THE HIGH COURT OF DELHI AT NEW DELHI % + Judgment delivered on:
11. 02.2014 CA No.301/2013 IN CO. PET. 203/2007 DR. J.S. GAMBHIR ..... Petitioner versus MILLENNIUM HEALTH INSTITUTE AND DIAGNOSTICS PVT. LTD. ..... Respondent Advocates who appeared in this case: For the Petitioner : Mr D.R. Bhatia. For the Respondent : Mr Pankaj Chaudhary, for R-4/applicant in C.A. 301/2013. Mr Rajat Navet proxy counsel for Mr Deepak Jain. Mr Kanwal Chaudhary for Official Liquidator. CORAM:HON’BLE MR JUSTICE VIBHU BAKHRU
JUDGMENTVIBHU BAKHRU, J1 This is an application filed by the applicant seeking recall of the order dated 07.11.2012 passed by this Court whereby the Ex-Directors of the respondent company, (in liquidation), Mr Deepak Kumar Jain and the applicant, were directed to deposit a sum of `9.23 lacs in two equal proportions in the office of the Official Liquidator. This direction was passed pursuant to a report (report no.650/2012) submitted by the Official Liquidator. This Court concluded that the Official Liquidator had been unable to recover a sum of `9.23 lacs shown as receivable in the books of the company because the Ex-Directors had failed and neglected to provide the requisite information.
2. The applicant being aggrieved by the order dated 07.11.2012 had preferred an appeal being Company Appeal No.4/2013 before a Division Bench of this court. The said appeal was disposed of by the Division Bench by an order dated 23.01.2013 whereby the Division Bench had permitted the applicant to file an application to take all contentions and raise all issues with respect to the liability of the applicant to compensate the company for its receivables which could not be recovered. The Division Bench further clarified that the order dated 07.11.2012 would not come in the way of this Court deciding all the issues and contentions on merits. The learned counsel for the parties have submitted that in view of the order dated 23.01.2013 passed by the Division Bench, the question whether the applicant could be held liable for paying the amount as directed, has to be decided afresh.
3. The principal controversy in the present application relates to the question whether the ex-directors of a company in liquidation can be held accountable for the receivables of the company that can't be recovered by the Official Liquidator for want of requisite information and the complete records of the company. The other controversy that needs to be considered is whether the applicant was a director of the company at the relevant date as defined in Section 454(8) of the Companies Act, 1956 (hereinafter referred to as the „Act‟).
4. The learned counsel for the applicant submitted that Millennium Heath Institute and Diagnostics Pvt. Ltd. (i.e. the company in liquidation) had four Directors out of which two Directors were in charge of the day-today affairs of the company. He contended that the action of the Official Liquidator in fixing the liability for making good the receivable only upon two Ex-Directors of the company is wholly arbitrary and amounts to the Official Liquidator picking and choosing the Directors against whom the Official Liquidator wishes to proceed. It was further contended that the pleadings in the winding up petition indicated that Mr Sugani was in charge of the affairs of the company and also received remuneration from the company. However, no liability had been fixed on Mr Sugani and the applicant who is stated to be non executive director has been mulcted with the liability to compensate the company.
5. Secondly, it was contended that no allegation of malfeasance and misfeasance had been made by the Official Liquidator against the applicant. And, in absence of any allegation that the applicant had siphoned of funds of the company or was guilty of misconducting the affairs of the company no liability for any amount due to the company or any loss caused to the company could be fastened on the ex Directors. In support of his contention the learned counsel placed reliance on the decision of this Court in Ashoka Auto and General Industries Private Limited v. Inder Mohan Puri & Ors.: (2005) 124 Comp Cas 422 (Delhi).
6. It was further contended by the applicant that he was never involved in managing the day-to-day affairs of the company. It was submitted that the applicant was a non executive director and had resigned from the company on 31.03.2008. He stated that a distinction is required to be made between Directors who are incharge of the day to day affairs of the Company and Directors who hold non executive positions for the purposes of determining whether any liability for misconducting the affairs of the company is to be imposed on them. In support of his contention the learned counsel for the appellant relied upon the decision of the Division Bench of Kerala High Court in K. Subramony v. Official Liquidator, Malabar Phyto Chemicals Ltd. (in liquidation):
2010. (157) Comp. Cas. 61 (Ker.) and the decision of the Allahabad High Court in Vijai Laxmi Sugar Mills Ltd. (in liquidation), Official Liquidator v. Mathura Prasad and Ors.: AIR1963Allahabad 55. The learned counsel further submitted that as the applicant was not incharge of the day-to-day affairs of the company, the applicant could not be held to be liable to compensate the company for the loss caused to the company on account of lack of documents/records. It was further submitted that since the applicant had resigned on 31.03.2008, the applicant did not have any control over the assets or the books of accounts of the company. He submitted that in order to fasten a liability on an exdirector it must be shown that the director was in possession or in control of any assets of the company and had failed to surrender the same to the Official Liquidator.
