JUDGMENT 1. - Heard learned counsel for the parties on two applications namely S.B. Company Application No. 4/1987 and S.B. Company Application No. 5/1991 filed in relation to S.B. Company Petition No. 2/84 under Section 543 of the Companies Act, 1956. 2. As per the facts of the case,the company in liquidation M/s. Standard Woollen Mills Ltd is registered company under the provisions of the Companies Act, 1956. As per the facts alleged in the company petition, authorised capital of the company was Rs. 50 lacs, divided into Rs. 4 lacs equity shares of Rs. 10/- each and 10,000 preference shares of Rs. 100/- each. The subscribed and paid up capital of the company as on 30.6.1980 was Rs. 2,80,000/- equity shares of Rs. 10/- each fully paid up. The said paid up capital of Rs. 28 lacs includes direct equity participation of Rs. 66,000 shares amounting to Rs. 6.60 lacs by Rajasthan State Industrial Development and Investment Corporation Ltd. The company has also secured loans of Rs. 64,22,000/- from various financial institutions, details of which has been given in the company petition no.2/84, which was filed by M/s. Madhu Chemicals Centre - a partnership firm claiming that in spite of statutory notice, the company in liquidation failed to pay the debts of the creditors and the company's financial condition is so bad, therefore, it cannot be revived and it is required to be wound up. The company petition no.2/84 was allowed vide order dated 28.10.1985 after taking note of the fact that the company was not in position to repay the debts and, there was loan of Rajasthan State Financial Corporation Ltd. as on 31.1.1985 to the tune of Rs. 38,29,000/- and corporation already took over possession of the assets of the company. In view of the above, the winding up order was passed and the Official Liquidator was appointed by the same order i.e., by order dated 28.10.1985. 3. This application no.5/91 has been submitted under Section 453 of the Companies Act with the plea that the directors of the company were required to submit the statement of affairs of the company within 21 days from the date of order of winding up. That statement of affairs has not been furnished by the directors of the company. 3. This application no.5/91 has been submitted under Section 453 of the Companies Act with the plea that the directors of the company were required to submit the statement of affairs of the company within 21 days from the date of order of winding up. That statement of affairs has not been furnished by the directors of the company. However, the Official Liquidator got the balance-sheet and profit and loss account, which stood as on 31st Sept., 1983 from the office of the Registrar of the Companies, Jaipur. On the basis of the said balance-sheet and profit and loss account it has been averred that the directors of the company failed to recover the debts of the company to the tune of Rs. 24,78,848/- also in addition to the fact that they failed to furnish the statement of affairs of the account to the Official Liquidator. This application was submitted by the Official Liquidator in court on 22.10.1990. 4. In the same matter, another application has been submitted by the Official Liquidator which is under Section 543 of the Companies Act. This application was submitted before this court on 17.3.1987. In this company application no.4/87 it has been averred that the directors of the company since failed to take appropriate steps for recovery of the debts amount, therefore, they have committed misfeasance and also committed breach of trust and, therefore, they are liable to pay the amount of the loss caused to the company by their inaction rather say deliberate inaction. 5. It appears from the record of the company petition no.4/87 that one of the Directors-non-petitioner no.1 submitted statement of affairs of the company alongwith the application dated 26th Sept., 1991 with prayer for condonation of delay. This court observed that the said statement should have been furnished to the Official Liquidator and if said statement has not been furnished to the Official Liquidator, the Director may submit said statement of affairs of the company to the Official Liquidator. It appears from the record of the company application no.4/87 that Official liquidator submitted that statement of affairs of the company filed by one of the directors is not in proper compliance of the provisions of the Companies Act, 1956. It appears from the record of the company application no.4/87 that Official liquidator submitted that statement of affairs of the company filed by one of the directors is not in proper compliance of the provisions of the Companies Act, 1956. In long years, several orders were passed and the Director was also directed to appear before the Official Liquidator and it appears from the proceedings placed on record that one of the directors through his power of attorney appeared before the Official Liquidator and after interrogation, the Official Liquidator found that some more amount of the company was also not recovered and it was also found that statement given by the said Director that one of the bank recovered the amount of Rs. 4,33,637/- appears to be a wrong statement of fact. 6. Only one of the director respondent no.1 appeared and submitted reply to the application and it will be worthwhile to mention here that when the bank in question was even noticed to find out whether any amount was recovered by the bank or not, the bank's stand was that bank has no record of such recovery and the same stand was taken by the director of the company in their reply. 7. The question for consideration before this court in company application no.4/87 is whether it is fit case for taking action to prosecute the ex-directors of the company under Section 454(5) of the Companies Act,1956. 