Wind-Up Petition Focuses On Accountability Of Directors

The petition to wind up CRB Capital Markets Ltd has raised questions about the accountability of the companys board of directors, which includes among others a close relative of the promoter, C R Bhansali.

The 1995-96 annual report of CRB lists C R Bhansali as the chairman, S K Jain as vice-chairman. Other directors on the board were B D Dikshit, S N Tandon, Manjula Bhansali, P L Tatia and Vimal Kumar Sharma. The annual report lists P A Rao as executive director, A K Katial, Kiran Vaidya, Ashwin Shah and R Hariharan as president. It is possible that some of these people have quit the organisation since then.

 

So far no action or proceedings have been contemplated against the directors on the board of CRB. But these cannot be ruled out if the authorities go by the relevant provisions of the Companies Act, experts told Business Standard.

They said all the provisions of the Companies Act, 1956 are applicable in the CRB case. Some sections of the Act deal specifically with assigning responsibility on the board of directors and officers of the companies that go into liquidation.

For instance, Section 538 deals with offences by officers of companies in liquidation while Section 540 pertains to penalty for frauds by officers. Under Section 542 of the Companies Act, all those who are knowingly parties to the carrying on of the business with intent to defraud or for any fraudulent purpose can be held responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the Court may direct.

Of particular interest in the Companies Act are Sections 425 to 560 which deal with winding up by the court. Section 425 of the Companies Act states that the winding up of a company may be either by the court or voluntary or subject to the supervision of the court. In this case the RBI has moved a petition in the Delhi High Court for initiating winding up proceedings.

Among the people that CRB owed money are the banks and the depositors. As per the Companies Act both the secured and unsecured creditors will have to justify their claims.