The High Court of Karnataka imposed a fine on directors acting as voluntary liquidators for failure to comply with Sections 485 and 497 of the Companies Act, 1956 while considering their plea for leniency due to death of the CA entrusted with papers.
Fine imposed at Rs. 100/- per day on each Director if not paid within eight weeks.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 6TH DAY OF JANUARY, 2023
BEFORE
THE HON'BLE MR. JUSTICE KRISHNA S.DIXIT
O.L.R. NO.2/2022
BETWEEN:
OFFICIAL LIQUIDATOR ATTACHED TO THE HON’BLE HIGH COURT OF KARNATAKA CORPORATE BHAVAN NO.26-27 12th FLOOR, M.G. ROAD, BENGALURU - 560 001.
...APPLICANT (BY SMT. REVATHI ADINATH NARDE, ADVOCATE FOR OFFICIAL LIQUIDATOR) AND:
NIL
… RESPONDENT (BY SRI. M.K.DATTARAJ, ADVOCATE FOR VOLUNTARY LIQUIDATOR)
THIS O.L.R. IS FILED THE REPORT UNDER SECTION 497(6) OF THE COMPANIES ACT, 1956 TO –
(A) IMPOSE FINE ON THE COMPANY, DIRECTORS, VOLUNTARY LIQUIDATOR FOR NON-COMPLIANCE OF THE PROVISION OF THE SECTIONS 485(1), 497(3) OF THE COMPANIES ACT, 1956; AND ETC., THIS O.L.R. COMING ON FOR ORDERS THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER
This OLR complains as to non-compliance of the
provisions of sections 485 & 497 of the erstwhile
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Companies Act, 1956, by the Voluntary Liquidator who is none other than the Managing Director and other Directors of the Company in winding up. The counsel appearing for the Official Liquidator submits that the erring persons should be penalized as provided under the said provisions, there being absolutely no justification for non-compliance.
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lend some discretion to this Court in matters of imposition of fine. Regard being had to fair admission of the guilt and to the facts & circumstances of the case, this Court is inclined to show leniency and levies a fine of Rs.100/- per day for each of the Directors in terms of Section 485(2) for the breach of Section 485(1) and a similar sum on each of them for breach of Section 497 of the 1956 Act. The fine amount shall be accordingly computed till it is paid and remitted to the Official Liquidator within a period of eight weeks, failing which, the Official Liquidator shall move the Court for further action in the matter.
The above apart, the voluntary Liquidator shall report the compliance of this order to the Registrar of Companies within a period of one week after compliance as mentioned above.
Sd/JUDGE
DS
1 issue framed by the court
Whether penal action should be taken against voluntary liquidators for non-compliance with provisions of the Companies Act, 1956.
2 provisions across 1 enactments
Official Liquidator Attached to the Hon'ble High Court of Karnataka
Mr. M K Dattaraj and other Directors
Krishna S. Dixit
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
