Hon’ble Sunil Ambwani, J.—Heard Shri Subodh Kumar learned Counsel for petitioner-Union of India and Shri S.O.P. Agarwal for S.P. Mathur son of late Shri Gopal Mathur, R/o Rampur Gardan, Bareilly.

2. The proceedings have been initiated under Sections 45, 45H (2), 45L (4) of the Banking Regulation Act, 1949 read with Section 543 of Companies Act, 1956 for recovery of Rs. 253.54 lakhs alongwith interest from the respondent-S.P. Mathur, the Ex-Director of the Kashinath Seth Bank (amalgamated with State Bank of India w.e.f. 1.1.1996) for negligence, misfeasance and breach of trust causing mismanagement and losses to the bank leading to its winding up and amalgamated with the State Bank of India, under a scheme prepared by Reserve Bank of India w.e.f. 1.1.1996, with which the Kashinath Seth Bank Limited stood wound up.

3. Two years prior to this date, a moratorium was declared and the competent authority was directed to scrutinize the matter. It was found that the Bank had suffered losses on account of several acts of misappropriation and misfeasance by the Board of Directors of the Bank leading to filing of this Company Petition. The matter is connected with 16 other Company Petitions with regard to misfeasance by the Ex-Directors for various periods beginning from 1984 to December 1994.

4. Shri Subodh Kumar, learned Counsel for Union of India states that respondent-S.P. Mathur was Director of the Bank from 6.4.1984 to 9.2.1992. He alongwith members of Board of Directors is jointly and severally liable to the loss of Rs. 253.54 lacs caused to the Government of India and or/to the State Bank of India due to negligence and misfeasance of the respondent, which the respondent must pay to the bank as damages alongwith interest @ 18% per annum.

5. In a supplementary affidavit filed in connected Company Petition No. 112 of 2000, the loss caused to the bank explained after investigations is stated as follows:

"10-A. That till 12th of September, 1993, the affairs of the Kashi Nath Seth Bank Ltd. were in the hands of a Board which was being managed by the Board of Directors including Sri P.C. Seth, R.C. Seth, Ashok Kumar, Dwarika Nath, Umesh Tandon, P.K. Pandey etc.

10-B That no doubt the Board of Directors, as per their balance sheet of the financial year 1991-92 (assessment year 1992-93) have shown profit of Rs. 5,955.48. However, in the financial year 1992-93 (assessment year 1993-94) ending on 31st March, 1993, they have shown a net loss of Rs. 7, 10, 47, 252.15. At the cost of repetition it is submitted that till 31.3.1993 the affairs of the Bank were being managed by the Board of Directors including the aforesaid persons. It is also important to mention here that while preparing and tendering the balance sheet of the Bank till 31.3.1993 there is a page showing highlights of different financial years i.e. 1988-89, 1989-90, 1990-91, 1991-92 and 1992-93. A chart of the highlights is filed herewith and is being reproduced hereinafter.

HIGHLIGHTS

(Rupee in Lakhs)

SN 1988-89 1989-90 1990-91 1991-92 1992-93

1 Total No. 29 29 29 30 30

of Branches

2 Deposits 4,289.54 5,290.25 7,102.69 7,075.09 7,086.65

3 Advance 2,883.82 3,392.12 4,218.83 4,714.80 4,608.16

4 Income 540.02 547.87 674.11 906.14 398.92

5 Expenditure 535.78 528.29 673.09 904.71 1109.45

6 Reserve 10.00 12.75 22.00 24.05 -678.60

7 Investment 830.74 1085.23 1752.05 1761.30 1691.00

The reserves of the amount of different financial years is too much material specially regarding financial year 1992-93 which shown minus 678.60 Lacs. The form of balance sheet further shows that the advances made by the Bank to the borrowers is 46,08,16,180.00. The said advances including present amount in dispute is approximately 8.00 crore. Copy of the entire balance sheet and annual report of financial year 1992-93 is being annexed herewith and marked as Annexure 1 to this company petition.

10C. That,