This application is taken out by the official liquidator, Madras High Court, the official liquidator of Manasuba and company (Private) Limited under sections 455 and 478 of the Companies Act, 1956, for directing the public examination of the three directors, namely, C.V. Raman, T.V. Narayanaswami Aiyer and T.K . Balasubramaniam, and the secretary of the company, R.S. Rangarajan

The company, Manasuba and Company (Private) Limited, was incorporated on May 13, 1957, under the Companies act, 1956, as a private limited company. It ceased to do business as from May 21, 1961. It was ordered to be wound up. A preliminary report under section 455 of the Companies Act was filed on December 17, 1962, by the official liquidator and was ordered by this court on January 25, 1963. The official liquidator filed a further report under section 455(2) stating that fraud had been committed in the conduct of the business of the company and that a public examination of the persons mentioned above should be conducted

The three persons, C.V. Raman, T.V. Narayanaswami Aiyer and T.K. Balasubramaniam, and one T.N. Nagarajan were the promoter directors of the company. Nagarajan subsequently resigned his post as a director. C.V. Raman was appointed managing director of the company in charge of all business by a resolution of the company dated September 24, 1957, and was a paid a sum of Rs. 550 per month from September 1, 1957, as salary for managing the company's affairs. Narayanaswami Aiyer, who was another promoter-director of the company, was paid Rs. 325 per month as salary for advising the company in the matter of providing finances for various works, contracts, etc. His salary was increased to Rs. 550 per month with effect from June 1, 1958. He acted as chairman at the meetings of the board of directors at all material times. Balasubramaniam was also a promoter-director of the company, and by a resolution of the board dated October 6, 1958, he was being paid Rs. 500 per month with effect from May 1, 1958, for looking after the agency work and canvassing for various agencies and for looking after the other interests of the company. Rangarajan was appointed secretary of the company by a resolution of the board dated May 13, 1957, and was authorised to carry on the day to day affairs of the company taking instructions from any of the directorsThe company entered into several contracts for construction of buildings and quarters as well as supply of building and road materials to the Neyveli Lignite Corporation and the Integral Coach Factory and supplies to the Madras Port Trust, etc. As the undertaking by the company involved huge expenditure, it was provided in the articles of association that the directors may raise or borrow monies. The directors by resolutions permitted the managing director to do various acts and subsequently ratified those acts of the managing director. The company passed various resolutions for borrowing moneys from several banks like the Bank of Baroda, Pandyan Bank, Indian Bank, etc. In pursuance of those resolutions large amounts were borrowed

Apart from those borrowings the company indulged in several transactions which are not permissible in law. The company purchased two cars and twenty-one lorries. The company had paid the full price only for a few of these vehicles. With regard to the other vehicles, the company would appear to have paid only small amounts by way off advance and the balance was paid by borrowings from certain financing firms and Multani money-lenders by executing hypothecation deeds in favour of the banks and hire-purchase agreements in favour of the financing firms and the individual financiers

The company also borrowed from banks by discounting bills for supply of materials to public concerns like Neyveli Lignite Corporation, the Integral Coach Factory, Madras Port Trust, etc. It was found that several of the documents connected with the borrowings from several banks appeared to be not genuine a