7. The learned counsel for the Official Liquidator, at the outset, submitted that the prayers made in the status report (report no.650/2012) were not directed against the applicant alone but against all Ex-Directors including Mr Sugani. He submitted that although the company had four Directors, this Court had found that Shri Jagjivan Kumar Jain had resigned much earlier and, therefore, was not concerned with the present proceedings. The remaining three Directors were thus liable to compensate the company on account of the failure on the part of the Directors to provide all requisite information. He submitted that it was not necessary to allege or prove that the Ex-Directors were guilty of malfeasance and misfeasance in order to fasten the liability for the loss suffered by the company on account of non submission of requisite information. He further submitted that the statement of the applicant that he had resigned from the company could not be accepted at the threshold and the applicant would be required to prove the same in a trial for offence under Section 454 of the Act. In support of his contention, the learned counsel for the Official Liquidator relied on the decision of the Andhra Pradesh High Court in Official Liquidator, Suganti Alloys Castings Limited v. Edupuganti Subba Rao: [2006]. 72 SCL201(AP). The learned counsel also relied upon the decision of the Supreme Court in the case of Official Liquidator, Supreme Bank Ltd. v. P.A. Tendolkar & Ors.: (1973) 1 SCC602and P.K. Nedungadi v. The Malayalee Bank Ltd. (In Liquidation) and Ors.: (1971) 3 SCC598 8. I have heard the learned counsel for the parties. At the outset, it must be noted that there is no dispute that the Statement of Affairs filed with the Official Liquidator is incomplete. The requisite documents and accounts that were necessary for recovering the debts due to the company have not been furnished to the Official Liquidator. It is also not disputed that on account of inadequate information and the requisite documents, there is no possibility to recover certain debts of the company. The controversy that needs to be addressed is whether in such circumstances, the Ex-Directors could be called upon to compensate the company even though there is no allegation of misappropriation or mala fide on their part. There is also no allegation that the Directors have gained in any manner by not providing the necessary documents to the Official Liquidator.
9. The principal question to be addressed is whether it is necessary to allege and prove misfeasance on the part of an Ex-director of a company in order to make the concerned director liable for the loss suffered by the company on account of its inability to recover the debts from its debtors due to inadequate information. The other question that needs to be considered is whether the applicant had resigned from the company prior to the appointment of the provisional liquidator and, if so, whether he could be held liable for not providing the requisite details to the Official Liquidator.
10. In the present case, the learned counsel for the Official Liquidator has sought to justify the claim for compensation on the basis of Section 543 of the Act. Section 543 of the Act being relevant is quoted below:
“543.-. Power of Tribunal to assess damages against delinquent directors, etc.-. (1) If in the course of winding up of a company, it appears that any person who has taken part in the promotion or formation of the company, or any past or present director, manager, liquidator or officer of the company(a) has misapplied, or retained, or become liable or accountable for, any money or property of the company; or (b) has been guilty of any misfeasance or breach of trust in relation to the company, the Tribunal may, on the application of the Official Liquidator, or the liquidator, or of any creditor or contributory, made within the time specified in that behalf in sub-section (2), examine into the conduct of the person, director, manager, liquidator or officer aforesaid, and compel him to repay or restore the money or property or any part thereof respectively, with interest at such rate as the Tribunal thinks just, or to contribute such sum to the assets of the company by way of compensation in respect of the misapplication, retainer, misfeasance or breach of trust, as the Tribunal thinks just. (2) An application under sub-section (1) shall be made within five years from the date of the order for winding up, or of the first appointment of the liquidator in the winding up, or of the misapplication, retainer, misfeasance or breach of trust as the case may be, whichever is longer. (3) This section shall apply notwithstanding that the matter is one for which the person concerned may be criminally liable.”
