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Banaras Beads Ltd. v. Sristi Carriers (P) Ltd. - COMPANY PETITION No. 46 of 1996  RD-AH 6219 (22 March 2006)
Company Petition No.46 of 1996
Banaras Beads Ltd. Vs. Srishti Carriers Pvt. Ltd.
Hon. Sunil Ambwani, J.
Heard Shri Krishna Agrawal and Shri Arun Kumar, learned counsel for Shri Rakesh Kumar Jain son of Shri D.C. Jain, resident of 253/62, Nadan Mahal Road, Lucknow, the Ex-Director of the company (in liq.).
The company was wound up on 5.1.2000. On the date of winding up Smt. Sushila Devi Jain mother of Shri V.K. Jain and Shri Rakesh Kumar Jain son of Shri D.C. Jain were the directors. It took five years for this Court to find out the whereabouts of Rakesh Kumar Jain. It is only when non-bailable warrants were issued and police were reprimanded that Shri Rakesh Kumar Jain appeared before this Court and has filed affidavit. He has, after seeking time, which does not amount to relaxing the period prescribed for filing statement of affairs, filed statement of affairs by registered post, a copy of which has been annexed to the affidavit filed today.
A perusal of the statement of affairs shows that the company has huge liabilities and no assets at all. It is alleged that the company was carrying out transport business, which went into losses. The company, however, invested more than rupees one crore in Shrishti Video Corp. Ltd. promoted by Shri V.K. Jain and Vandana Jain purportedly from the promoter's fund in the year 1990. The balance sheet does not give proper account of these shares and the dividend as the assets of the company and treats them as loan against shares.
Incidentally Shristhi Video Corp. Ltd. has also been wound up and is under liquidation.
The order dated 30.8.2005, 21.10.2005 and 5.12.2005, showing the efforts, which were made by the Court and also directions to CBI to register a case against Shri Rakesh Jain after which he put in appearance. The orders are as follows:
Order dated 30.8.2005-"Shrishti Carriers Private Limited, Regd. Office 24/56 Birhana Road, Kanpur (U.P.) (the Company in liq.) was wound up by this Court vide order dated 5.1.2000 after the publication of notices under Rule 24 of the Companies Court Rules 1959 in 'Hindustran Times' and 'Amar Ujala' and U.P. Gazette, Saturday dated 16.10.1999, no reply was filed in the matter.
Five years have passed since then, but the Ex-Directors have not filed the 'Statements of Affairs' with the Official Liquidator of the Company. The negligence is punishable as an offence under Section 554 (5) and (5-A) of the Companies Act 1956 for which the Ex-Directors, delinquent officers and the members of the company are liable to be prosecuted. The Court also has powers to summons these persons to submit the details of the properties and accounts under Section 478 of the Companies Act 1956.
The company had not only failed to return Rupees one crore advanced by the petitioner company to the respondent company (In Liq.) it had also defaulted in payment of Income Tax dues. The Ex-Directors under Section 454 (3) of the Companies Act are required to file 'Statement of Affairs', within 21 days of the winding up. The Income Tax department appearing through Sri Shambhu Chopra, Advocate has filed an application supported by affidavit of Sri M.C. Baurai, Dy C.I.T. Range-IV, Lucknow, stating that the Company (in liq.) - namely Shrishti Carriers Private Limited ows to the income tax department, a sum of Rs. 6, 56,82,878.00 (Rupees six crores fifty six lacs eighty two thousand eight hundred and seventy eight only) being arrears of Income Tax from assessment years 1991-92 to 1997-98, including interest and an information in this regard has been sent to the Official Liquidator with a prayer to recover these amounts from the assets of the company.
From the records I find that the this company petition was contested by Sri Rakesh Kumar Jain, who had in his affidavit dated 4.2.1997, claimed himself to be a Director of the respondent company namely Shrishti Carriers Private Limited, Regd. Office 24/56 Birhana Road, Kanpur. In this affidavit he has stated himself to be son of D.C. Jain, resident of 24/56 Birhana Road, Kanpur.
