1 ca755-06.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY APPLICATION NO.755 OF 2006 WITH COMPANY PETITION 976 OF 1998 Mrs.Warhamn Metal Corporation .. Petitioner and Official Liquidator, High Court & Liquidator of M/s.United Air Tech Pvt.Ltd. In liquidation .. Applicant Versus Shreerang Sadashiv Phadke Shrikrishna Ramchandra Tamhankar Abhay Ramchandra Garge .. Respondents Mr.S.A.Bhagwat i/b. Official Liquidator Mr.V.S.Hadade for respondent No.1 Mr.Sagar Joshi for respondent Nos. 2 and 3 CORAM : S.C.DHARMADHIKARI, J. 14th October 2011. P.C.: 1] At the hearing of this application, it was stated that the first and third respondents have expired. The Counsel appearing for the Official Liquidator does not dispute this fact. Death certificate proving death of respondent No.1 dated 1st July 2011 is taken on record. The death certificate of respondent No.3 shall also be placed on record within one week from today, so also on the file of O.L. 2 ca755-06.doc 2] Learned Counsel for Liquidator however, submits that the report survives as against respondent No.2 and going by the contents of the same and the directions of this Court, it will be possible for the Official Liquidator as also this Court to proceed against respondent No.2 in terms of section 543 of the Companies Act, 1956 and to assess the damages against him. He is delinquent Director and at the relevant time was obliged to, therefore, account for the acts which are subject matter of the Liquidator's report. He was duty bound to render accounts in relation to the property or money of the company. Being Director, he was acting in a position of a Trustee. For all these reasons, the matter can proceed against the respondent No.2. However, the Counsel for respondent No.2 invites my attention to the affidavit filed in reply and the contents of the report placed by the Official Liquidator. He submits that the report makes general and sweeping allegations against all the respondents without setting out any specific act, which is particularly attributed to respondent No.2. Such general statements and allegations would not enable this Court to frame charges and 3 ca755-06.doc proceed on the basis that respondent No.2 along with others was guilty of mis-application and/or misappropriation or has failed to render any accounts for any money or property of the company or is guilty of misfeasance or breach of trust in relation to the company. For all these reasons and the Hon'ble Supreme Court clarifying the legal position that misfeasance action against the directors being a serious charge of misconduct or breach of trust, the application of Official Liquidator should contain detailed acts of omission and commission on the part of each Director, quantifying the loss to the company arising therefrom. The burden is squarely on the Official Liquidator and in the absence of such particulars, the Liquidator cannot proceed under section 543 of the Companies Act, 1956. 3] In law, may be the Official Liquidator can proceed against the heirs of the deceased directors to the extent permitted but his report ought to be such as would enable the Court to proceed against the individual Director for acts of misfeasance and malfeasance. After carefully perusing the report of the Liquidator and all materials on record so also section 543 of the Companies 4 ca755-06.doc Act, 1956 and the judgement of the Supreme Court reported in A.I.R. 1974 S.C. 2069, the Official Liquidator Vs. Raghava Desikachar and Ors., I am of the opinion that no action can be taken in terms of this report or the application of the Official Liquidator. The law being very clear, the Liquidator was required to set out specific acts of omission and commission of each of the respondents and place sufficient particulars so as to enable this Court to proceed under section 543 of the Companies Act, 1956. In the absence of any such material being produced/ placed on record, it will not be possible for the Court to proceed under section 543 of the Companies Act, 1956. In fact, by the initial order dated 3rd April 2008, the Court had permitted the Official Liquidator to hold an enquiry. It was possible, therefore, for the Liquidator to hold an enquiry and make a conclusive report, setting out the necessary material and attributing specific acts of omission and commission against the respondents. That having not been done, the report cannot proceed in terms of section 543 of the Companies Act, 1956. The application, therefore, is rejected. (S.C.DHARMADHIKARI, J)