The main legal point established is that the ex-directors were not liable for misfeasance or breach of trust under Section 543(1) of the Companies Act, 1956, due to the seizure of company assets by the Kerala State Financial Corporation.

Anand Byrareddy, J.— The present application is filed under Section 543(1) of the Companies Act, 1956. It is alleged that by an order dated December 1, 1999, in Company Petition No. 26 of 1994, the company-in-liquidation was ordered to be wound up and the official liquidator was appointed as the liquidator. He had issued letters to the ex-directors to hand over the assets, books and records of the company which they failed to do. The statement of affairs filed by the ex-directors with the official liquidator on December 5, 2000, was defective and the same has not been taken into account. The official liquidator had issued several reminders to rectify the deficiencies, which they had failed to do. According to the official liquidator, figures shown in the statement of affairs filed by the respondents indicated a sum of Rs. 32,620.85 as realisable under the head--balance at bank. The directors had not taken efforts to furnish the name and address of the bank and details of the account. Hence, the official liquidator could not take steps to recover the money. It is therefore the contention that the ex-directors had committed acts of misfeasance or breach of trust in causing loss to the company.

2. It is similarly contended that a sum of Rs. 7,68,652.88 is shown as realisable under the head--trade debtors. No efforts have been taken to realise the same. In the absence of material being produced, the official liquidator was also helpless in this regard. Similarly, under the head of loans and advances, a sum of Rs. 72,93,078.55 was shown as realisable and in the absence of material being produced, no steps could be taken to recover the same.

3. Similarly, in so far as the assets specifically pledged is concerned, it is indicated as being valued at Rs. 67,76,026,86. The respondents had not delivered the assets of the company to the official liquidator. A reference is also drawn to be fixed and current assets valued at Rs. 67,76,026.86 in the statement of affairs. And in this fashion, it is alleged in the application that the ex-directors were accountable for a total sum of Rs. 1,48,71,040.68 and hence, the prayer to declare the respondents jointly and severally liable for the above amounts and to pay the same with interest to the official liquidator.

4. The respondents having entered appearance through counsel have contested the application and have stated that the Kerala State Financial Corporation (hereinafter referred to as "the KSFC" for brevity) which had furnished loans to the company-in-liquidation had taken over the assets of the company under Section 29 of the State Financial Corporations Act, 1951, as on July 7, 1994 and brought the assets of the company to sale, which was confirmed on July 1, 1996. The sale deed has been executed on November 7,1996, without notice to the directors. It is subsequent thereto that the winding up order has been passed and the statement of affairs has been filed on the basis of the material available with the directors as on December 5, 2000. The books of account and records, which had been seized by the KSFC were subsequently secured and produced before the official liquidator as on January 27, 2005. However, on March 10, 2000, the ex-directors had intimated the official liquidator of the action taken by the KSFC in having taken over the assets of the company having seized these records and therefore, the ex-directors were not capable of furnishing the particulars readily.

5. In the above background, it cannot be brought home that the respondents have been guilty of any act of misfeasance or breach of trust. It is not the applicant's case that the non-realisation of amounts shown under various heads was intentional or on account of wilful or culpable negligence. There is no allegation that the loss caused to the company results in wrongful gain to the directors. In the face of the admitted circumstance that the properties of the company were seized by the KSFC, the invocation of Section 54