{"id":87979,"date":"2002-03-06T00:00:00","date_gmt":"2002-03-05T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/the-secretary-to-the-government-of-vs-leafin-india-limited-mr-dega-on-6-march-2002"},"modified":"2016-08-15T10:04:57","modified_gmt":"2016-08-15T04:34:57","slug":"the-secretary-to-the-government-of-vs-leafin-india-limited-mr-dega-on-6-march-2002","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/the-secretary-to-the-government-of-vs-leafin-india-limited-mr-dega-on-6-march-2002","title":{"rendered":"The Secretary To The Government Of &#8230; vs Leafin India Limited, Mr. Dega &#8230; on 6 March, 2002"},"content":{"rendered":"<div class=\"docsource_main\">Company Law Board<\/div>\n<div class=\"doc_title\">The Secretary To The Government Of &#8230; vs Leafin India Limited, Mr. Dega &#8230; on 6 March, 2002<\/div>\n<div class=\"doc_bench\">Bench: S Balasubramanian, K Balu<\/div>\n<\/p>\n<pre><\/pre>\n<p>ORDER<\/p>\n<p>S. Balasubramanian <\/p>\n<p>1. The Central Government has filed this petition under Section 408 of the Companies Act alleging that the directors of the Board of Directors of M\/s Leafin India Limited have indulged in large scale diversion of funds for their own ultimate benefit in total disregard to the interest of depositors and creditors and have mismanaged the affairs of the Company and as such has sought for authorization to appoint majority directors on the Board by the Central Government.\n<\/p>\n<p>2. When this petition was mentioned, we passed an interim order on 7.6.2001 authorising the Central Government to appoint five directors with immediate affect pending disposal of the petition. Later it came to light that the Andhra Pradesh High Court has passed an order on 26.6.2001 winding up the Company and appointing Official Liquidator as Liquidator of the Company. Aggrieved by this order, the Leafin Depositors Association filed an appeal before the Division Bench, wherein the first respondent who had filed the winding up petition had submitted that he was not interested in continuing the winding up proceedings, on the submission of which, the Division Bench permitted the first respondent to file an application before the single judge for withdrawal. Accordingly, on an application made by him, the winding up petition was dismissed. On dismissal of this winding up petition, the Central Government has appointed all the five directors in terms of our order dated 7.6.2001.\n<\/p>\n<p>3. It is seen from the petition that the Company has collected over Rs. 15 crores from over 6,000 depositors and has failed to repay the deposits on time. It also transpires that there had been systematic diversion of funds by the directors of the Company through various front companies and subsidiaries. In addition, the Company had also disposed of certain valuable assets at throw away prices. The Company has also failed to file due returns for the years 1998, 1999, and 2000 including Profit and Loss Account and Balance Sheets and failed to convene and hold general body meetings.\n<\/p>\n<p>4. A copy of the petition was served on all the respondents. According to the third respondent, he was not an active director and it was the second respondent being the Managing Director who was carrying on the business of the Company and the third respondent had not been attending the Board meetings. Having come to know the various defaults committed by the Managing Director, according to the third respondent, he had resigned from the Board. According to the fourth respondent, his resignation was accepted in a Board meeting held on 5.8.98 and as such he is not responsible for any of the allegations in the petition. Similar is the stand of the fifth respondent stating that she had resigned from the Board on 15.3.99. According to the ninth respondent being the outside director, he had also resigned from the Board on 13.3.98 and tenth respondent has submitted that he had resigned from the Board on 10.3.98. All of them have submitted that they have no objection in appointment of Government directors on the Board. From these affidavits, we also note that the second respondent is absconding and his whereabouts are not known. It appears to us from the fact that five of the directors have resigned and that the Managing Director absconding clearly establish that there is no Board to conduct the affairs of the Company. From the various instances narrated in the petition, we are convinced that the affairs of the Company are being carried in a manner detrimental to the interest of the Company and the public interest. Taking this aspect into consideration and also the fact that there is no effective Board in position to carry on the affairs of the Company which owes huge amount of money to deposit holders it is necessary in the public interest that we should authorize the Central Government to appoint sufficient number of directors on the Board of the Company. Accordingly, we authorize the Central Government to appoint five directors on the Board of the Company for a period of three years from the date of notification of appointment of the said directors.\n<\/p>\n<p>5. The petition is disposed in the above terms.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Company Law Board The Secretary To The Government Of &#8230; vs Leafin India Limited, Mr. Dega &#8230; on 6 March, 2002 Bench: S Balasubramanian, K Balu ORDER S. Balasubramanian 1. The Central Government has filed this petition under Section 408 of the Companies Act alleging that the directors of the Board of Directors of M\/s [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-87979","post","type-post","status-publish","format-standard","hentry","category-judgements"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Secretary To The Government Of ... vs Leafin India Limited, Mr. Dega ... on 6 March, 2002 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/the-secretary-to-the-government-of-vs-leafin-india-limited-mr-dega-on-6-march-2002\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Secretary To The Government Of ... vs Leafin India Limited, Mr. Dega ... on 6 March, 2002 - Free Judgements of Supreme Court &amp; 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