8. It appears from the bulky record of the company petition and even from the record of the company applications no.4/87 and 5/91 that the company in question which was incorporated in the year 1980 was under bad whether and due to heavy losses the company had huge losses and liability which went into more than crores of rupees and that fact has been taken note of by this court in the proceedings referred above. The possession of the company's assets were taken by the RFC on 30-31st Oct., 1984 much before the order of winding up of the company was passed on 28.10.1985. As per one of the applications submitted by the Official Liquidator in company application no.2/86 it appears that the Official Liquidator took the charge of the record, books of accounts and assets and prepared the inventory also on spot on 12/13th Nov., 1986. The said inventory was submitted in time as is stated in the said application. As per one of the applications submitted by the Official Liquidator in company application no.2/86 it appears that the Official Liquidator took the charge of the record, books of accounts and assets and prepared the inventory also on spot on 12/13th Nov., 1986. The said inventory was submitted in time as is stated in the said application. Be it as it may be, the facts reveal that the contention of the Official Liquidator as back as in the year 1988 was that he got the record and books of accounts of the company whereas as per the fact stated in the application by one of the directors of the company, who submitted the statement of affairs of the company alongwith the application dated 26th Sept., 1991, the books of accounts were lying somewhere at Delhi or at Calcutta. From these two averments which were stated about decades ago from today disclose that some of the books of accounts may be with the Official Liquidator and some of the books of accounts may be with the ex-director. The application dated 26th Sept., 1991 submitted in the company application no.4/87 filed by the Official Liquidator seeking permission has not yet been rejected and the statement of affairs submitted by the ex-director have not been rejected. However, the objection of the Official Liquidator is that the statement of affairs have not been filed properly and in compliance of the provisions of the Companies Act, 1956. However, It appears from the record that though the statement of affairs having been scrutinised so as to state that the statement of affairs given by one of the director is false statement, particularly, when the statement of affairs of the company is in detail and for present controversy we are concerned with the loan and advances given by the company. 9. It appears from the proceedings taken by the Official Liquidator including the various orders of this court that one of the director also appeared before the Official Liquidator. 9. It appears from the proceedings taken by the Official Liquidator including the various orders of this court that one of the director also appeared before the Official Liquidator. In these facts and circumstances though there was delay in submitting the statement of affairs of company by the director of the company but that delay can be condoned and particularly in view of the fact that in a matter where the company itself was incorporated in the year 1980 and faced the winding up petition in the year 1984 and in short time on 28.10.1985 it was ordered to be wound up and the statement of affairs of the company was submitted by the director on 26th Sept., 1991. Therefore, at this belated stage in the facts and circumstances, there is no reason to pass any order to prosecute the director of the company after almost 25 years from the date of passing of the order of the winding up of the company. Therefore, the company application no.4/87 is liable to be dismissed. 10. In the company application no.5/91, learned counsel for the petitioner vehemently submitted that the duty of the directors is more pious and they were not owner of the properties of the company, but they were only custodian and they could not allow the syphoning of the funds of the company. Learned counsel for the petitioner vehemently submitted that it is apparent from the statement of the profit and loss which has been submitted by none-else-than the company, copy of which has been obtained by the Official Liquidator from the office of the Registrar of the companies, it is admitted case of the directors of the company that there was dues of Rs. 24,78,848/- as per the statement dated 30th Sept., 1983. Learned counsel for the petitioner, drew the attention of the court towards some facts mentioned in the said balance-sheet wherein it has been indicated that there are some loan and have not been shown as bad debt. Meaning thereby according to the learned counsel for the petitioner the loan amount was recoverable amount prior to taking over charge by the Official Liquidator and that amount was not recovered by the directors of the company. It is also submitted that the directors of the company gave false statement before the court and mislead this court that amount of more than Rs. It is also submitted that the directors of the company gave false statement before the court and mislead this court that amount of more than Rs. 4 lac have been recovered from the debtors of the company by the bank whereas no proof has been submitted by the directors of the company of recovery of the said amount and the bank clearly stated that no such recovery was effected, rather say, bank stated that there is no record of the accounts of the company in liquidation of such amount in the bank's account. 11. It is also submitted that in judgments of the Mumbai High Court, Punjab & Haryana High Court and Allhahabad High Court the courts already examined the issue in detail and in the light of the ratio given in those judgments it was the duty of the directors to explain and submit that the due which has been shown by them were not allowed to be syphoned out and not allowed to become time barred. It was also their duty to explain what efforts they made to recover the dues of the company It is submitted that from the reply it transpires only that the company's only stand is that the company made efforts, but what efforts were made has not been explained in any manner. 