Over 2 lakh Indian cases. Search powered by Google!

Case Details

IN THE MATTER OF PARASRAMPURIA TRADING & FINANCE (P) LTD.

High Court of Judicature at Allahabad

Case Law Search

Indian Supreme Court Cases / Judgements / Legislation

Judgement


In The Matter Of Parasrampuria Trading & Finance (P) Ltd. - COMPANY PETITION No. 58 of 1997 [2006] RD-AH 10294 (25 May 2006)

 

This is an UNCERTIFIED copy for information/reference. For authentic copy please refer to certified copy only. In case of any mistake, please bring it to the notice of Joint Registrar(Copying).

HIGH COURT OF JUDICATURE OF ALLAHABAD

COMPANY PETITION NO. 58 OF 1997

In the matter of

M/s Parasram Puria Trading & Finance Ltd.

Cross examination of Shri B.K.L. Srivastava, aged about 52 years, s/o Late Amar Lal Srivastava, Deputy director (Inspection) the then Assistant Inspection Officer, Office of the Regional Director (NR) 10/499-B, Allenganj, Kanpur now in PDIL Bhawan, Sector-1, NOIDA, U.P.

ON OATH

(By Shri R.P. Agarwal)

On being asked that when I have conducted the inspection what was  my educational and professional qualification, the witness stated that I am Law Graduate. I do not have any experience  in business and financial management. By virtue of my office, I have experience in this field. The instructions for inspection were obtained on 10.9.1992 but inspection was  conducted on 31.10.2000 after two years. The reason for this delay is that the sanctions have to be taken from the officers and that large number of inspections are ordered to be carried out by officers. Sometimes more than 25 to 30 inspections are pending. On being asked whether did you receive any complaint from any shareholder or creditor before conducting inspection, the witness stated that the said inspection was purely on the direction of the Central Government. Our office did not receive any complaint from any shareholder or creditor regarding misuse of funds and mismanagement of the

2

company. On being asked whether you have inspected some more records previous or later, the witness stated that although the period of inspection was from 30.3.1990 to 31.3.1994, I have perused all the available minutes books rights from the beginning when the Company was incorporated. On being asked whether the witness had examined the accounts for the period prior to 30.3.1990, the witness saw the record brought up and answered that I had not seen the accounts of the period prior to 30.3.1990. I do not remember to have seen any such minutes in the minutes books in which other than Managing Director, any Director or Officer of the Company was authorized to carry out the management of the company or to ensure compliance with the provisions of the Companies Act. It is true that my office and office of the Official Liquidator are part and partial of the Department of Company Affairs, Government of India. I submitted my report on 31.7.1995. On the same day the reports were forwarded to the Central Government and Registrar of the Companies. I am not aware whether on the date when I carried out inspection, any winding up petition was pending in this Court. I am not aware about the action taken on my report as I was transferred and that the action taking authority is Registrar of Companies. I do not know whether any action was taken on the violations reported by me relating to the Central Government and the Registrar of the Companies as I have not been  communicated with the action  taken on my report. I am not aware whether the Registrar of Companies filed only one complaint on the basis of my report. I did not recommend to the Central Government that the proceedings of misfeasance be taken against the Directors. No doubt I had pointed out certain diversion of funds. On being asked whether on his report any

3

proceeding of misfeasance was taken, the witness answered that I was not authorized to give his opinion  the action to be taken on his report. A suggestion was put to the witness that in my report,  no case was made out for misfeasance that is why the Central Government did not make any complaint before the Company Law Board under Sections 397/398 of the Companies Act read with Section 401 of the Companies Act, the witness stated that I could not give reason as to why the Central Government did not take any such an action on my report. It is correct to say that the accounts were audited every year  for four years under inspection. I do not remember whether these accounts were duly filed every year in the office of Registrar of the Companies. It is correct that I did not raise any objection in my report with regard to not filing of the audited accounts in the office of Registrar of the Companies. It is correct that such a presumption can be raised that they were duly filed within time. It is not correct to say that all the balance sheets filed in the office of Registrar of the Companies are scrutinised by the technical staff only and some balance sheets in the routine manner are scrutinized. On being asked whether upto 15.12.1993 there was only one Managing Director namely Shri Sudhir Kumar Parasram Puria, the witness stated that I had given the details in my report that I cannot say without looking into the records that there was any other Managing Director during this period. It is correct to say that Smt. Chandra Kala Parasram Puria was appointed Director and not as whole time or Managing Director. It is also correct to say that Shri Gopal Pandey and Shri Vishnu Kant Misra were appointed as Director w.e.f. 15.12.1993. Earlier they were not whole time Director or

4

the Managing Director. They were appointed as simple Directors. I did not say whether these two persons were given any sitting fees or any remuneration for attending the meetings. It is true that Shri S.K. Parasram Puria resigned as Managing Director w.e.f. 15.12.1993 and did not get any remuneration from the Company thereafter but they were maintaining current accounts in the Company. I have stated in my report that 93.6% share were held by family of Shri Parasram Puria and remaining by others. I did not take into  whether these remaining 6.4% shares were held by friends and relative of the families. This company only had equity share capital and as such this 93.6 % share as  referred only to equity share capital. It is correct that Shri Gopal Pandey and Vishnu Kant Misra were allotted one share each on 15.12.1993 prior to this they were not holding any share of the Company. It is also correct to say that these two persons were not promoters of the Company. I do not remember  whether any change in share holding pattern took place when the Company became deemed Public Limited Company under Section 43-A of the Companies Act. I did not remember to find out the reason for fall in turn over every year reported by me. I have stated in my report that the company was incurring losses year after year. In my report  I made general observations with regard to the functioning  of the company and that is how I stated in my report that the Company was suffering losses year after year. I have not verified whether the losses in the year 1992 was because of the write off  of the insurance claim and to which year the insurance claims pertain. In the year 1993-94 also I did not go through the accounts to find out whether the loss was because of the write off  of the insurance claims and to which year the insurance claims pertain. It is not correct that

