Partly allowed

The Official Liquidator v. Kumar Raichand Madan

Madras HC15 Mar 2024COMP.A/1122/2014

Case brief

AI extract

What is this about?

Company application filed by Deputy Official Liquidator seeking directions to take cognizance of offence under Section 454(A) of the Companies Act, 1956 for non-filing of Statement of Affairs and to punish the accused. The application was partly allowed except insofar as the second and fifth respondents were concerned.

What did the court decide?

Application partly allowed except insofar as the second and fifth respondents are concerned.

The Official Liquidator Vs Kumar Raichand Madan — Company and Corporate | Madras HC (2024)

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Comp.A.No.1122 of 2014

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C.SARAVANAN, J.

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This Company Application has been filed under Sections 460(4) and 454(5A) of the Companies Act, 1956 read with Rules 9, 11(b) of the Companies (Court) Rules, 1959, for the following relief:-

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a) To take this report on record.

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b) To take cognizance of the offence committed by the accused under Section 454(A) of the Companies Act, 1956 for non-filing of the

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Statement of Affairs with the Official Liquidator and punish them in accordance with law.

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c) To direct the accused to file forthwith the Statement of Affairs with the Official Liquidator.

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d) To direct that the cost of this complaint come out of the funds of the company in liquidation.

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The Deputy Official Liquidator has also supplemented this company application with a Report dated 08.02.2024 which has been filed at the Registry on 14.02.2024.

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https://www.mhc.tn.gov.in/judis

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The learned counsel for the second, third and fifth respondents

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are present before this Court.

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The learned counsel for the second respondent would submit that

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the second respondent is aged about 91 years and is bedridden and that he was merely a Director of the Company who was not concerned with the day to day affairs of the Company under Provisional Liquidation.

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That apart, it is submitted that he was formerly a Member of the

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Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai, and had served as a Judicial Member and had merely lent his name at the time when the Company with its promoters/first, fourth and fifth respondents.

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The learned counsel for the fifth respondent would submit that

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the fifth respondent had tendered resignation on 17.12.2019 long before

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the Company was ordered to be wound up on 26.11.2013.

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https://www.mhc.tn.gov.in/judis

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To this effect, the fifth respondent also filed a copy of the Letter

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dated 02.04.2010 addressed to the fourth respondent, the Managing Director of the Company. He has also attached the copy of the E-Mails sent on 03.05.2010 to the fourth respondent.

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That apart, it is submitted that pursuant to order of this Court 12.01.2024, the Office of the Official Liquidator was also made an enquiry recording the submissions from the fifth respondent. However, the content of information elicited is not reflected in the Report dated 08.02.2024.

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It is therefore submitted by both the counsels for the second and

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fifth respondents that the prayer insofar as the second and fifth respondents are concerned may be dismissed.

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The Deputy Official Liquidator would draw attention to the

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Report indicating to substantiate that there have been large scale irregularities in the preferential sale of shares held by the Company under Liquidation after the Company was ordered to be wound up.

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https://www.mhc.tn.gov.in/judis

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The Deputy Official Liquidator has drawn attention to Paragraph 13 of the Report dated 14.02.2024. It reads as under:-

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“13. That the Chartered Accountant Firm appointed by this Hon'ble Court, to investigate the fraudulent transaction if any, taken place by the company (in prov. Liqn) reported that the subject company (in prov. Liqn) invested in 98 companies. The details of 98 companies where investment made are as attached as Annexure-B to this report. The Chartered Accountant Firm has reported that there is a possibility of positive share value and the investment in the shares of 14 companies can be recovered by way of sale of the above shares subject to the provisions of the Companies Act, 2013.

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As per the report of the Chartered Accountants, subject company (in prov. Liqn) invested with 11 companies. The shares owned by the company in prov. Liqn) have been forfeited, this forfeiture have taken place after date of filing of winding up petition.

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The shares issued by 12 companies to the company (in prov. Liqn) have been transferred to the directors or share holders of the investee companies or some other person by the investee companies.

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In respect of 16 companies wherein the company in liquidation made investment have been struck off as per MCA Master data.

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With regard to 3 companies not able to correlate any of the transaction relating to the Company in liquidation.

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As per the report, the company in liquidation invested equity shares with 3 companies by on verifying the records of these companies, investment made by the company in liquidation has been treated as preferential shares.

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As per the financials of company in liquidation the investment made in 9 companies. But in the records of investee companies no such shares appear in the name

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https://www.mhc.tn.gov.in/judis

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of company in liquidation.

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As per the annexures of the said report the name of investee companies (9 numbers) do not appear in the MCA data base.

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As per annexures 9 of the report stated that the company in liquidation invested with 17 number of companies, as per financial records of investee companies available with MCA, the name of the company in liquidation appears as shareholders in the financial year 2010-2011 and 2011-2012 but subsequent years the name of the company in liquidation not appearing as shareholder.”

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I have considered the submissions of the Deputy Official

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Liquidator, the learned counsel for the second respondent, the learned counsel for the third respondent and the learned counsel for the fifth respondent.

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This application is partly allowed except insofar as the second

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and fifth respondents are concerned.

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15.03.2024

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arb

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https://www.mhc.tn.gov.in/judis

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C.SARAVANAN, J.

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arb

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Comp.A.No.1122 of 2014

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15.03.2024

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https://www.mhc.tn.gov.in/judis

The Official Liquidator v. Kumar Raichand Madan

Case brief

What is this about?

What did the court decide?

The Official Liquidator v. Kumar Raichand Madan

Case brief

What is this about?

What did the court decide?

What the court decided

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