weeks from today.
16. At this stage, the learned counsel for the Ex.Director requests that this
court may at least grant eight weeks for the same. Accordingly, in the
interest of justice, the period for depositing the said sum is extended by eight
weeks.
17. The application stands disposed of.
18. This court has taken a lenient view of the matter and has not imposed
any interest or other cost or penalty on Mr.Vinod Vij, Ex.Director of the
respondent company.
CO.PET. 247/2012
19. Mr.Vinod Vij will now appear before the OL on 22.03.2018 at 3.00
p.m. to complete the recording of statement under Rule 130 of the
Companies (Court). Ex.Director will also take steps for filing of the
complete statement of affairs.
20. The learned counsel for the Ex.Director submits that the record of the
respondent company is lying sealed in a room/residential premises of the
basement. He also submits that alternate area in the premises is available
where the OL can shift their record.
21. Let the OL inspect the alternate area in the premises being offered by
the Ex.Director on 08.03.2018 at 2.00 p.m. In case, on inspection the OL
finds the alternate area being offered to shift/store the record suitable, the
OL may shift/store the record in the alternate area in the premises.
Thereafter the OL may seal the room where the record is shifted.
22. After shifting of the record on 08.03.2018 if found feasible in the
alternative area, the Ex.Director may also be permitted to carry out
inspection of the record. For the said purpose, the OL may de-seal the same
and after inspection again seal the premises as required.
23. List on 30.05.2018.
JAYANT NATH, J.
FEBRUARY 27, 2018/v
