ORDER A.S. Bopanna , J.—The Official Liquidator has filed the instant application under Section 543 of the Companies Act contending that the respondents who are the erstwhile Directors of the Company in liquidation have committed misfeasance and as such, the amount claimed should be recovered from the respondents. Initially the application was filed only insofar as the details of the sundry debtors not having been provided against which a sum of Rs. 25,00,000/- had been shown as outstanding to the Company in liquidation. Subsequently, during the pendency of the application, a Chartered Accountant was appointed to verify the accounts and based on the report filed by the Chartered Accountant, a sum of Rs. 1,57,02,216/- was added to the claim. The respondents have filed their objection statement to the application. The claim made in the application is disputed. The correctness of the report submitted by the Chartered Accountant is also questioned. It is therefore contended that the respondents are not liable to pay the amount claimed in the application, Insofar as respondent No. 3, it is contended that he is a Non-Residential Indian Director who was not engaged in the day-to-day affairs of the company and cannot be held liable. So far as respondent No. 4 it is contended that she had resigned as a Director of the Company prior to the winding up and therefore, was not in the know of things with regard to the affairs of the company. In that view, it is contended that none of the respondents are liable to pay the amount. 2. The matter was accordingly set down for evidence. The Chartered Accountant viz., Sri G. V. Sundar was examined as P.W. 1 and the documents at Exhs.P 1 to P3 were marked. The first respondent Sri Suresh Manoharlal Mehta was examined as R.W.1 and the documents at Exhs.R1 to R18 were marked. The third respondent was examined as R.W.2 and fourth respondent was examined as R.W.3. All the witnesses have been cross-examined. 3. Heard the learned counsel for the parties and perused the application papers. 4. The first respondent Sri Suresh Manoharlal Mehta was examined as R.W.1 and the documents at Exhs.R1 to R18 were marked. The third respondent was examined as R.W.2 and fourth respondent was examined as R.W.3. All the witnesses have been cross-examined. 3. Heard the learned counsel for the parties and perused the application papers. 4. At the outset, having noticed that the instant proceedings is one initiated under Section 543 of the Companies Act, the mere allegation would not be sufficient and the pleading and proof should be to the extent that the erstwhile Directors in fact had involved themselves in misfeasance with the intention of making unlawful gain unto themselves and the role of each Director should be pointed out. Keeping the law on this aspect of the matter in view, the claim put forth requires to be noticed. 5. The claim made is towards the amount indicated as against the name of sundry debtors and also loans and advances, since it is contended that the erstwhile Directors have failed to furnish details of such debtors so as to enable the Official Liquidator to recover the said amount from them. Therefore, it is contended that the loss caused to the company in the said manner is to be recovered from the Directors. Insofar as the amount of Rs. 1,57,02,216 the same is based on the observation made by the Chartered Accountant appointed through this Court with reference to the remarks made by the Statutory Auditors stating that the said amount was released to one M/s Associated Precisions Spindles Limited, which is a Sister concern of the Company in liquidation. Since the Directors herein have certain interest in the said M/s Associated Precisions Spindles Limited, it is alleged that there is misfeasance in transferring the money belonging to the Company in liquidation to an establishment in which the Directors are interested. 6. in support of the said claim, which has been put forth in the application, the Chartered Accountant Sri G.V. Sundar has been examined as a witness (PW 1) and he has filed his affidavit of evidence. A perusal of the affidavit would indicate the brief reference made to the nature of the claim which has been put forth. The affidavit would indicate that his observation in the report is based on the remarks which had been made by the Statutory Auditors. A perusal of the affidavit would indicate the brief reference made to the nature of the claim which has been put forth. The affidavit would indicate that his observation in the report is based on the remarks which had been made by the Statutory Auditors. The report submitted by M/s G.V. Sundar and Company has been produced and marked as Ex.P1. The said report refers to the indication in the annual report of the company which contains the balance sheet and the remarks made therein by the Statutory Auditors. The remarks as contained therein have been extracted in the report. The witness has been cross-examined in detail on behalf of the respondents but the witness has stood by the report which was filed by him. However, he admits that apart from looking at the said Annual Report, he has not verified any other documents. The communication by which the Statement of Affairs was filed by the erstwhile Directors is marked as Ex. R2 and the 13th Annual Report for the year 1993-94 based on which P.W.1 had tendered his report is produced and marked as Ex.P3. 