The main legal point established in the judgment is the court's interpretation and application of Section 542 of the Companies Act, 1956, which allows the court to hold individuals personally liable for fraudulent activities and to give further directions for giving effect to that declaration.

MANMOHAN, J.

1. On 05th June, 1998, this Court while issuing notice in the winding up petition at the instance of the Reserve Bank of India had appointed a Provisional Liquidator in respect of M/s. JVG Finance CCP(Co.) 17/2007& Co. Appl.867/2011 in Co. Pet. 265/1998 Page 3 of 23 Limited, M/s. JVG Leasing Limited and M/s. JVG Securities Limited. Later on, a Provisional Liquidator was appointed on 08th March, 2001 with respect to M/s. JVG Departmental Stores Limited.

2. On a report submitted by the Registrar of Companies, Delhi and Haryana, New Delhi, under Section 234 of the Companies Act, 1956 (for short „Act?), the Central Government, Ministry of Corporate Affairs had ordered an investigation into the affairs of JVG Finance Limited under Section 235 of the Act by order dated 30th July, 2007. The investigation had been ordered by the Central Government in order to facilitate filing of misfeasance application against the exmanagement under Section 542/543 of the Act by the Official Liquidator, if necessary.

3. On 11th February, 2010, the Serious Fraud Investigation Office (for short „SFIO?) submitted its report to the Ministry of Corporate Affairs. In pursuance to the said report, the Official Liquidator filed an application being Co. Appl. 867/2011.

4. In the meanwhile, this Court felt it necessary to examine the SFIO report so as to gain clarity about the nature of disputes involved in the present case. In fact, the winding up proceedings have been pending since 1998 and no serious progress with regard to payment to the innocent investors / depositors have so far been achieved largely due to the fact that most of the properties of the Company in liquidation are embroiled in multiple title disputes. The Court has also kept in mind the urgency in view of the fact that with the passage of time, the number of the small investors / claimants would further dwindle which would altogether frustrate the very purpose of this proceeding.

5. Since the report was voluminous, the Court requested the concerned officers of SFIO team for a presentation of the report in the open court after directing the Official Liquidator to inform all the parties / stakeholder / counsels to remain present. In fact, a note to the said effect was published in the daily cause list.

6. On 16th April, 2012 and 23rd April, 2012, Mr. N.K. Bhola, Additional Director, SFIO, made a presentation to this Court with regard to the SFIO report.

7. Today in Court, the arguments of Mr. Shailendra Singh, learned counsel for Mr. Vijay Kumar Sharma, former Managing Director and Promoter of the respondent company have also been heard.

8. After hearing both the sides, this Court is of the view that certain immediate interim directions/orders are required to be passed under Section 542(2) of the Act to preserve and protect the rights and interests of the creditors and investors of the Companies in liquidation.

9. Section 542(1) of the Act provides that if in the course of the winding up of a Company, it “appears” that the business of the Company has been carried out with the “intent to defraud the creditors of the Company or for any other fraudulent purpose”, then, on an application made by either the Official Liquidator or any creditor or any contributory, the Court can declare “such persons who were parties to such fraudulent activities, personally liable, without any limitation of liability, for all or any of the debts and liabilities of the Company”. Section 542(2) provides that the Court may give such further direction as it thinks proper for giving effect to that declaration.

10. This Court in the case of Col. M.R. Bhakshi vs. Fintra Systems Ltd & Anr., 2008 (106) DRJ 166 invoked Section 542 to attach the personal properties of the ex-Director and his wife after relying upon a CBI report which prima facie revealed misappropriation of the funds of the Company in liquidation by the persons involved. The following interpretation of Section 542 of the Act and the reas