ORDER : Alok Sharma, J. 1. The respondents ex-directors of M/s. San India Electro Chem Private limited (in liquidation) are being pursued by the Official Liquidator (OL) under Sections 543 of the Companies Act, 1956 (hereinafter 'the Act of 1956') in the facts stated in his application for recovery of an aggregate amount of Rs. 20,19,500/- odd along with interest @ 8% per annum for their alleged misfeasance and breach of trust. 2. The case of the OL is that the three respondents were directors at the time of passing of the order of winding up by this court qua M/s. San India Electro Chem Private limited on 20-3-1997 in company petition No. 24/1996. It has been submitted that pursuant to the power granted by the company court to the OL under Section 457 of the Act of 1956 he appointed one M/s. PC Modi & Company, Chartered Accountant (CA) to examine the accounts of the company in liquidation for determining as to whether any misfeasance/breach of trust was made out. The Chartered Accountant accordingly having inspected and perused the accounts of the company in liquidation as also the statement of affairs of the company in liquidation furnished by the ex directors, submitted his report on 27-12-2001. According to the said report the directors failed to recover an amount Rs. 4.67 lacs from trade debtors and an amount of Rs. 9.16 lacs advanced to various suppliers even though the goods ordered were not supplied. No concrete steps were taken by the directors in the discharge of their fiduciary duties on the aforesaid account. It is also alleged that inventory of varied goods valuing about Rs. 6.34 lacs had not been accounted for. Further an amount Rs. 500/- deposited as security towards Oxygen cylinder and Rs. 3000/- deposited as security with sales tax office of which no address was given by the directors were also lost for lack of requisite recoveries. It has been submitted that the aforesaid sums were lost to the company in liquidation both for reason of dereliction of duty and deliberate action of the directors of M/s. San India Electro Chem Private limited (in liquidation) rendering them liable under Section 543(1) of the Act of 1956. The said amounts were thus liable to be personally recovered from them jointly/severally. 3. The said amounts were thus liable to be personally recovered from them jointly/severally. 3. In reply to the application, under consideration, the respondent-directors submitted that the fixed assets of the company in liquidation i.e. land, plant and machinery were at the relevant time mortgaged to RIICO against the term loan availed by the company now in liquidation. Business losses and resultant financial crisis led to defaults in payment of the term loan to RIICO. Consequently in the exercise of powers under Section 29 of the State Financial Corporation Act, 1951 (hereinafter 'the Act of 1951') on 3-9-1996 all immovable assets of M/s. San India Electro Chem Private limited (in liquidation) mortgaged to RIICO as also its stock were taken possession of by the RIICO. So to were the records and books of accounts of the company in liquidation maintained at factory site. The respondents then the company's directors were excluded from all access. Subsequently on 20-3-1997 in winding up petition No. 24/1996 the company was wound up by this court and the OL required to take charge of all manner of assets of the company in liquidation. It was submitted that it was the duty of the OL following the winding up order dated 20-3-1997 to take over all assets of the company in liquidation from RIICO, including the books of account kept at the factory site, which he did not. Hence the respondents directors being out of possession effective 3-9-1996 could do little and were not even in a position to submit the requisite statement of affairs to the OL under Section 454(3) of the Act of 1956 within 21 days of the passing of the winding up order dated 20-3-1997. It was only subsequently that the directors were allowed access to the record in possession of RIICO under the orders of the Company Court and filed the statement of affairs on 28-9-2001. Resultantly the proceedings taken against them under Section 454(5) of the Act of 1956 were concluded in the facts of the case and they were visited with a fine of Rs. 45,000/- which was deposited by them with the OL. 4. Resultantly the proceedings taken against them under Section 454(5) of the Act of 1956 were concluded in the facts of the case and they were visited with a fine of Rs. 45,000/- which was deposited by them with the OL. 4. The respondent directors submitted that the application under section 543(1) of the Act of 1956 was not sustainable as it was based merely on the CA's report dated 27-12-2001, in the preparation of which they were not required to participate nor afforded any opportunity for any clarification. Omnibus allegations against the respondent directors have been made for