Open iDraf
In Re - The Peerdun Juharmal Bank Limited (in Liqn.) By Its Joint Official Liquidator v.

In Re - The Peerdun Juharmal Bank Limited (in Liqn.) By Its Joint Official Liquidator
v.

(High Court Of Judicature At Madras)

Civil Miscellaneous Petition No. 347 & 348 Of 1958 In Original Side Appeal No. 142 Of 1954 | 04-03-1958


(Prayer: Petition (disposed of on 4-3-1958) praying that in the circumstances stated in the affidavit filed therewith, the High Court will be pleased to set aside the abatement caused by the death of the third respondent in O.S.A. No. 142 of 1954 on the file of the High Court (Appln. No. 4394 of 1952 in O. P. No. 212 of 1949 on the file of the Original Side, High Court) and cause G. Sundaram, the 5th respondent herein to be impleaded as the legal representative of the said deceased, A. V. Gopalachariar, the 3rd respondent in the said appeal.)

After the Peerdun Juharmai Bank Lid., was ordered to be wound up, the Joint Liquidators preferred Appln. No. 4394 of 1952, under S. 235 of the Indian Companies Act (Act VII of 1913), in which charges of misfeasance among others were levelled against the respondents who had been directors of the Bank. One of them was A.V. Gopalachariar, who was impleaded as the sixth respondent in that application. Ramaswami Gounder J. dismissed the application against the sixth respondent as well as against respondents 5 and

7. The Joint Liquidators appealed against these directions: O. S. A. No. 142 of 1954. Gopalachariar was impleaded as the third respondent in that appeal. During the pendency of that appeal Gopalachariar died on 14th September 195

7. On 3rd January 1958 the appellants preferred C. M. P. No. 347 of 1958 to set aside the abatement of the appeal as against Gopalachariar, and C. M. P. No. 348 of 1958 to bring on record the representative of Gopalachariar. A further affidavit was filed on 21st February, 1958 to explain the delay in perferring these applications.

The question for consideration is, whether the proceedings taken under S. 235 of the Act against a Director of a Banking Company, ordered to be wound up, can be continued after his death, and whether the liability, if any, of such a director can be enforced against his legal representative in those proceedings. That the appeal is a continuation of those proceedings does not admit of any doubt.

The question was answered in the negative by Shahabuddin, J. in Sankaran v. Kottayam Bank I. L. R. 1946 Mad. 507=59 L. W. 38 the only reported decision of the Court on this point. But the learned Judge applied in that case what was considered a well settled principle of law.

That under the corresponding statutory provisions in the English law the estate of a deceased director is not liable for any misfeasance of his appears to have been well settled ever since Feltons Executors case (1865) 1 Eq. cases 219. which was followed in In Re British Guardian Life Assurance Co. (1880) 14 L.R. Ch. 33

5. At page 346 of the report in In re British Guardian Life Assurance Co., (1880) 14 L.R. Ch. 33

5. Hall V. C. observed;

First, as to the objection taken that the 165th section is not capable of being put in operation against the executors of a deceased director. It has been contended that the question was expressly decided by Vice Chancellor Kindersley in Feltons Executors case (1865) 1 Eq. cases 219., and that the decision was recognised by Lord Justice Selwyn in Exparte Hawkins 3 Ch. Ap. 787., and I think that the express point was decided, and upon the literal words of the 165th section.

Hall V. C proceeded:

Looking at the language of the section in reference to making an offender who is criminally responsible liable, it appears to me that there is a tolal absence power to investigate the conduct of a dead man under it

The position under the English Statute was thus summed up in Buckley on the Companies Act, 12th Edn. at page 682.

The section is personal only as against the director or Officer and does not apply as against the executors of a deceased director or officer.

Courts in India have been consistent in placing the same construction oh the analogous provision, S. 235 of the Indian Companies Act.