5

my observation regarding recurring losses were casual. They were based on balance sheet. With regard to termination of the agency G.T.C. whatever information I received I have given in my report. The date of termination of the agency is based on the document inspected by me. On being asked as to who told you and what material placed regarding termination of the agency of GTC the witness stated that the responsible officer informed me about the termination of agency. I have given date of termination in my report. On being asked about the observation of the witness in the report that the recurring losses could not be compensated even by sale of instruments and fixed assets and the material on which this observation was based, the witness stated that the balance sheet of the year 1993-94 in which some assets have been sold. On being asked whether there is any adjustment of this sale in the profit and loss account, the witness stated that I do not know about it. On being asked that I have commented in my report about the reduction of current assets. There was reduction  in turn over also the witness stated that it is apparent from the balance sheet. I did not calculate the ratio of current assets to the turn over. I cannot say whether the reduction of current assets is a sign of efficient management. The reduction in fixed assets was not only on account of depreciation but also on account of certain sales like the sales of cards. On being asked whether such sale affected the losses, the witness stated that I have made observations with regard to the diversion of the fund and  resultant loss from the balance sheet. The proceeds of sale were credited to the Companies account and not the the Director's accounts. I have simply said that the current investment  were reduced. I have not said in my report that the reduction of investment was  prejudicial to the interest of the company. I noticed only six current accounts of the

6

Directors, may be as suggested there were 13 current accounts of the Directors of the companies. I do not know that the Company had concealed anything from the ledger. The question whether the company had 13 accounts has been properly answered and is thus turned down. (Mr. R.P. Agarwal was reminded of the fact that the witness is an official witness who has come to prove my report which I has stated that I generated  it on the basis of accounts of book inspected by me and that the cross examination may be confined to report and not to the technicality of the procedure). On being asked about the comments in my report that the Directors were  depositing much amounts and  whether there was any discrepancy  at the end of the year, the witness stated that there were much withdrawals which were not deposited but that in the end of the year the accounts were balanced. The witness stated that in some of the accounts some debit balances is also there at the end of the year. On being asked whether I integrated  the account of all family members, the witness stated that there was no question of integrating the accounts of individual Director. It is correct that Gopal Pandey and Vishnu Kant Misra did not have account with the company. I have already enclosed with my report  the party ledger. I have not stated in my report that there was no debit balance at the end of the year. I have stated in my report about the debit balance in the account of Shri S.K. Parasram Puria and family members for ten days and reported the retention of debit balance for few days but I did not calculate the credit balance in their account on similar basis. To a question whether in para 5.2 of the report and para 16 of the affidavit the allegation is only confined to violation of  Section 372 about not making entry of investment within seven days in

7

the investment register  the witness  stated that when I have reported about investment  entries not made in  the investment register.  The investment  register was asked for during the inspection and that there was no entry in the investment register. It is correct that the investment made by the Company was duly entered in the books of the Companies. I cannot say after such a long time whether the investment was held in the name of companies or held in the name of some other persons.

With regard to the notice under Section 299 (3) a question was asked whether these notices were produced before me, the witness stated that I do not remember but these must have been produced before me. I have already answered that the accounts  were already audited and it should be taken that turn over is being  shown in the audited accounts book, this question was asked that relevant to the violation of Sections 295, 211, 269 and 227 of the Companies Act as referred to in paragraph 5.4 of the report. On being asked whether the average turn over of these three years was within the knowledge of the ROC, the witness replied that ROC is not supposed to check turn over   year after year. I do not know whether auditors knew this fact. I do not know whether any penal provision with regard to the reporting of the turn over of Rs. 1 crore after five years  was invoked by ROC. I do not know whether such  delay was condoned by ROC. I only reported that the average turn over of the year 1983, 1984, and 1985 averaged over Rs. 1 crore and this fact was reported much later. To a suggestion whether the Registrar had condoned the delay, the witness stated that in my knowledge the deeming provision come into effect as soon as the turn over increases Rs. 1 crore and there is no power of condonation given to the Registrar of the Companies. Though

8

the period of inspection was of four years but for certain violation of the Companies Act I have to go through the record of all previous years right from the date of incorporation. It is true that this violation was reported only on account of the  increase in turn over and not on account of any public participation in share capital or public deposits. On being asked as to  what is the basis of violation under Section 227 the witness stated that auditors  should have stated the fact of increased turn over in his report. I did not receive any complaint from the auditors  regarding non-supply of any information and non-access to books of accounts. I do not know whether Shri S.K. Parasram Puria was appointed as Managing Director for life. I do not remember minute of minutes books to that effect.

Dt. 25.5.2006

RKP/-

COMPANY JUDGE


Copyright

Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites

Advertisement

dwi Attorney | dui attorney | dwi | dui | austin attorney | san diego attorney | houston attorney | california attorney | washington attorney | minnesota attorney | dallas attorney | alaska attorney | los angeles attorney | dwi | dui | colorado attorney | new york attorney | new jersey attorney | san francisco attorney | seattle attorney | florida attorney | attorney | london lawyer | lawyer michigan | law firm |

Tip:
Double Click on any word for its dictionary meaning or to get reference material on it.