before the company law board - Company Law Board Mumbai Bench

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28Apart from the above the R2 is also liable for refund of loan amountwith interest to the R1 Company, if it is already no refunded.CP 28/2010Union vs GwaliorThe petitioner has further alleged that an amount of Rs.9lacs was advanced to Mrs.Pragati Awasthi wife of R4 before he wasappointed as additional director on 27.8.2003 and no board resolutionwas passed in that regard.It was also alleged that Rs.6 lacs wasadvanced as loan to Man Singh International Limited during the yearending on 31.3.2001 in violation of Sec.292(1)(e) of the Act.Withrespect to the said allegations, the Respondent No.2 in his counter statedthat loan appears to have been given in the year 1999 whereas R4 wasappointed as Additional Director in the Board Meeting held on27.8.2003, it is stated that there was no debit balance appearing when R4was appointed as additional director. It was further contended that whenthe loan was advanced, the R6 was the Managing Director and he wasonly responsible for day to day management of the Company and theRespondent No.2 and 3 cannot be held responsible for the saidcontravention. With regard to loan advanced to Man Singh InternationalLimited is concerned, the R2 and 3 denied the said allegation and statedthat the R6 was the Managing Director at that point of time and he alonecan explain how the said advance was given to Man Singh InternationalLimited. The 6 th respondent has not denied the saidaverment/allegations, therefore, it is presumed that the loans have beenadvanced to the above i.e. Mrs. Pragati Awasthi and M/s.Man Singh
29International Limited by the Company during the period theRespondents were acting as directors of the R1 Company. Therefore,they are liable to refund the amounts along with interest to the Companyif it is not already repaid. The respondents being the directors of the R1Company are responsible for misappropriation of funds andmismanaging the affairs of the Company. They contravened theprovisions of law and also failed to discharge the duties being directorsin their fiduciary capacity. Therefore, I hold that the directors areresponsible for the mismanagement and misappropriation of funds of theR1 Company and direct them to make the good the default committed bythem. Though, I hold that the Board Meeting dated 27.8.2003 is illegal,however, from the above findings, it is unequivocal that the directorsmiserably failed their duties and caused loss to the Company and thegeneral public. Therefore, in exercise of powers conferred under Sec.402of the Companies Act, to regulate the affairs of the Company, I dissolvethe Board of R1 Company forthwith and hereby direct the Ministry ofCorporate Affairs to take appropriate and necessary action in appointingindependent Board of Directors for smooth functioning of the day to dayaffairs of the Company. Till such time and to protect the interest of theshareholders and public at large, it is hereby directed the Ministry ofCorporate Affairs to take custody of all the statutory registers, records,books of accounts and other documents of the R1 Company forth with.Accordingly the issue is answered. It is needless to say that actionCP 28/2010Union vs Gwalior
Page 5 and 6: 5and M/s.Vishwa Extrusions Pvt. Ltd
Page 7 and 8: 7this regard under Sec.292(1)(e) of
Page 9 and 10: 9present petition is not maintainab
Page 11 and 12: 11sole proprietor of Central India
Page 13 and 14: 13directorship due to alleged contr
Page 15 and 16: 15(ii) Shri Anil P.Sahu (R3) 29.10.
Page 17 and 18: 17the Company for the Financial Yea
Page 19 and 20: 191) Whether Board Meetings dated 4
Page 21 and 22: 21clauses mentioned in Sec.22 of th
Page 23 and 24: 2313. Now I deal with Issue No.2, 3
Page 25 and 26: 25was the responsibility of the ex-
Page 27: 27the subscribers to the Memorandum

before the company law board - Company Law Board Mumbai Bench

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