Heard the Counsel for the applicant and the Counsel for the respondents and perused the material on record.

2. The present application under Section 543(1) of the Companies Act, 1956 (hereinafter referred to as the Act for brevity) seeks a declaration that respondents 1 and 2 are jointly and severally liable to pay a sum of Rs. 13 lakhs under the head "Trade Debtors" along with proportionate interest from the date of winding up order and to pay a further sum of Rs. 2.10 lakhs under the head Loans and Advances along with interest, and further to declare that the respondents are liable to pay Rs. 568 lakhs, under the head Fixed and Current Assets.

3. The respondents having entered appearance have resisted the application. It is contended by the Counsel for the Official Liquidator that by order dated 12-3-1999 of this Court in Company Petition No. 139 of 1997, presented as on 13-10-1997, the present applicant was appointed as the Official Liquidator and that subsequent to the passing of the winding up order, the Official Liquidator has taken possession of those assets of the company which were available after M/s. Canara Bank, had taken possession of certain other assets of the company prior to the date of winding up order. The respondents not having delivered the books and records of the company, the statement of affairs filed by them was found to be defective and was not taken on record.

4. The Official Liquidator had issued several reminders to the respondents to rectify the defects, which were not complied with. The Official Liquidator would contend that, on examination, it was found that the respondents were due of the amounts aforesaid under the several heads claimed. Since the respondents have failed to deliver the above assets of the company, the said assets could not be sold by the Official Liquidator. These amounts are endorsed by the respondents themselves in their statement of affairs. It is therefore to be presumed that the respondents have misapplied or retained or become liable or accountable for any money or property of the company and hence, they are guilty of misfeasance or breach of trust in relation to the company and would be hence liable to make good the loss suffered by the company in liquidation.

5. In support of the application, the applicant has tendered evidence of a witness, who has reiterated the averments in the application. There is no indication that any further material, apart from the statement of affairs, was produced along with the evidence that was tendered, apart from certain exchange of correspondence between the offence of the Official Liquidator and the respondents herein. The respondents, on the other hand, in their statement of objections have, in particular, stated that the allegation that there were no efforts on their part to release the amount under the head of Trade Debtors is incorrect. The financial position of the company being in a bad state, on account of various unavoidable circumstances, the respondent-directors were fighting several battles on several fronts, in order to keep the company floating and in any event, the admitted circumstance is that M/s. Canara Bank had seized the records of the respondent-company and the same were in the custody of the said Bank which was unavailable to the respondents, in order that they could take steps to recover any monies due. In any event, the financial position of the company being in a bad State, the respondents were hardly in a position to institute proceedings, since the records were unavailable and that sufficient funds were not readily available to institute any such proceedings.

6. Insofar as the amounts under the head of Loans and Advances are concerned, the respondents have stated identical reasons. The respondents have further emphasised that no records or document being available, as the same were in the factory premises, which was seized and taken over by the banker as aforesaid and in respect of one other premises, which wa