The company petition was filed on a demand notice for payment of Rupees one crore advanced by Banaras Beads Ltd. (the petitioner) to Shrishti Carriers Private Ltd. (in liq.)for purchasing under an agreement 166700 Debentures of Shrishti Video Corp. Ltd. The record prima facie shows that Sri V.K. Jain, husband of Smt. Vandana Jain, Managing Director of Shrishti Video-Corp. Limited, resident of C-1/23, Sector -37 NOIDA was the connecting factor between these two companies. The names and addresses of all the Ex-Directors of the companies are not on record.
In the facts and circumstances, and in view of the large scale defaults, misfeasance and defalcation of public money the Court takes cognizance of the offences of misfeasance committed by Ex-Directors of the company. It has been now five years that this Court was chasing these Ex-Directors. The Official Liquidator in his report No. 43/2000 stated that the registered office at 24/56 Birhana Road, Kanpur is found to be closed and that Sri Onkar Nath Tondan, Chartered Accountant of the company (in liq.) informed that the company has shifted its office to Delhi at some unknown place. The letter of offer of Debentures of Shristi Video Corp. shows that the office of Shrishti Video Corp Ltd. (Formerly Shrishti Enterprises Ltd.) Kanpur is also registered at 24/50 Birhana Road, Kanpur, and has a Corporate Office at 501/Som Dutt Chambers-I, 5 Balaji Complex New Delhi. The Shrishti Vediocon Ltd is also under liquidation.
Let non-bailable warrant be issued against Sri Rakesh Kumar Jain, resident of 24/56, Birhana Road, Kanpur to be brought before this Court for defalcation and misfeasance committed by him the Ex-Director of the Company ( In Liq.). The Senior Superintendent of Police, Kanpur Nagar is directed to execute the warrants. In case the registered office at 24/56 Birhana Road, Kanpur has been closed and is inaccessible he shall take help of serving and production of Sri Rakesh Kumar Jain through Sri V.K. Jain and Smt. Vandana Jain on the addresses at Delhi.
Sri Shambhu Chopra, learned counsel for the Income Tax Department has also produced the order under section 271 (1) of IT Act 1961 passed by Joint Commissioner of Income Tax, Special Range, III Lucknow dated 29.8.2000 in which the addresses of M/s Shrishti Careers Private Ltd has been shown as 253-B-62 Nagan Mohalla Road Lucknow and the second address given is F-1/8 DLF Kutub Entry Phase-I, Gurgaon, Haryana. The police shall if necessary try to obtain the whereabouts of the Ex-Directors of the Company (In Liq.) from these two addresses as well.
List on 21.10.2005 for appearance of Sri Rakesh Chand Jain and other Ex-Directors of the Company (In Liq.)."
Order dated 21.10.2005- In compliance of the order dated 30.8.2005 non-bailable warrants were issued for service on Rakesh Kumar Jain at his Kanpur Address.
The Chief Metropolitan Magistrate, Kanpur Nagar, has sent a fax message on 19.10.2005 stating that from Kanpur address it was found that Sri Rakesh Kumar Jain is living in House No.253-B-62 Nagan Mohalla Road Lucknow. When the warrants were sought to be served upon him at Lucknow, his wife Smt. Nisha Jain and neighbour Santosh Kumar Jain stated that Rakesh Kumar Jain is working in New Delhi. Address not known to his wife.
It appears that the office has not sent a copy of the order dated 30.8.2005 along with non-bailable warrants.
Let the office sent the copy of the order to the Chief Metropolitan Magistrate, Kanpur Nagar, who shall send the non-bailable warrants to be executed to the Commissioner of Police, New Delhi on the addresses given in the order. The warrants sent by the Court shall include the order dated 30.8.2005, report of Chief Metropolitan Magistrate, Kanpur Nagar as well as the copy of the order passed today. The warrant shall be executed and Shri Rakesh Chand Jain shall be produced before this Court on 21.11.2005."
Order dated 5.12.2005- In pursuance of order dted 30.8.2005 and in the special facts and circumstances of the case and defalcation of crores of rupees of the investors and also dues of Income Tax Department, the non-bailable warrants were issued to secure the attendance of Shri Rakesh Kumar Jain. It was found from the records that Shrishti Carriers Private Ltd is integrally connected in its financial affairs with Shrishti Video Corporation and that Shri Rakesh Kumar Jain is closely connected with Shri V.K. Jain and Smt. Vandana Jain. The Chief Metropolitan Magistrate, Kanpur Nagar was directed to execute the non-bailable warrants to produce Shri Rakesh Kumar Jain after tracing out from the addresses given in the order.