7. In the background of the evidence which has been tendered in support of the pleadings, the evidence tendered on behalf of the respondents requires to be noticed to ascertain as to whether the said claim made has been satisfactorily explained by the respondents as being either beyond their control or not having indulged in an act so as to make gain unto themselves. In that regard, a perusal of the affidavit evidence of Sri Suresh Manoharlal Mehta, who was examined as R.W. 1 at the outset refers to the seizure of the factory premises at Dharwad by the Provident Fund authorities during October 1997 and public auction was undertaken by the said authorities on 09.12.1998. With reference to the same, it is pointed out that prior to the winding up order being passed on 10.12.1998, the authorities had taken possession of the factory premises belonging to the applicant-company and all records were available in the said proceedings. With reference to the said proceedings before the Provident Fund Commissioner, the documents are produced at Exhs. R3 to R7. It is on that basis contended that with the available materials, the Statement of Affairs had been filed and the further details could not be furnished as the records were not available with them. With reference to the said proceedings before the Provident Fund Commissioner, the documents are produced at Exhs. R3 to R7. It is on that basis contended that with the available materials, the Statement of Affairs had been filed and the further details could not be furnished as the records were not available with them. Therefore, insofar as the claim made in the application that the details of the sundry debtors and the other debtors under the head of loans and advances could not be furnished is explained by the said proceedings. When the said documents in fact indicate that the Provident Fund Department had initiated action against the company and furthermore, vide Annexure-R11, the inventory refers to the details of the document received by the Official Liquidator, the cumulative effect of the availability of the documents to the extent as provided to the Official Liquidator and the contention put forth by the respondents, with regard to other documents not being available as the Provident Fund authorities had taken possession of the premises would indicate that there was an intervening circumstance prior to the date of winding up which had prevented the respondents from providing further details. Though it could be a position that the respondents could have secured further details from the documents which were available as taken possession by the Official Liquidator, that in itself cannot constitute an act of misfeasance to come to the conclusion that the names of the debtors had not been furnished by the respondents with an intention of avoiding recovery and causing loss to the company or on the other hand making gain unto themselves. 8. The question that would arise thereafter is with regard to the claim of Rs. 1,57,02,216/-. The claim in that regard as noticed has been made with regard to the amounts said to have been transferred to a Sister concern of the Company in liquidation. The basis for the same has been taken by that Chartered Accountant from the observation made by the Statutory Auditors in the 13th Annual Report (Ex.P3). In fact, the said report has also been relied by the respondents and marked as Ex.R1. The explanation put forth in that regard in the evidence of R.W 1 is that the export marketing of the product of the Company in Liquidation was proposed to be made through its Sister Concern. In fact, the said report has also been relied by the respondents and marked as Ex.R1. The explanation put forth in that regard in the evidence of R.W 1 is that the export marketing of the product of the Company in Liquidation was proposed to be made through its Sister Concern. It is in that regard, a provision was made during the financial year 1993-94 wherein the Export Marketing Development expenses was shown. 9. In that regard, the provision was made to the extent of Rs. 1,57,02,216/- and the same is referred to by pointing out to the indication in Ex. R1 itself. It is no doubt true in Note 6, the Statutory Auditors have made reference questioning the correctness of such provision which has been made. Even if the said indication in the balance sheet and providing the said amount for Export Marketing Development Expenses as against the name of a Sister Concern is evident, the question that would arise for consideration is as to whether the said amount had been transferred and as to whether by such transfer, the respondents being the Directors of the Company in Liquidation and also being interested parties in the Sister Concern hove made gain unto themselves so as to classify the same as misfeasance? 