Back
1978 Supreme(Cal) 364
High Court Of Calcutta
SALIL KUMAR ROY CHOWDHURY
BHAWANI SHANKAR SAHAY - Appellant
Versus
REGISTRAR OF COMPANIES, CHOTANAGPUR LIMESTONE AND MINERALS (P.)LTD. - Respondent
Company Application 194 Of 1978
Decided On : 05/31/1978
A.C.Law, DIPAK SOM, R.K.LALA, U.P.Mukherji
The court has the power to remove a liquidator and appoint an official liquidator in its place under Section 515 of the Companies Act, and that the court may relieve a liquidator of the consequences of his default, negligence, and breach of duty under Section 633 of the Companies Act.
Headnote:
COMPANY - WINDING UP - VOLUNTARY LIQUIDATION - APPOINTMENT OF OFFICIAL LIQUIDATOR - REMOVAL OF LIQUIDATOR - POWER OF COURT - SECTIONS 515 AND 633 OF THE COMPANIES ACT - FACTS AND CIRCUMSTANCES OF THE CASE - COURT'S DISCRETION - APPOINTMENT OF OFFICIAL LIQUIDATOR AS LIQUIDATOR - REMUNERATION OF LIQUIDATOR - INJUNCTION AGAINST REGISTRAR OF COMPANIES.
Fact of the Case:
The petitioner, a chartered accountant, was appointed as the liquidator of a company in voluntary liquidation. However, he did not receive the books, papers, and documents of the company, nor was he assisted by the ex-managing directors in the matter of winding up. He also faced various family calamities, including the death of his father and his wife's insanity. Subsequently, criminal cases were filed against him by the Registrar of Companies for non-compliance with the statutory provisions.
Finding of the Court:
The court found that the petitioner was not handed over the relevant documents, nor was he assisted by the ex-managing directors in the matter of winding up of the company. The court also found that the petitioner met with unforeseen calamities like the death of his father and his wife's insanity. The court further found that the petitioner has not been handed over the books, papers, and documents of the company by the respondents, the ex-directors of the company and, therefore, he could not act in the matter promptly as he could have done.
Issues: 1. Whether the petitioner should be relieved of the consequences of his default, negligence, and breach of duty as a liquidator? 2. Whether the official liquidator should be appointed as the liquidator of the company in place of the petitioner? 3. Whether an injunction should be granted against the Registrar of Companies restraining him from instituting further criminal proceedings against the petitioner?
Ratio Decidendi: 1. The court held that the petitioner was merely a creature of the circumstances over which he had no control and that he could not be expected to keep his balance of mind and discharge his duties as an ordinary prudent person can do. 2. The court held that the petitioner has not acted honestly or reasonably and that there are good grounds for him to be relieved of the consequences of his default, negligence, and breach of duty as a liquidator. 3. The court held that the official liquidator should be appointed as the liquidator of the company in place of the petitioner in exercise of its power under Section 515 of the Companies Act. 4. The court held that an injunction should be granted against the Registrar of Companies restraining him from instituting further criminal proceedings against the petitioner.
Final Decision: 1. The petitioner was removed as the liquidator of the company. 2. The official liquidator was appointed as the liquidator of the company in place of the petitioner. 3. The petitioner and the respondents Nos. 3 and 4, Jagat Bhusan Garg and Dinomoni Shah Deo, were directed to make over possession of all books, papers, and documents and information relating to the company to the official liquidator forthwith. 4. The official liquidator was to be paid a fixed remuneration of Rs. 1,500 to be paid by the respondents Nos. 3 and 4 in the first instance and to be repaid to them out of the assets of the company after the same is realised by the official liquidator. 5. An injunction was granted against the Registrar of Companies restraining him from instituting further criminal proceedings against the petitioner.
( 1 ) THIS is an application, inter alia, for removal of the liquidator and for appointment of an official liquidator as the liquidator in his place and stead. There are other prayers for determination that the petitioner, Bhawani Shankar Sahay, the liquidator, was not entitled to act and has not acted as a liquidator and also for stay of all criminal proceedings mentioned in para. 17 of the petition and an injunction restraining the Registrar of Companies, respondent No. 1, from instituting further criminal proceedings against the petitioner as a liquidator of the company.
( 2 ) IT appears that the present application is made under various sections of the Companies Act including Sections 515 and 633 of the Companies Act. The company, by a resolution dated 6th September, 1971, was wound up voluntarily nominating the petitioner as the liquidator of the said company for the purpose of winding up on a remuneration of Rs. 2,000. The petitioner received the copy of the said resolution and a sum of Rs. 400 as part payment of the resolution on the 7th September, 1971. It appears that neither the company nor the liquidator has complied with the provisions for filing the resolutions or caused a notice to be published in the Gazette and other requirements under the law and subsequently the Registrar made certain correspondence with the company and the petitioner regarding the filing of documents by the company in compliance with the Companies Act. It also appears that by a letter dated 7th September, 1971, the petitioner, the liquidator appointed in the said voluntary liquidation of the company, intimated the Registrar of Companies about his appointment. It appears that the directors of the company, with a copy to the liquidator, were addressed by Registrar on the 7th February, 1972, for filing the Gazette publications along with form No. 36a filed by the said directors of the company on the 14th September, 1971, It also appears from a letter dated 28th August, 1973, written on behalf of the Registrar of Companies, West Bengal, to one of the managing directors of the company, viz. , Jagat Bhusan Garg, that for non-compliance of filing the notice and the publications under Sections 500 (2) and 485 not being submitted, the company cannot be treated to be in liquidation and, therefore, the directors continued to be liable for not complying with the statutory requirements under the Companies Act as an existing company.
( 3 ) IT appears that subsequently the petitioner obtained certain extracts from the Calcutta Gazette dated 23rd September, 1971, and forwarded the same to the Registrar. Immediately thereafter, the respondent No. 1 started seven criminal cases between 8th January to 17th January against the petitioner under Section 551 (5) of the Companies Act. The petitioner, thereafter, on or about 10th May, 1978, filed this application and on the 12th May an ad interim injunction in terms of prayer (d) was issued.
( 4 ) MR. R. K. Lala, appearing with Mr. U. P. Mukherji for the petitioner, submitted, after placing the facts before me, that he should be relieved from the office of the liquidator and either the official liquidator or any other person should be appointed. He submitted that in the facts and circumstances of the case he was induced to become the liquidator as he was connected with the firm of the auditors of the company immediately after he qualified himself as a chartered accountant and joined the said auditors firm. He was not handed over the books, papers and documents of the company save and except a sum of Rs. 400 and, in fact, the company did not comply with all the requirements of the voluntary liquidation. The petitioner was also, to some extent, misled by the letters of the Registrar of Companies dated 7th February, 1972, and 29th August, 1973, copies of which are annexed with the petition and are at pages 23 and 24 that the company was not treated to be a company in liquidation by the Re
