Case: Official Liquidator, High Court, Bombay Vs. Taru Jethamal Lalvani

( 2 ) IN order to decide whether we should restore the misfeasance summons so dismissed by the learned single judge, we have to take into account the totality of circumstances relating to the misfeasance summons. The company was ordered to be wound up by an order dated June 23, 1976. The official liquidator took out the present misfeasance summons against the 16 respondents on June 15, 1981, just before the period of five years prescribed under section 543 (2) of the Companies Act was about to expire. This misfeasance summons is based on a report of one J. K. Doshi, chartered accountant, who was appointed as inspector of the above company by the Central Government under section 138 (iv) of the Indian Companies Act, 1913. He was so appointed on June 7, 1955. The report submitted by him is dated September 30, 1957. The report pertains to accounting years5. The charges mainly relate to the accounts for the years49 andThe charges in the misfeasance summons which was taken out in June, 1981, relate to transactions which took place>( 3 ) IN respect of these very same charges based on the same report, Jai Hind Estates shareholders Association had lodged a complaint against the auditors of the company (one of whom is respondent No. 8 in this appeal) before the Institute of Chartered Accountants of India. Respondent No. 8 had submitted his written statement on May 10, 1965, in respect of the entire report and the allegations made against him in that report. In view of what was pointed out in the written statement, the Institute of Chartered Accountants of India held him not guilty of any professional or other misconduct.( 4 ) MOREOVER, as the charges pertain to the period51 approximately, it is going to be extremely difficult to investigate and establish these charges. The manner of conducting these proceedings by the official liquidator also leaves much to be desired. The original misfeasance summons was against the 16 respondents. It was taken out in June, 1981. As early as in September, 1981, one of the respondents, viz. , respondent No. 9, filed an affidavit in which he pointed out that the misfeasance summons was misconceived and was not maintainable because 8 of the 16 respondents had died prior to 1980 and prior to the taking out of the misfeasance summons. These were respondents Nos. 1, 2, 4, 5, 6, 12, 13 and 16. Thus, although the official liquidator became aware in September, 1981, of the death of these 8 respondents, he took no steps either to delete their names and to amend the charges or to ascertain and bring their heirs on record if so warranted. Ultimately, only in the year 1988, he took out a company application being Company Application No. 75 of 1988 for bringing the heirs of respondents nos. 1 and 16 on record. This application was dismissed by the learned single judge by his order dated February 20, 1988, and an appeal from that order has also been dismissed by us for reasons which we have set out in our judgment and order delivered today.

Court's reasoning:
( 6 ) IT is also necessary in this connection to bear in mind that in the winding up, all the creditors of this company have been fully paid and the shareholders have also received a dividend. Looking to the totality of circumstances, and particularly in view of the fact that the misfeasance pertains to events which took place 30 to 35 years back, and also in view of the fact that the creditors of the company have been fully paid, we do not think any useful purpose would be served by restoring the misfeasance summons. It is going to be extremely difficult, looking to the lapse of time, for the respondents to defend themselves properly, just as it is going to be difficult for the official liquidator to establish these charges. Relevant papers, vouchers and other documents may not be forthcoming especially when the misfeasance summons itself was taken out more than 30 years after the alleged misconduct. Eight out of the sixteen respondents had died before the misfeasance summons was taken out. The official liquidator has made no attempt to bring on record the heirs of six out of the eight deceased tortfeasors. His attempt to bring on record the heirs of the remaining two has also proved unsuccessful. In these circumstances, no useful purpose would be served by restoring the misfeasance summons.