Examine the extent to which the legal representatives of a deceased Director

Examine the extent to which the legal representatives of a deceased Director against whom misfeasance proceedings were initiated by the liquidator of the company, under the Companies Act, 1956, can be held liable.

[May, 19981

25. M/ s Sunset Constructions Limited is being wound up by the court. The Official

Liquidator afterrealisation of the assets has an amount of Rs. 28,00,000 at his disposal

towards payment to the creditors of the company. The list of creditors is given below:

Rs.

(i) Dues to secured creditors 20,00,000

(ii) Dues to workers 15,00,000

(iii) Taxes, etc. payable to the government authorities 2,00,000

(iv) Unsecured creditors 40,00,000

Since the available amount is insufficient to meet the claims of all the creditors, explain the precedure to be followed for payment of dues as provided in the Companies Act, 1956. Assuming that the company has created a charge on all the

assets of the company in favour of the secured creditors. [May, 19991

26. The Balance Sheet ofM/s. Hush Hush Ltd. as at 31.3.1999 filed with the Registrar of Companies, Mumbai disclosed that the liabilities amounted to Rs. 2.75 crores as against the Assets of Rs. 1.25 crores. On the basis of the scrutiny of the Balance Sheet, the Registrar filed a winding up petition against the company stating that it is commercially insolvent and that the company is unable to pay its debts on the ground that the value of liabilities far exceeded the value of assets. Examine whether the company has any case to defend against the winding up petition

filed by the Registrar. [November, 19991

27. What is meant by Misfeasance? Under what circumstances can the Official Liquidator initiate misfeasance proceedings against the Auditor of the Company? Is there

any time limit for initiating such proceedings? [November, 19991

28. M/ s. XYZ Limited was wound up with effect from 15.3.2000 by an order of the Court. Mr. A, who ceased to be a member of the company from 1.6.1999, has received a notice from the liquidator that he should deposit a sum of Rs. 5,000 as his contribution towards the liability on the shares previously held by him. In this context explain whether Mr. A can be called a contributory and whether he can be made liable and whether there is any limitation on his liability.

[May, 20001