Cal HC frees company after 40 yrs of wrongful control

Kolkata: The Calcutta High Court has returned control of Chrestien Mica Industries Ltd. to its shareholders, ruling that the company stayed under court-appointed management for over forty years because of what it called a “fraud on the court” and a long-running abuse of judicial process.

Justice Ravi Krishan Kapur said the company’s affairs were run through deliberate suppression of facts, non-disclosure and acts carried out without the court’s permission.

The company was wound up in November 1979. Since then, it had been run by court-appointed special officers and a management committee while efforts were made to revive it.

The court observed that those overseeing the company did not place full accounts before it, failed to call the shareholders’ meeting directed earlier, and carried out several actions without approval. These included running bank accounts, selling stock, dealing with properties and acting on an alleged assignment of debt. The court said these steps misled it and prolonged court control far beyond what was intended.

The court noted that key information on inventories, mining rights, properties and sale proceeds was never properly accounted for. A sum of Rs 72 lakh given to a court-appointed officer also remained unexplained.

The court said share transfers made after the winding-up were carried out despite orders prohibiting such transactions. It described the overall conduct as calculated and deceitful, undermining the revival process under which the company had been managed.

Based on its findings, the High Court cancelled revival orders passed in 1991 and 1993 and ordered a permanent stay of the 1979 winding-up. All special officers, the management committee and the Official Liquidator were discharged. The court directed that all assets, books and records be handed over to a board elected at a shareholders’ meeting to be called on the basis of the last accepted register of members dated June 30, 1970. Share transfers made after the winding-up will not be counted for this purpose.

The company has also been allowed to decide whether to adopt or cancel the alleged assignment of debt and to begin recovery proceedings for amounts it believes are due, including the unaccounted Rs 72 lakh, with limitation running from the date of the judgment.