alleged failure to discharge their duties to recover due amounts from debtors of the company even while no dishonest intention has been attributed to them. In the circumstances no amount in issue can in law be recovered from the respondent directors under Section 543(2) of the Act of 1956. It has been further submitted that notices on the application under Section 543 of the Act of 1956 were received by the respondents only in the year 2008 i.e. eleven years subsequent to the passing of the winding up order dated 20-3-1997, by which time the respondents were prejudiced in their defence to explain with clarity the circumstances in which the outstanding amounts of the company M/s. San India Electro Chem Private limited (in liquidation) from the sundry debtors or advances made by the company in liquidation to suppliers of machinery could not be recovered. So to with regard the alleged unaccounted inventory on the date of passing of the winding up order dated 20-3-1997. It was however submitted that the sundry debtors and details of parties to whom machinery advances were made by the company before its liquidation were clearly set out in the books of account of the company taken possession of by RIICO on 3-9-1996 along with the land, plant and machinery and inventories. The OL subsequent to passing of the winding up order dated 20-3-1997 ought to have taken timely possession of the aforesaid books of account and initiated requisite steps for recovery from all concerned who in his estimation based on the same books were liable to the company. This was not done and for the OL's failure to discharge his obligations, the respondent directors cannot be held liable under Section 543 of the Act of 1956. This was not done and for the OL's failure to discharge his obligations, the respondent directors cannot be held liable under Section 543 of the Act of 1956. Without prejudice to the aforesaid contentions, in the alternative with a caveat to the earlier submissions it was submitted that the advances were made to suppliers of machines for machines required for the company's business. But thereafter for reason of financial crisis in the company at the relevant time, the remainder amount could not be paid for the machines which had been ordered. In the circumstances the amount of advances made were forfeited by the suppliers. And as per the opinion of the company's Advocate with regard to plausibility of recovery of advanced amounts from the suppliers, the company was advised that it was not easy to recover the said amounts in the background of the company itself being in breach of contract. On the Advocate's opinion and in the context of the company's financial difficulties at the relevant time, cases against the suppliers of machinery for refund of advance amounts were not filed. Similarly sundry debtors by taking legal proceedings entailed expenses towards court fee, professional charges and out of pocket expenses which the company at the relevant time could not afford. It was submitted that proceedings under Section 543(1) are not merely reactive to non recovery of amount due to a company wound up but as held by the Apex Court in the case of Official Liquidator, Supreme Bank Ltd. Vs. P.A. Tendolkar, (1973) 1 SCC 602 for such proceedings specific acts of the respondent directors liable for the clearly alleged acts of misfeasance/breach of trust have to be set out for a case against them being made out. This has not been done in the present case, it was submitted. And consequently the application under Section 543(1) of the Act of 1956 is mechanical, vague and lacking in material particulars and hence liable to be dismissed. With regard to the inventory of Rs. 6.34 lacs as reflected in the accounts of the company and statement of affairs submitted to the OL, it was submitted that the said inventory was lying at the factory premises k-1921, Jetpura Industrial Area, Jetpura when possession of immovable assets was taken by RIICO in the exercise of its powers under Section 29 of the Act of 1951 on 3-9-1996. The respondent directors were thereupon completely excluded from control of the said inventory and cannot be held liable therefor. 5. On pleadings of the parties following issues were struck: 1. Whether the respondents are jointly and severally liable to compensate and or to contribute to the applicant company, the sum of Rs. 4.67 lacs along with interest @ 18% p.a. for allowing the said sum recoverable from the sundry debtors of the applicant company to become time barred under the Limitation Act, 1908? –Applicant. 2. Whether the respondents are jointly and severally liable to compensate and or to contribute to the applicant company, the sum of Rs. 9.16 lacs along with interest @ 18% p.a. for allowing the said sum recoverable towards advances given by the applicant company to become time barred under the Limitation Act, 1908? - Applicant. 