11. A plain reading of sub-section (1) of Section 543 of the Act indicates that the provision has two limbs. The first limb would be applicable where a past or present Director, Manager, Liquidator or any officer of the company (hereinafter referred to as the „specified person‟) has misapplied or retained or has become liable or accountable for any money or asset of the company. The second limb would be applicable if the specified person is guilty of misfeasance or breach of trust in relation to the company. It is apparent that in order to invoke the first limb of Section 543(1), it would be essential to come to a conclusion that the specified person has misapplied or retained any asset or has become liable or accountable for any money or property of the company. In the present case, there is no allegation that the funds of the company in liquidation have been misapplied or retained by the applicant. The only ground on which a claim of compensation has been made is that the applicant is guilty of misfeasance or breach of trust in relation to the company in liquidation.
12. In order to sustain the present claim against the applicant, it would be essential to show that the applicant was guilty of misfeasance or breach of trust. The examination of the conduct of the applicant must indicate that the applicant has committed a breach of his duty and as a result thereof, a loss has been caused to the company.
13. It is well settled that a charge of misfeasance or a breach of fiduciary duty is a serious charge and may result in a personal liability. The nature of the said liability has been explained by the Supreme Court in Official Liquidator v. Parthasarathi Sinha: (1983) 1 SCC538as under:
“18. The liability arising under the misfeasance proceedings is founded on the principle that a person who has caused loss to the company by an act amounting to breach of trust should make good of the loss. Section 543 of the Act does not really create any new liability. It only provides for a summary remedy for determining the amount payable by such person on proof of the necessary ingredients. The section authorises the court to direct such persons chargeable under it to pay a sum of money to the company by way of compensation. ....”
14. It necessarily follows that the charge/allegation would have to be specifically pleaded in order that the person accused of the same has due opportunity to meet the accusation. The Supreme Court in its decision in Official Liquidator v. Raghawa Desikachar: (1974) 2 SCC741 expressed this view as under:
“7. ..... It may be mentioned that misfeasance action against the Directors is a serious charge. It is a charge of misconduct or misappropriation or breach of trust. For this reason the application should contain a detailed narration of the specific acts of commission and omission on the part of each Director quantifying the loss to the Company arising out of such acts or omissions. .....”
15. This Court has in the case of Security and Finance Pvt. Ltd. v. B.K. Bedi: (1991) 71 Comp Cas 101 (Del.) articulated the settled position in law as under :
“Under Section 543 of the Act, the court is vested with jurisdiction to examine the conduct of the past or present director, manager, liquidator or any other officer of the company to find out whether he has misapplied or retained or become liable or accountable for any money or property of the company; or he has been guilty of any misfeasance or breach of trust in relation to the company and, where any such conduct is found attributed to any such person, then, to compel him to repay and restore the money or property, or any part thereof to the company. In other words, under this section, the court is to examine the conduct of an individual director or officer and to pass an order against him, if such a person is personally found to be liable for misapplication, etc., of the money or property of the company or, otherwise, is guilty of any misfeasance or breach of trust in relation to the company. It is thus clear that, to enable the court to examine the conduct of an individual director or officer and to pass an effective order to make him personally liable for misapplication, etc., of the money or the property of the company, there has to be positive and specific evidence and pleadings in respect of the individual director of an act of the nature contemplated by the section. In the absence of such specific allegations and positive evidence, it is not possible or proper for the court to indulge in a fishing or roving enquiry so as to compel the individual director to reimburse and/or compensate the company. The principles with regard to the pleadings and proof are well-settled. There cannot be a general and roving enquiry into the conduct of a person sought to be made liable.”
The above quoted passage from the decision in Security and Finance Pvt. Ltd. (supra) has also been followed in the later decision of this Court in Ashoka Auto & General (supra) and has also been reaffirmed by the Andhra Pradesh High Court in Official Liquidator v. T.J.
Swamy and Ors.: (1996) 86 Comp Cas 696 (AP).
16. In the present case, the claim for compensation is premised on a breach of the obligation to furnish a complete and accurate Statement of Affairs and providing the necessary documents, required for recovering the money due to the company in liquidation, to the Official Liquidator. The learned counsel for the Official Liquidator has rightly submitted that in such circumstances the application for claiming compensation could be sustained by establishing that: (a) The documents/information provided to the Official Liquidator were insufficient to effect recovery of the amounts due to the company; (b) That the company had suffered a loss on account of its inability to pursue its claims for recovery; and (c) the person from whom compensation is claimed was under a duty to provide the documents/information to the Official Liquidator.