10. In order to discharge that burden, respondent (R.W.1) has relied on the Annual Report and the balance sheet for the subsequent years which is marked as Ex.R2. From the said documents, it is pointed out that since the proposal which was made with regard to the Export Marketing had been reversed, the amount which in fact had not passed hands but had only been indicated by way of provision has been subsequently reversed. In this regard, reference is made to the balance, sheet as on 30.09.1995 where the provision for the earlier years viz., 1993-94 is indicated at an amount of Rs. 13,412,309/- and during the year 1994-95, the same is indicated as not payable. Reference is also made to the note which has been made in the financial statement wherein it is stated as follows: K. Export Market Development Expenses: Export market development expenditure of Rs. 13,412,309/- and during the year 1994-95, the same is indicated as not payable. Reference is also made to the note which has been made in the financial statement wherein it is stated as follows: K. Export Market Development Expenses: Export market development expenditure of Rs. 15.7 millions incurred by the company during the previous year has been written back, since the export order could not be materialised due to continued economic and political instability in Russia, It has been agreed that the issue of market development cost incurred by the associate company will be reviewed afresh as and when orders are received. The associate company has agreed for non-charging of expenditure of Rs. 15.7 millions incurred by it. However the company has reimbursed an amount of Rs. 2 million being the actual expenses incurred by the associate company. The said note would indicate that in fact, at an earlier point, the reversal of Rs. 20,00,000/- had been indicated and the said amount in fact had not been passed on to the Sister Concern, The objection on behalf of the applicant however is that the said document viz., Ex.R2 is not a document which had been either filed along math Statement of Affairs or was filed in the Registrar of Companies and therefore, the same is a got up document. In this regard, it would be relevant to refer to the cross-examination of R.W. 1 wherein no doubt, such suggestion has been put forth to the said witness. But he has a categorically denied that the said copies of the balance sheet had not been filed with the Registrar of Companies and he has maintained that the same has been filed and it is available. When such suggestion has been denied, there is no other material available on record to indicate that in fact the said balance sheet had not been filed before the Registrar of Companies. 11. Further, what is also to be noticed is that the witness on behalf of the applicant viz., P.W. 1 had relied on the document at Ex.P 1 i.e., the Annual Report wherein certain observations were made and in the subsequent document, the same have been clarified by the same Auditors. To that extent, there is no evidence to indicate that the said Auditors have also connived with the respondents. To that extent, there is no evidence to indicate that the said Auditors have also connived with the respondents. Therefore, in a circumstance whereby the earlier report the observations made by the Statutory Auditors have been relied on by the Chartered Accountant, such observation by the very same Statutory Auditors for the subsequent years to indicate that the amount in fact had not been passed onto the Sister concern cannot be brushed aside, Therefore, if these aspects are kept in view, it cannot be said that there is deliberate attempt on behalf of the respondents to make unlawful gain unto themselves when it is not established that there was loss caused to the applicant-company by such provision in the balance sheet with regard to the marketing strategy of the applicant-company. 12. Therefore, in the said circumstance, when the element of misfeasance and there being wilful conduct on the respondents to make gain unto themselves to the detriment of the applicant-company is not made out, in any event this Court need not go into the question as to whether the claim itself was time-barred or not. Further, insofar as the evidence tendered by R.W.2 and R.W.3 to absolve themselves in any event would not arise when no case is made out against the respondents. However, what cannot be lost sight is that even in a case where misfeasance is to be proved, the actual involvement is to be made out and insofar as R.W2, the documents produced would indicate that he is a NRI and was not involved in the day-to-day affairs of the Company. Insofar as R.W3, though Form No. 32 is not produced and filed, the fact that the company while it was a going concern on 06.10.1997 has passed a resolution as at Ex.R18 would disclose that the resignation submitted by Mrs. Yuti S. Bhatt-respondent No. 8 had been accepted by the Directors and the same would be relevant to the extent that the Directors themselves have accepted that respondent No. 3 was not involved in the day-today affairs of the company as they had accepted the resignation. 13. Therefore, keeping in view the nature of the pleadings put forth and the evidence available on record, I am of the opinion that the claim made in the instant application cannot be granted. Accordingly, the application is dismissed.