3. Whether the respondents are jointly and severally liable to compensate or contribute to the applicant company, the sum of Rs. 3,500/- with interest @ 18% p.a. which was due to the applicant company towards security deposits which the respondents had failed to recover from the concerned parties - Applicant. 4. Whether the respondents are jointly and severally liable to compensate or contribute to the applicant company, the sum of Rs. 6.34 lacs with interest @ 18% p.a. towards the value of the inventories belonging to the applicant company as the possession of the inventories was not handed over by the respondents to the applicant? - Applicant. 5. Whether the respondents are joint and severally liable to restore the possession of inventories or the equivalent value thereof to the applicant company? - Applicant. 6. Whether the actions or omissions on the part of the respondents as mentioned in the report of the Chartered Accountant dt. 27-12-2001 (Annx. 1) constitute acts of misfeasance and or breach of trust in relation to the respondents are thus liable for the same and to what extent? - Applicant. 7. Whether the present application U/s. 543 of the Companies Act, 1956 is barred by limitation? -non-applicant. 8. Relief? Issue No. 7: 6. The application under Section 543 of the Act of 1956 was admittedly filed on 6-3-2002 following the winding up order dated 20-3-1997--i.e. within five years of the winding up order. - Applicant. 7. Whether the present application U/s. 543 of the Companies Act, 1956 is barred by limitation? -non-applicant. 8. Relief? Issue No. 7: 6. The application under Section 543 of the Act of 1956 was admittedly filed on 6-3-2002 following the winding up order dated 20-3-1997--i.e. within five years of the winding up order. Section 543(2) of the Act of 1956, provides for a limitation of five years to file an application under Section 543(1) of the Act of 1956. And Section 458A of the Act of 1956 further excludes a period of one year from the date of winding up order in computing limitation under Section 543(2) thereof. The application under Section 543(1) of the Act of 1956 could have therefore been filed in fact within six years of the winding up order. It was in the instant case thus filed within limitation. Issue No. 7 is therefore decided against the respondents and for the OL. Issues No. 1,2,4 and 5: 7. Issues No. 1, 2, 4 and 5 are interconnected and therefore are being dealt with together. The case of OL is that an amount of Rs. 4.67 lacs towards sundry debt, and Rs. 9.16 lacs being advances by the company M/s. San India Electro Chem Private limited (in liquidation) prior to its liquidation for supply of various machines, not being recovered tantamounted to breach of trust by the respondent directors. The counsel for the OL Mr. K.J. Mehta submitted that the said amounts ought to have been recovered by the respondent directors. Non recovery of the same within time and thereafter the debts becoming barred by limitation is attributable to the failure of the respondent directors to exercise their fiduciary duty to the company, submitted counsel for the OL. Mr. Ajeet Bhandari for the respondent Directors submitted that defence evidence shows that the factory premises were taken possession of by RIICO on 3-9-1996 along with the records, books of accounts kept at factory premises. The directors were thereafter not in a position to take any action for recovery of the amounts in issue as they for one had no access to the relevant records. The directors were thereafter not in a position to take any action for recovery of the amounts in issue as they for one had no access to the relevant records. He further submitted that in any event the OL following the winding up order dated 20-3-1997 had knowledge of the factum of the records of the company M/s. San India Electro Chem Private limited (in liquidation) being in possession of RIICO since 3-9-1996. Therefore he ought to have taken possession of the records of the company in liquidation in the exercise of powers conferred upon him by the Company Court under Section 457(1) of the Act of 1956 and initiated steps if so advised, for recovery of the amounts in issue from sundry debtors and suppliers of machinery holding advance amounts. Mr. Ajeet Bhandari submitted that even otherwise for reason of paucity of funds with company while it was under financial stress and failing to repay installments towards the term loan to RIICO, it was not possible for the company to bear the expenses of litigation, uncertain as its efficacy was for recovery of the amounts from the sundry debtors who had their own potential defences. Counsel submitted that further there is not even an iota of evidence that non recovery of the amounts in issue was beneficial to the respondent directors. With regard to non recovery of the sum of Rs. 9.16 lacs advanced to various suppliers of machines, Mr. Ajeet Bhandari submitted that the said sums were forfeited by the suppliers of machinery for the company's failure to pay the remainder amount and receive the machines ordered. The Advocates of the company now in liquidation advised to the weakness of any case for recovery of advances to suppliers of machines in the context of the forfeiture clause to the suppliers' benefit in the contracts for supply of machinery. 