HC Dismisses Esskay MD’s Misfeasance Case as Liquidator Fails to Pursue the Matter for 15 years

Case Details: O.L. of Esskay Pharmaceuticals Ltd. v. Kirti Jain - [2023] 149 taxmann.com 391 (HC - Gujarat)

Judiciary and Counsel Details

• • Bhargav D. Karia, J.  
  • Ms. P.J. Davawala for the Applicant. 
  • Mrs. Mauna M Bhatt, Nikunt K Raval and N.K. Majmudar for the Respondent.

Facts of the Case

In the instant case, the Official Liquidator of the company ‘Esskay’ filed an application u/s 300 read with section 340 of the Companies Act, 2013.

The Official Liquidator had also placed a report prepared by ‘KAS and Co.’, Chartered Accountants, along with the application pointing out the misfeasance done by the respondent (i.e. the Managing Director of the Company).

After the filing of the aforesaid application, the instant Court issued a notice and permitted the advocate appearing for the respondent to obtain a copy of the report. The Court also directed the respondent to remain present before the Court on every hearing.

The matter was listed 27 times yet it was at a stage where documents had to be collected from the office of the Official Liquidator. However, the Official Liquidator failed to comply with the order and sought more time.

Later, the Official Liquidator filed a report seeking permission to avail the services of the retired Judge of the District Court to conduct the matter and further to place the proceedings of the matter on record of this Court and to pay the remuneration of Rs. 10,000, excluding other actual expenses, to the retired Judge of the District Court.

However, the Official Liquidator had not pressed for passing any order on the report and the matter was adjourned from time-to-time on one pretext or another and mostly due to the lack of personal presence of the respondent.

High Court Held

The High Court observed that considering the above progress on the matter since 2007 till date, it appeared that the Official Liquidator was not keen to proceed with the matter and the matter was being adjourned from time to time on one pretext or another.

The High Court, further observed that the Official Liquidator has also not pursued the matter after filing a report seeking permission to avail services of the retired Judge of the District Court to conduct the matter.

The High Court held that the application was to be disposed of due to sheer negligence on the part of the Official Liquidator to pursue the matter in accordance with the law and keeping it pending for more than 15 years on one pretext or another and permitting the respondent to take advantage of delay tactics to see that the entire cause of action was frustrated.