17. It has been pointed out in the report (No.650/2012) that the Official Liquidator has been unable to recover the amount due to the company for want of sufficient documents and information. It is alleged that the exdirectors of the company have failed in their obligation to furnish a complete Statement of Affairs and provide the necessary documents. The applicant is also named one of the ex-directors.
18. A Director is placed in a fiduciary position to that of a company and, therefore, it is the duty of a Director to ensure that the assets of the company are preserved and protected. It is the duty of a Director to ensure that the affairs of the company are conducted in a manner so as to comply with all laws and for the benefit of the company. Indisputably, the Directors of the company would be liable if the records of the company are not maintained as required by law or that the relevant books and papers of the company are not preserved. Thus, in certain circumstances, where loss is caused to the company on account of not maintaining proper records or where the Directors have failed to take appropriate steps for preserving and recovering the assets of the company, the Directors of that company would be liable. This is so because the Directors have the power to manage the affairs of the company and coupled with this power is a duty to ensure that the affairs of the company are properly managed. In such circumstances, it would not be necessary to impute any malintent or make any specific allegation against a particular Director and it would be sufficient if it was established that proper records of the company were not maintained or that the Directors of the company, who were incharge of its affairs, did not take the necessary steps to preserve and recover the assets of the company. In the case of Official Liquidator, Supreme Bank Ltd. (supra), the Supreme Court held that even if no specific act of dishonesty was proved against a Director personally, the Court could nonetheless hold a Director to be liable for misfeasance if he was found to be closely associated with the management of the company. In these circumstances, the Director would be deemed to be cognizant of the entire affairs of the company and would thus also be liable to compensate the company for any fraud that may have been committed in the conduct of the affairs of the company even though their specific knowledge of the fraud could not be proved. The Supreme Court further held that it was not necessary for a Director to have participated in commission of a fraud, it was enough if it could be shown that the Director was negligent which enabled the fraud to be committed. The Directors of a company are placed in a position of trust thus, it is not necessary to show that the Directors themselves have participated in pilfering or secreting the assets of a company, it would be sufficient to point out that the affairs of the company have been carried on negligently which made it possible for the assets to be pilfered or misappropriated. The Directors, by virtue of their position, would have to accept the liability for the conduct of affairs of the company. In the case of Official Liquidator, Suganti Alloys Castings Limited (supra), the Andhra Pradesh High Court held the Directors were liable to compensate a company on account of certain receivables of the company that had become time barred. The rationale being that it was the duty of the Directors to ensure that steps are taken for recovery of the debts due to the company. The failure to initiate appropriate steps for recovery of debts was found to be sufficient to hold the Directors liable to compensate the company.
19. Given the allegations in the present case, it is not necessary that any separate and specific allegation be made against the applicant since the liability is sought to be imposed on the applicant on account of his being a Director of the company at the relevant time.
20. If the report of the Official Liquidator is viewed in the above perspective, it is apparent that it does contain the necessary allegations on the basis of which a claim of compensation can be based. Thus, the requirement that an application under section 543 of the Act must contain specific allegations on which the claim is based, is duly met.
21. The next step is to examine whether the allegations made in the report are established. It is not in dispute that full particulars have not been provided to the Official Liquidator and, consequently, it has not been possible for the Official Liquidator to recover the amounts due to the company. The only other aspect that needs to be considered is whether the applicant was under a duty to ensure that all records of the company are handed over to the Official Liquidator and the Statement of Affairs containing all the necessary particulars are handed over to the Official Liquidator.
22. The applicant has disputed the contention that he had any obligation to ensure that the records of the company are handed over to the Official Liquidation, on the ground that he had ceased to be a Director much prior to the Official Liquidator being appointed as a Provisional Liquidator. The applicant has also submitted that, he did not have the necessary details or records in his possession to submit a Statement of Affairs which was complete in all respects.
23. It is contended by the applicant that, by a letter dated 01.04.2008, the applicant had tendered his resignation as a Director of the respondent company and also sent a copy to the Registrar of Companies. The present Company Petition was filed on 13.08.2007. This court, by an order dated 02.04.08, directed the company to file a reply stating the names of its directors. In terms of the directions the company filed a reply on 26.07.2008, wherein the applicant was indicated as a director of the company. However, the reply also specified that the applicant had tendered his resignation as a Director of the company which had not been accepted. The present petition was admitted and Official Liquidator was appointed as a Provisional Liquidator by an order dated 15.01.2010.