8. Mr. Ajeet Bhandari submitted that these aspects of the matter are clear from the evidence of D.W. 1 Sanjay Jain who stated that an amount of Rs. 8 lac was advanced to M/s. Ved Sassomeccanica (India) Private Limited by RIICO under agreement dated 30-11-1991 (Ex. A-14). Like wise an amount of Rs. 65,000/- was paid on 8-12-1992 as reflected in the company's ledger to M/s. Arunodaya Foundries Jaipur also for supply of another machine for the purpose of cutting marble blocks, manufacturing marbles tiles-the company's business. 8 lac was advanced to M/s. Ved Sassomeccanica (India) Private Limited by RIICO under agreement dated 30-11-1991 (Ex. A-14). Like wise an amount of Rs. 65,000/- was paid on 8-12-1992 as reflected in the company's ledger to M/s. Arunodaya Foundries Jaipur also for supply of another machine for the purpose of cutting marble blocks, manufacturing marbles tiles-the company's business. However thereafter owing to the financial problems faced by the company, the remainder amounts towards the machines were not paid leading to forfeiture of amounts already paid. The company vide letter dated 15-7-1995 (Ex. A-15) asked M/s. Ved Sassomeccanica (India) P. Ltd. for refund of the amount advanced towards purchase of a machine ordered. Reminder was sent on 16-1-1996 (Ex. A-16) and a legal notice dated 14-7-1997 (Ex. A-17) through Advocate R.P. Garg followed. In reply thereto the said company by its notice dated 4-8-1997 (Ex. A-18) instead of refunding the advance amount claimed damages for breach of contract and not purchasing the machine ordered and ready for delivery. Legal consultants threw up advise that an amount of Rs. 1 lac in the aggregate towards court fee, advocate's charges and miscellaneous expenses would be required to pursue the matter in court by way of legal proceedings which in any event had little chance of success as the company was indeed not ready to purchase the machine ordered. Hence as prudent businessmen, a decision was taken by the company not to pursue the matter. On the issue of recovery of dues from the sundry debtors in the books of the company and statement of affairs submitted to the OL. Mr. Ajeet Bhandari pointed out to the evidence of Mr. Sanjay Jain (D.W. 1) that the Board of Directors of the Company passed a resolution on 31-8-1996 (Ex. A-1) with regard to outstanding amount due to the company in its books against Bharat Marbles, Hindustan Marble company and Naresh Kumar Bansal to whom marble tiles were supplied. It was recorded in the said resolution that marble tiles supplied to the aforesaid buyers were of irregular size and of inferior quality. It was therefore decided not to take legal proceedings for recovery noting that short payments by the named parties could be justified in court for reason of poor quality/irregular size of marble tiles. Therefore amounts due from the sundry debtors were waived. It was therefore decided not to take legal proceedings for recovery noting that short payments by the named parties could be justified in court for reason of poor quality/irregular size of marble tiles. Therefore amounts due from the sundry debtors were waived. Further, the cost of litigation on the one hand and desirability of keeping good commercial relations with buyers dictated waiver of amount due to the extent of Rs. 4,67,000/-. Mr. Ajeet Bhandari drew attention of the court to the evidence of D.W. 1 Sanjay Jain who stated that raw material/stocks lying at the factory premises were taken possession of by RIICO when it took over fixed assets mortgaged to it in exercise of power under Section 29 of the act of 1951, which is evident from the Auditor's report dated 7-2-2002 (Ex. A-3). He submitted that hence no liability in respect thereof can be fastened on the directors of the company who had no control over the inventory after RIICO's taking over possession on 3-9-1996, even prior to the winding up order dated 20-3-1997. 9. Mr. Ajeet Bhandari submitted that evidence on record thus establish that the respondent directors thus cannot be held responsible for unaccounted inventory. It was further pointed out that as against the specific case and evidence in support thereof by the respondents, it is not the OL's case that the inventories of the company in liquidation were not available at site when possession of land, building, plant, machinery and raw materials was taken by RIICO on 3-9-1996. Mr. Ajeet Bhandari submitted that none from RIICO has been produced by the OL to prove the said fact to controvert the evidence of Shri Sanjay Jain in regard thereto. 