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Bhawani Shankar Sahay Vs. Registrar of Companies and ors. and Chotanagpur Limestone and Minerals (P.) Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberCompany Application No. 194 of 1978
Judge
Reported in[1979]49CompCas639(Cal),1980CriLJ23
ActsCompanies Act, 1956 - Sections 551(5) and 633(1)
AppellantBhawani Shankar Sahay
RespondentRegistrar of Companies and ors. and Chotanagpur Limestone and Minerals (P.) Ltd.
Appellant AdvocateR.K. Lala and ;U.P. Mukherji, Advs.
Respondent AdvocateDipak Some, Adv. for respondent No. 1 (Registrar of Companies) and ;A.C. Law, Adv. for respondent Nos. 3 and 4
Excerpt:
- .....j.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.....
Judgment:

Salil K. Roy Chowdhury, J.

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 Registrar and, therefore, he was under the impression that he was not the liquidator and has not acted as such. Thereafter, it transpired that the petitioner since November, 1973, faced various family calamities including the death of his father and his wife became completely insane and he had to keep himself busy looking after his wife and young children and, therefore, he could not move this application earlier. Mr. Lala submitted that in the facts of this case the court should relieve him of the default, if any, for non-compliance with the statutory provisions as a liquidator of the company and also there should be a stay of the criminal proceedings which have been initiated by the Registrar of Companies as mentioned in para. 17 of the petition. At this stage, it appeared to me that the managing directors of the company, being respondent No, 3, Jagat Bhusan Garg, and respondent No. 4, Dinomoni Shah Deo, should be appointed as official liquidators in place and stead of the petitioner. At this stage, Mr. A. C. Law was appearing for them but has not filed any affidavit but he had instructions only to watch the proceedings. At this stage Mr. Law, on behalf of his said two clients, took leave to file affidavits and leave was also given to the petitioner to file the affidavit-in-reply in the presence of the Registrar of Companies being respondent No. 1 who was also given leave to file further affidavit. Pursuant to the said leave affidavits were filed and Mr. Law appeared. He submitted that the company is deemed to have been wound up as soon as the resolution was passed in view of Section 486 of the Companies Act, and, therefore, the petitioner must be deemed to have acted as a liquidator. Mr. Law also drew my attention to the affidavits filed from which he sought to contend that the said managing directors of the company have handed over the documents to the petitioner through the said auditors' firm of the company. The same is denied by the petitioner and it appears to me that there is much substance in the contention of the petitioner that he has not received the relevant documents save and except a sum of Rs. 400 as part payment of his remuneration fixed and I am also satisfied that the petitioner in the circumstances, could not act as the liquidator as he was not handed over the relevant documents, nor was he assisted by the ex-managing directors, being respondents Nos. 3 and 4 in the matter of winding up of the company. I am also satisfied that the petitioner met with unforeseen calamities like the death of his father in November, 1973, and his wife's insanity. The petitioner being a young man with young children and an insane wife cannot be expected to keep his balance of mind and discharge his duties as an ordinary prudent person can do. Therefore, in the circumstances of this case, it cannot be said that he has not acted honestly or reasonably and, therefore, taking into consideration all the relevant circumstances it appears that he was merely a creature, of the circumstances over which he had no control. It was expected of him, as a chartered accountant, to be more active and diligent in discharging his duties as a liquidator but, unfortunately for him, he could not do so for the circumstances beyond his control and which could not be foreseen by him under any circumstance. Further, it appears that he 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. In these circumstances, it appears that there are good grounds for him to be relieved of the con-sequences of his default, negligence and breach of duty as a liquidator but having regard to the fact that this court has no jurisdiction under Section 633(1) of the Companies Act to relieve him of the said consequences of the default as already criminal cases have been filed by the Registrar before the court of Chief Metropolitan Magistrate, Calcutta, the petitioner has his remedy in the said proceedings where he is expected to receive proper consideration having regard to all the circumstances in which he was as described above.

5. Mr. A. C. Law also submitted that his clients are not in a position to act as the official liquidators as they have no resources to take up the office of the liquidator for winding up of the company. But I am satisfied that Mr. Law's clients, being respondents Nos. 3 and 4, the ex-managing directors of the company, have failed in their duty to hand over all the books, papers and documents to the petitioner in due course and kept the matter pending for such a long time.

6. After carefully considering the matter and also after hearing Mr. Dipak Some, who is appearing for the Registrar of Companies, respondent No. 1, who is also asking for appointment of the official liquidator as the liquidator in place and stead of the petitioner in the facts and circumstances of the case, if the court thinks fit, I am of the opinion that for the winding up of the company and for dissolution of the same in due course the court should appoint the official liquidator as the liquidator of the company in exercise of its power under Section 515 of the Companies Act. In this case it may be taken into account that the Registrar of Companies being respondent No. 1 is also asking for such appointment.

7. Now, the question is that the remuneration of the liquidator should be fixed by the court and that shall be credited to the Central Government under Section 515(4) of the Companies Act.

8. In the result, I am making the following order ;

There will be an order in terms of prayer (a). The official liquidator be appointed as a liquidator of the company in place and stead of the petitioner who is removed as a liquidator of the company. The petitioner and the respondents Nos. 3 and 4, Jagat Bhusan Garg and Dinomoni Shah Deo, are hereby directed to make over possession of all books, papers and documents and information relating to the company to the official liquidator forthwith. The official liquidator 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. ,

9. There will also be an order of injunction against the Registrar of Companies, the respondent No. 1, in terms of prayer (e) of the petition. The ad interim order of injunction in terms of prayer (d) is vacated.

10. The petitioner, the said respondent Nos. 3 and 4 and the official liquidator and the Registrar of Companies to act on a signed copy of the minute on the undertaking of the petitioner's advocate on record, to complete and file this order.


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