24. Section 454 of the Companies Act, 1956 enjoins all persons who are Directors on the relevant date to file a statement of affairs. The relevant provisions of Section 454 of the Act are quoted below:
“454. Statement of affairs to be made to Official Liquidator- (1) Where the Tribunal has made a winding up order or appointed the Official Liquidator as provisional liquidator, unless the Tribunal in its discretion otherwise orders, there shall be made out and submitted to the Official Liquidator a statement as to the affairs of the company in the prescribed form, verified by an affidavit, and containing the following particulars, namely : (a) the assets of the company, stating separately the cash balance in hand and at the bank, if any, and negotiable securities, if any, held by the company; (b) its debts and liabilities; (c) the names, residences and occupations of its creditors, stating separately the amount of secured and unsecured debts; and in the case of secured debts, particulars of the securities given, whether by the company or an officer thereof, their value and the dates on which they were given ; (d) the debts due to the company and the names, residences and occupations of the persons from whom they are due and the amount likely to be realised on account thereof ; (e) such further or other information as may be prescribed, or as the Official Liquidator may require. (2) The statement shall be submitted and verified by one or more of the persons who are at the relevant date the directors and by the person who is at that date the manager, secretary or other chief officer of the company, or by such of the persons hereinafter in this sub-section mentioned, as the Official Liquidator, subject to the direction of the Tribunal, may require to submit and verify the statement, that is to say, persons(a) who are or have been officers of the company; (b) who have taken part in the formation of the company at any time within one year before the relevant date; (c) who are in the employment of the company, or have been in the employment of the company within the said year, and are, in the opinion of the Official Liquidator, capable of giving the information required; (d) who are or have been within the said year officers of, or in the employment of, a company which is, or within the said year was, an officer of the company to which the statement relates. (3) The statement shall be submitted within twenty-one days from the relevant date, or within such extended time not exceeding three months from that date as the Official Liquidator or the Tribunal may, for special reasons, appoint. (4) Any person making, or concurring in making, the statement and affidavit required by this section shall be allowed, and shall be paid by the Official Liquidator or provisional liquidator, as the case may be, out of the assets of the company, such costs and expenses incurred in and about the preparation and making of the statement and affidavit as the Official Liquidator may consider reasonable, subject to an appeal to the Tribunal. (5) If any person, without reasonable excuse, makes default in complying with any of the requirements of this section, he shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to one thousand rupees for every day during which the default continues, or with both. xxxx xxxx xxxx xxxx xxxx (8) In this section, the expression „the relevant date‟ means, in a case where a provisional liquidator is appointed, the date of his appointment, and in a case where no such appointment is made, the date of the winding up order.”
25. A plain reading of Section 454(2) of the Act indicates that a Statement of Affairs has to be filed by persons who are Directors on the relevant date. Sub-section 8 of Section 454 defines the relevant date to be the date on which a Provisional Liquidator is appointed. And, in case where no such appointment is made, the relevant date is defined to be the date on which the winding up order is passed. In the present case, the relevant date would be 15.01.2010 when the order appointing the Official Liquidator as a Provisional Liquidator was passed by this Court. Thus, all persons who were Directors on 15.01.2010 were obliged to file a Statement of Affairs.
26. The Official Liquidator could also require other persons as specified in Section 454(2) of the Act to file a statement of affairs, however, such a direction could only be passed in cases where the Official Liquidator believed that such persons had control over certain records of the company or had particular knowledge regarding the affairs of the company. In the present case, the liability was sought to be imposed on the applicant on the assumption that the applicant was a Director of the company at the relevant date (15.01.2010) and was thus, obliged to file a Statement of Affairs. The Official Liquidator has proceeded on the basis that the applicant was a Director solely on basis that the records of the Registrar of Companies indicated the respondent to be a Director of the company on the relevant date.
27. As stated earlier, the applicant is stoutly disputing the assumption that he was a Director of the company on 15.01.2010. It is apparent, from the reply filed on behalf of the company, that the company represented the applicant to be a Director of the company in spite of the applicant having submitted his resignation only on the basis that his resignation had not been accepted by the Board of Directors of the company. In conformity with this stand taken by the company, the company also did not file Form No.32 with the Registrar of Companies.