12. It is also submitted that amount is huge amount of Rs. 24,98,848/- plus more than Rs. 7 lacs as found subsequently after interrogation by one of the directors and it is also submitted that the directors of the company deliberately did not cooperate the Official Liquidator. 13. Learned counsel for the respondent no.1, who alone has put in appearance through his counsel, submitted that the company went in bad weather immediately from the initial period and its property was taken over by the RFC and the accounts books were taken over by the Official Liquidator as has been admitted by the Official Liquidator in his application. Therefore, the respondent-directors have no access to the account and whatever material was with them on the basis of which they have submitted the statement of affairs of the company. Therefore, the respondent-directors have no access to the account and whatever material was with them on the basis of which they have submitted the statement of affairs of the company. Not only this, according to learned counsel for the respondent no.1, the services of the Charactered Accountant was taken so as to prepare the scheme for rehabilitation of the unit, but the proposals given by the respondent were not accepted by the FCI, RIICO and RFC as well as by the respondent's banker SBBJ in addition to the other institutions of the State. It is also submitted that in that situation, the efforts could have been made only of personal persuasion and which have been made by the directors. 14. I considered the submissions of learned counsel for the parties and found that in the application submitted by the Official Liquidator it is only mentioned that the balance-sheet was obtained by the Official Liquidator of the period upto 30th Sept., 1983 wherein papers have been shown having the amount of Rs. 18,66,407/- and there was cash and bank balance of Rs. 1,99,770/-. There was loan and advances of Rs. 4,12,6711- totalling Rs. 24,78,848/-. It appears from the report submitted by the non-petitioner that some of the loan were given to the employees by the company as interest free loan and the relevant entries are at page no.29 of the paper book wherein amount has been shown as outstanding a period exceeding 6 months as on 30th June, 1982. Recoverable amount of the goods has been shown as Rs. 74,6707/- and it came down to Rs. 6,32,853/- as on 30th Sept., 1983. The other debts and outstanding as on 30th June, 1982 was shown to be Rs. 12,02,525/- and it appears that out of this amount, substantial part become doubtful and, therefore, has been included in column (I) page no. 29 and, therefore, the amount which was considered to be doubtful which was Rs. 2,18,000/- which increased to Rs. 11,63,517/- as on 30th Sept., 1983. 12,02,525/- and it appears that out of this amount, substantial part become doubtful and, therefore, has been included in column (I) page no. 29 and, therefore, the amount which was considered to be doubtful which was Rs. 2,18,000/- which increased to Rs. 11,63,517/- as on 30th Sept., 1983. Therefore, it appears from the statement of affairs as well as from the balance-sheet that some trade dues were there and those trade dues could not have been recovered uptill 30th Sept., 1983 and the company petition was submitted before this court on 31.1.1984 and the company in liquidation was already in heavy losses which eroded its entire capital and it appears that in these facts and circumstances the directors took steps to make more efforts for its rehabilitation by obtaining the services of the company Secretary/CA which they could have done looking to the total involvement of the finance of the company and did not opt for litigation for recovery of the total amount of Rs. 28 lacs and additional amount of Rs. 7 lacs then in that situation if the company decided not to invest more money for recovery of that amount then it cannot be said that it was a deliberate act of the directors so as to cause loss to the company and to get some benefit for themselves or to give some benefit to any other person. 15. At this juncture, it will be relevant to mention here that in a petition for misfeasance, some relevant particulars are required to be pleaded, which may enable the court to find out that at what point of time, the debts of the company become barred by time. In this case, there is no material particular on the basis of which inference can be drawn that at the time when the company's assets was taken over by the RFC or Official Liquidator in pursuance of the order of the winding up, the money of the company already became barred by time. In this case, there is no material particular on the basis of which inference can be drawn that at the time when the company's assets was taken over by the RFC or Official Liquidator in pursuance of the order of the winding up, the money of the company already became barred by time. At this juncture, it will be also relevant to mention here that though it is a civil liability, yet merely inaction of the directors in peculiar facts and circumstances and particularly when company is heavily burdened with the financial liability, the efforts for recovery of the same amount which may independently be big by ignoring the total stakes then if the company has not taken any coercive measure for the recovery of those amounts of the company, the facts may justify the inaction of the director of the company. 16. In view of the above reasons also, I do not find any just reason to hold the directors of the company guilty of misfeasance in the facts of the present case. 17. In view of the above both the applications being S.B. Company Application No. 4/87 and 5/91 are dismissed.Both Application Dismissed. *******