Erstwhile Directors are to Assist Official Liquidator in Affairs of Company Even After Winding Up: Calcutta HC Dismisses Revision Petition [Read Order]

In a recent decision the Calcutta High Court observed that Erstwhile directors are to assist official liquidator in affairs of company even after winding up, thereby dismissing a revision petition.

The present revision has been preferred praying for quashing of Complaint Case under Section 200 of the Code of Criminal Procedure with charge under Section 276C (2) read with Section 278B of the Income Tax Act, 1961 and all orders passed therein including order passed by the Chief Metropolitan Magistrate at Calcutta thereby taking cognizance and orders passed by the Chief Metropolitan Magistrate, , thereby issuing process against the petitioners.

The petitioners’, Sri Chhatar Singh Dugar & Ors, case is that Vikash Metal and Power Limited (under liquidation) hereinafter referred to as the said company under liquidation was incorporated on 4th July, 1996 as a Public Limited Company under the provisions of the Companies Act, 1956 and engaged in the business of manufacturing of steel and power.

That due to economic slowdown and other reasons the business of the said company (under liquidation) failed and consequent to which the company failed to honour the payments of its creditors. On such failure of the said company (under liquidation), one M/s. Indian Carbon Limited initiated winding up proceedings in or about November, 2014 under Section 434 and 439 of the Companies Act, 1956 before the High Court.

The respondent being the complainant lodged a complaint under Section 200 (a) of the Code of Criminal Procedure with charge under Section 276C (2) read with Section 278B of the Income Tax Act, 1961 against Vikash Metal and Power Limited (under liquidation), and the petitioners herein along with one Kailash Chand Jain and Vijay Kumar Jain, the other ex-directors of the said company.

It is the case of the petitioners that since the Court has directed the winding up of the company, everything related to the company is now in the custody of the official liquidator and as such the petitioners have no liability nor responsibility in respect of the affairs of the company. The proceedings against them should thus be quashed.

A Single Bench of Justice Shampa Dutt (Paul) observed that “Admittedly, considering the present situation, the official liquidator is a necessary party before the trial court. Though the official liquidator is now in-charge of the affairs of the company, the petitioners being the erstwhile directors are to assist the official liquidator in affairs of the company even after winding up.”

To Read the full text of the Order CLICK HERE

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