28. In the aforesaid circumstances, the substratal controversy that needs to be addressed is whether filing of Form No.32 or acceptance of resignation submitted by a Director is necessary for the same to be effective. It is well settled that unless otherwise specified in the Articles of Association of a company, a resignation by a Director would become effective from the date on which it is communicated. A resigning Director is not obliged to file Form No.32 with the Registrar of Companies. A resignation by a director implies a relinquishment of his office. This is a unilateral Act which unless the Articles of Association otherwise provide, is not contingent on the acceptance by the company. Directors act as agents of the company and are, thus, also entitled to terminate their agency. The act of resignation or relinquishment of the office would not require the consent of the company and, therefore, would become effective from the time when the intention to relinquish the office as a Director is communicated.
29. The law on the question as to when does a resignation by a director become effective, is stated in Palmer's Company Precedents, seventeenth edition, part 1, at page 565 as under:
“Where there is no provision in the Articles as to the procedure for resignation it would seems that resignation will take effect until it has been tendered to the company as a whole, but the company cannot refuse it. xxxx xxxx xxxx xxxx xxxx Even in the absence of any express power to resign, it is submitted that, unless the articles are specially framed, a director may by notice to the company resign his directorship. Directors‟ are merely agents of the company‟ and an agent may determine his agency. xxxx xxxx xxxx xxxx xxxx Where a director has resigned he is not liable for a report made after his resignation, even though his resignation was not communicated to the company and his name appeared in the report.”
30. The statement of law on the subject in Gore-Browne's Handbook on Joint Stock Companies, 41st edition, page 358, reads as under:
“Articles usually permit a director to resign. Even in the absence of such a power, unless the articles contain conditions, he may resign, and his resignation is complete where notice is given to the secretary, and cannot subsequently be withdrawn and even though no acceptance has taken place. Notwithstanding that the articles contemplate a written resignation a verbal notice of resignation given and accepted at a general meeting of the company is binding.”
31. In the present case, the Articles of Association also provides that the resignation would take effect from such date as may be specified. Article 35 of the Articles of Association of the respondent company is relevant and is quoted below:
“Section 283 of the Companies Act, 1956 shall be applicable with regard to vacation of office by a Director. A Director shall also be entitled to resign from the office of Director from such date as he may specify while so resigning.”
32. By virtue of Section 303(2) of the Act a company is obliged to file a return in the prescribed form indicating inter alia any change among its directors. Section 303(2) of the Act is quoted below:
“(2) The company shall, within the periods respectively mentioned in this sub- section, send to the Registrar a return in the prescribed form containing the particulars specified in the said register and a notification in the prescribed form of any change among its directors, managing directors, managers or secretaries specifying the date of the change. The period within which the said return is to be sent shall be a period of thirty days from the appointment of the first directors of the company and the period within which the said notification of a change is to be sent shall be thirty days from the happening thereof.”
e-Form No.32 of the Companies (Central Government‟s) General Rules and Forms, 1956 is the prescribed form in which the relevant return in accordance with section 303(2) of the Act is to be filed. It is thus apparent that filing of Form 32 is an obligation of the company and not of the Director who is demitting office. The filing of Form 32 with the Registrar of Companies is an action which is required to be taken by a company and not by a Director who has tendered his resignation. And, the same is required to be initiated after the resignation by a Director has become effective. It is obvious that once a Director has demitted his office, he would have no authority to file any form on behalf of the company.
33. In the present case, the company itself has accepted that the applicant had tendered his resignation and an affidavit to this effect was placed on record much prior to the Official Liquidator being appointed as a Provisional Liquidator. Thus, there can be no doubt that the applicant had communicated his unequivocal intention to relinquish his office as a Director of the company. In view of the settled law that, unless articles provide otherwise, the acceptance of resignation submitted by a Director is not necessary for the same to take effect, it is clear that the applicant had demitted office as a Director much prior to the Official Liquidator being appointed as a Provisional Liquidator. In this view, no liability for non performance of any obligation as a Director on the relevant date (15.01.2010) can be imposed on the applicant. As stated earlier, in the present case, the sole basis for imposing the liability on the applicant to compensate the company for insufficient particulars/records was the assumption that the applicant was a Director of the Company (in liquidation) on the relevant date (i.e. 15.01.2010). In view of the decision that this assumption is erroneous, no liability can be imposed on the applicant.
34. Accordingly, the present application is allowed and it is clarified that the applicant is not required to deposit 50% of the sum of `9.23 lacs as directed by the order dated 07.11.2012.
35. The Provisional Liquidator is directed to file a fresh status report within a period of 8 weeks.
36. List on 30.04.2014. VIBHU BAKHRU, J FEBRUARY11 2014 RK