In CRR 834 of 2020 -CAL HC- Calcutta High Court rules erstwhile Directors must assist Official Liquidator even after winding up of the Company, allows consideration of petitioners' request for discharge after adding Official Liquidator as a party to the case
Justice Shampa Dutt Paul [19-06-2023]

Read Order: Sri Chhatar Singh Dugar & Ors v. Income Tax Officer under the office of the Principal Commissioner of Income Tax-1, Kolkata

Chahat Varma

New Delhi, June 26, 2023: The Calcutta High Court has ruled that the petitioners' request for discharge will be considered by the trial court after adding the official liquidator as a party to the case. The court recognized the official liquidator as a necessary party, since they were now in charge of the affairs of the company undergoing liquidation.

The petitioners in this case were directors of Vikash Metal and Power Limited, a company involved in the manufacturing of steel and power. Due to economic slowdown and other factors, the company faced financial difficulties and was unable to repay its creditors. As a result, the Calcutta High Court issued an order of winding up the company on September 8, 2015.

The counsel for the petitioners argued that once a winding up order was passed or a provisional liquidator was appointed, no legal proceedings could be initiated against the company without the permission of the Tribunal and as a result of the winding up order dated September 8, 2015, all the directors of the company (under liquidation) ceased to be directors, and they were not authorized to take any actions on behalf of the company. It was further argued that since the company was under the custody of the official liquidator, they had no liability or responsibility regarding the company's affairs, and therefore the proceedings against them should be quashed.

The bench of Justice Shampa Dutt Paul noted that the Income Tax Authorities themselves admitted that they were unaware of the winding up order dated September 8, 2015.

“The petitioners’ relief on grounds stated thus lies in praying for discharge before the trial court, which the Court is to consider in accordance with law, on adding the official liquidator as a party to the case, first and then consider the prayer for discharge if any,” said the court.

While dismissing the revisional application, the court emphasized that the petitioners, being the erstwhile directors, had a responsibility to assist the official liquidator even after the winding up of the company.