10. The evidence of D.W. 1 Mr. Sanjay Jain remained unshaken. And the evidence of the OL's witnesses which included himself and the Chartered Accountant remained confined to accounts reflected in the company's books of account and the Statement of Affairs submitted by the Directors of the Company in liquidation on 28-9-2001. Based thereon inference of liability of the respondent directors was sought to be drawn. 11. In the evidence on record, I am of the considered view that issues No. 1, 2, 4 and 5 deserve to be decided in favour of the respondent directors and against the Official Liquidator. Issues No. 3: 12. Based thereon inference of liability of the respondent directors was sought to be drawn. 11. In the evidence on record, I am of the considered view that issues No. 1, 2, 4 and 5 deserve to be decided in favour of the respondent directors and against the Official Liquidator. Issues No. 3: 12. As far as the allegation of non recovery of an amount of Rs. 3,500/- in the aggregate towards security deposit of an amount of Rs. 500/- security for Oxygen cylinder and Rs. 3000/- towards security pledged with the Sales Tax Department is concerned, Ex. A-8 and A-9 filed by the respondent Directors and proved by D.W. 1 Mr. Sanjay Jain, indicates that the said amount along with interest aggregating to Rs. 6500/- has been deposited with the OL through receipt No. 1349 dated 12-9-2002. Therefore, this issue deserves to be decided against the OL and in favour of the respondents directors. Issue No. 6: 13. This issue No. 6 relates to allegations of misfeasance and/or breach of trust by respondent directors on the basis of the report by the Chartered Accountant submitted on 27-12-2001. That report alone is the bedrock of the evidence of the Official Liquidator and the Chartered Accountant in support of the application under Section 543(1) of the Act of 1956. Nothing concrete and specific to any of the respondent directors has been brought on record. The case of the respondent directors is that allegations against them are vague, general, hypothetical and inferential in nature, do not relate to specific instances of wrong doing or culpable neglect for which they can in law be held liable in their individual capacity for misfeasance, malfeasance or breach of trust. 14. The Apex Court in the case of Official Liquidator Vs. Raghava Desikachar, (1975) 45 Com. Cases 136 held in the context of Section 543 of the Act of 1956 that "the application should contain a detailed narration of the specific acts of commission and omission on the part of each director quantifying the loss to the company arising out of such acts or omissions". Similarly in the case of Official Liquidator of Gujarat Vs. Kavasaji Tehmures Modi, 2003 (45) SCL 514 Guj. Similarly in the case of Official Liquidator of Gujarat Vs. Kavasaji Tehmures Modi, 2003 (45) SCL 514 Guj. it was held that charges of misfeasance and breach of trust should be specific and not of vague and general nature, and when no specific or particular allegation was made in regard to any director/officer so as to make him responsible for repaying or restoring the money or the property of the company in liquidation, the court would be constrained from granting relief sought by the OL. In the case of Security and Finance Private Limited Vs. B.K. Bedi [1991 (71) Com Cases 101 Delhi] it was held that the court has to examine the conduct of an individual director or officer and to pass an order against him, if such a person is personally found personally liable for misfeasance etc. of the money or property of the company or otherwise guilty of any misfeasance or breach of trust in relation to the company. In the absence of specific allegations and positive evidence, it is not possible or proper for the court to indulge in a fishing or roving enquiry so as to compel the individual director to reimburse and/or compensate the company. 15. In the case of Official Liquidator Vs. T.J. Swamy, 1996 (86) Com Cases 696 AP Andhra Pradesh High Court held that unless individual responsibility is identified and established it would be difficult for the court to grant appropriate reliefs on Section 543 of the Act of 1956 application. It was held that only documents such as audit reports and the balance sheet cannot establish that there was a misfeasance on the part of the respondent-directors. There should be very specific individual and personal misconducts for making out a case under Section 543 of the Act of 1956. In the case of Official Liquidator Dhavalgiri Paper Mills (P) Ltd. Vs. Chinubhai Khilachand, 2003 (114) Com Cases 277 it was held that to bring the charge of misfeasance against ex-directors it is necessary that specific acts of commission or omission and/or negligence on the part of each director should be pointed out and proved establishing that the act of commission or omission or negligence was with the knowledge and intent of the director named to cause loss to the company simultaneously resulting in personal gain. 16. In the case of Official Liquidator Vs. 16. In the case of Official Liquidator Vs. D.D. Sinha [SB Company Application No. 5/1995 decided by the Rajasthan High Court] this court held that if any loss is caused to the company all its directors will not automatically become liable, unless the allegation of misfeasance is made and proved against the director indicating his connection with such loss. The allegation of misfeasance and misapplication has to be specifically pleaded with material particulars against each of the directors/erstwhile directors of the company. 