In Manilal Brijlal v. Rao Saheb Vandrawandas I. L. R. 1944 Bom. 284 [LQ/BomHC/1943/95] ., a Division Bench of the Bombay High Court (Beaumont C. J. and Rajadhyaksha, J.) held that on the language of S. 235 it would be wrong to allow proceedings to be taken against the personal representative of a deceased liquidator under S. 23

5. After referring to Feltons Executors case (1865) 1 Eq. cases 219., and in re British Guardian Life Assnrance Co., (1880) 14 L.R. Ch. 335., Beaumont, C. J. observed:

Those cases proceed rather on the strict language of the section. As I have said, this section has been copied into the Indian Act, and, prima facie , I think the same construction should be put upon the words of the Indian Act, though, no doubt, the position in India is not precisely the same.

After pointing out that others besides the executors and administrators were recognised in the Indian law at the personal representatives of a deceased liquidator (or director) and that defences were open to them which would involve an enquiry quite foreign to the purpose of S. 235, Beaumont C. J. observed:

S. 235 is concerned only with an enquiry into the conduct of the officers of the company in relation to the companys property, and in my opinion, it was never intended to involve the Court on an application under that section in an enquiry relating to the estate of a deceased person.

The same principle was laid down earlier in Billimora v. Mrs. De Souza 8 Lah. 549. and in Official Liquidators, Mufassil Bank v. Jugal Kishore I.L. R. 1939 All.

6. and it was reiterated in Sankaran v. Kottayam Bank I. L. R. 1245 Mad. 507=59 L. W. 38 S. 306 of the Indian Succession Act was relied upon by the applicants both in the Lahore and Allahabad cases even as it was relied on before us. We are in respectful agreement with what Harris, J. said at page 14 of the reported judgment in Official Liquidators. Mufassil Bank v. Jugal Kishore I.L. R. 1939 All. 6.

When the law which gives a person a right to institute proceedings gives him a right to institute and continue those proceedings against a man only in his life-time, then if the defendant dies the right dies with him and the suit or proceeding cannot be continued against his executors.

It is the language of S. 235 of the Act that decides the issue. It was a limited right. It ended when Gopalachariar died. We are not concerned with the question whether the liquidators have any other remedies against the estate of the deceased Gopalachariar, All we are concerned with is to answer the question we have set out above: Can the proceedings under S. 235 of the Act be continued against the deceased Gopalachariar

We re-affirm the well settled principle which was followed in Sankaran v. Kottayam Bank I. L. R. 1245 Mad. 507=59 L. W. 38 and answer the question in the negative. In the view we have taken that the right to continue the proceedings under S. 235 of the Act ended when Gopalachariar died, the further question of condoning the delay ig setting aside the abatement does not arise for consideration. C. M. P. Nos. 347 and 348 of 1958 are dismissed.

Advocates List

For the Petitioner Messrs. A. Balasubramaniam, P.S. Chandrasekhara Aiyar, Advocates. For the Respondent -------

For Petitioner
  • Shekhar Naphade
  • Mahesh Agrawal
  • Tarun Dua
For Respondent
  • S. Vani
  • B. Sunita Rao
  • Sushil Kumar Pathak

Bench List

HON'BLE MR. JUSTICE RAJAGOPALAN

HON'BLE MR. JUSTICE RAMACHANDRA IYER

Eq Citation

(1958) 2 MLJ 294

1958 CRILJ 1412

AIR 1958 MAD 571

AIR 1958 MAD 583

(1958) ILR MAD 858

(1958) 2 MLJ 167

LQ/MadHC/1958/80

HeadNote

Companies Act, 1956 - S. 539(A) (corresponding to S. 235 of 1913 Act) — Misfeasance proceedings against directors of a Banking Company, ordered to be wound up — Continuation of, after death of respondent director — Issue of abatement of appeal against respondent director on his death — Contingency not provided for in S. 539(A) — Hence, held, appeal abated — Further held, right to continue proceedings under S. 235 of 1913 Act ended when respondent director died — Hence, question of condoning delay in setting aside abatement does not arise for consideration