The Chief Metropolitan Magistrate, Kanpur Nagar has submitted a report dated 26.11.2005, based on the report of Station Officer, Feelkhana Police Station, Kanpur Nagar that the office of Shrishti Video Corporation Ltd at 501 Somdutt Chamber- Balaji Complex, New Delhi is an address of the premises in bhikhaji Complex which was found to be locked. The Chief Estate Officer, Retd. Col. Remesh Diwan informed that this office is the personal property of Shrishti Video Corp. Ltd which is locked for last ten years and that he does not know the current address which is not on record. The address of Smt. Vandana Jain at C-1/23 Sector-37 NOIDA was found to be wrong. There is no such block as C-1/23 Sector 37 and thus non-bailable warrants have been returned back.
This Court had taken cognisance of the offences committed by Shri Rakesh Jain under Section 454 (3) and 451/468 of the Companies Act 1956. He is absconding for last about six years and the addresses given to Official Liquidator as well as Income Tax Department have been found to be false. The Company (in Liq.) was integratelly connected with the Shrishti Video Corp. Ltd of which Smt. Vandana Jain is the Managing Director and her husband Shri V.K. Jain is behind all the activities. The Ex-Directors have committed offences under the companies Act but are also guilty of large scale defaults and defalcation of public money. The income Tax Department ha to realize Rs.6,56,82,878.00 from the Company towards income tax dues of the assessment years 1991-92, to 1997-98. Shri Shambhu Chopra appearing for Income Tax Department states that the department has not been able to find out the whereabouts of the Company (In Liq.) and its ex-directors.
In the special facts and circumstances the Court directs the Central Bureau of Investigation, to register a criminal case against Shri Rakesh Jain and to investigate the offences. The Official Liquidator shall inform the S.P., C.B.I., Lucknow with copy of the order dated 30.8.2005, 21.10.2005 and order passed today. The Official Liquidator is also directed to seal the office of Shrishti Video Corporation Ltd situate 501 Somdutt Chamber-1, 5 Bhikaji Complex, New Delhi and to inform the Registrar, New Delhi not to accept document for registration in respect of the said complex with information to the Chief Estate Officer, Bhikaji Complex, New Delhi.
List again on 6.2.2006.
It is a matter of serious concern that the Directors of the companies, which are wound up by the Court abscond immediately after winding up, wasting valuable time of the Court and Government machinery in tracing them. Prima facie the petitioner has committed offences under Section 454 (5) of the Companies Act, 1956, which are punishable with two years imprisonment and a fine of Rs.1000/- from 21 days after the date of winding up.
There is no explanation whatsoever in all the three affidavits, which are filed by Shri Rakesh Kumar Jain, for not filing statement of affairs. Significantly there is no averment in these affidavits that he has no knowledge of the winding up order.
Let the Official Liquidator submit his report on the statement of affairs, which is alleged to have sent to him through registered post. Shri Rakesh Kumar Jain will hand over the assets of the company, whatever they are and wherever they are to the Official Liquidator without any further delay.
Shri Rakesh Kumar Jain is charged as follows:
"That you Shri Rakesh Kumar Jain, son of Shri D.C. Jain, resident of 253/62-D, Nadan Mahal Road, Lucknow having full knowledge of the winding up order of Srishti Carriers Pvt. Ltd. (in liq.), of which you were the Ex-Director on the date of winding up i.e. on 5.1.2000 have failed to file statement of affairs, within 21 days of the date of winding up order under sub-section (1) of Section 451 of the Companies Act, 1956 and continued to evade your presence and the notices, which were sent to you as also the notices by the Income Tax Department for recovery of Rs.6,56,82,878/- for assessment year 1991-92 to 1997-98 and absconded, compelling the Court to issue bailable and then non-bailable warrants and thereafter to register a case with CBI against you, and thus committed offence under Section 454 (5) of the Companies Act, 1956 punishable with imprisonment of a term of two years and fine, which may extend to Rs.1000/- per day for the period of default."
Shri Rakesh Kumar Jain is present in the Court. The charge has been read out and explained to him. Shri Krishna Agrawal, learned counsel appearing for him is granted a month time to file a reply of the charge and the evidence, which he may like to produce.
List on 24.4.2006. Shri Rakesh Kumar Jain shall be present on that day.
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