17. The moot question for consideration is thus whether on the evidences of the OL a case against the respondent directors under Section 543(1) of the Act of 1956 is made out. 18. The case before this court as laid is only based on the report dated 27-12-2001 prepared by the Chartered Accountant and its reiteration in the evidences of the OL and Chartered Accountant. From the evidence on record it is clear that the directors of the company in liquidation cooperated with the OL, various amounts running into lakhs were deposited by them as were fairly their liability. Aside of the aforesaid, no specific evidence obtains on record against any of the respondent directors having misappropriated or otherwise having wrongly acted or omitted to act to cause loss to the company in liquidation to their corresponding enrichment/benefit or otherwise. In fact no allegation of the respondent-directors benefitting personally from the assets of the company has been at all made by the OL. In fact, the Chartered Accountant in his report dated 27-12-2001 which is the basis of this application under Section 543 of the Act of 1956 has stated that no dishonesty in the affairs of the company can be attributed to the directors of the company. Only because the respondents were the Directors of the company as on date of passing of winding up order, it is presumed that they were in possession of the properties and records of the company in liquidation. Non accounting of which to the OL's satisfaction tantamounts to their being fastened with damages/liability under Section 543(1) of the Act of 1956. That is impermissible. No liability on the rebound is contemplated under Section 543 of the Act of 1956. Concrete positive evidence at the instance of OL and his witnesses is mandatory. Unless that burden has been discharged no liability on the directors can accrue. That is impermissible. No liability on the rebound is contemplated under Section 543 of the Act of 1956. Concrete positive evidence at the instance of OL and his witnesses is mandatory. Unless that burden has been discharged no liability on the directors can accrue. This has not been done in the instant case. 19. The High Court of Karnataka at Bangalore in the case of Official Liquidator of M/s. Zenith Power Systems (I) Ltd. Versus Sri K. Venkatachalam & Ors. (C.A. No. 752/2007 In C.O.P. No. 138/2000), decided on 21-1-2013, had held that an application under Section 543 of the Act of 1956 cannot be made on vague terms and cannot be used as a power to conduct a roving enquiry to ascertain as to whether there was any act of misfeasance, malfeasance or breach of trust on the part of erstwhile directors. The averments in the application should be clear, unambiguous and specific. In the absence thereof, such application would not stand to the test of scrutiny warranted in law and be liable to be dismissed. In fact, Section 543 proceedings are proceedings to quantify loss sustained by the company (in liquidation) on account of acts of misfeasance, malfeasance, breach of trust committed by its ex-directors and others. As such, alleged acts of the respondent-directors or officers of the company in winding up should be clear and specific and should emerge from the application itself duly supported by documentary evidence. Until and unless these ingredients are satisfied from evidence on record and the Court lawfully arrives at the conclusion that the deeds and acts/omissions of ex-directors/others were of a nature not expected of a prudent person engaged in business bona fide, liability cannot be laid on the door of the ex-directors or any other to hold them responsible under Section 543 of the Act of 1956. 20. On consideration of the pleadings of the parties and evidence on record, I am of the considered view that no case of misfeasance, malfeasance or breach of trust is made out against the respondents Sanjay Jain, Abhay Jain and Ajay Jain Ex-Directors of the company M/s. San India Electro Chem Private Limited (in liquidation). 21. Consequently the issue No. 6 is decided in favour of the respondent directors and against the Official Liquidator. 22. Resultantly, the application under Section 543 of the Companies Act, 1956 stands dismissed accordingly.