OFFICIAL LIQUIDATOR Vs. PARTHASARATHI SINHA

JUDGEMENT

(1.) The short question which arises for decision in this appeal by special leave is whether the proceedings initiated against a director of a company under Section 543 of the Companies Act, 1956 (hereinafter referred to as 'the Act') can be continued after his death against his legal representatives and whether any amount declared to be due in such proceedings can be realised from the estate of the deceased in the hands of his legal representatives.

(2.) The facts of the present case may be briefly stated thus:Ballygunge Real Property and Building Society Ltd. (hereinafter referred to as 'the Company in liquidation') was ordered to be wound up by the High Court of Calcutta on January 8, 1958. On Jan. 2, 1963, the Official Liquidator took out summons under See, 543 (1) of the Act against its directors including Dr. S. N. Sinha for a declaration that the said directors were guilty of misfeasance and breach of trust and also for an order directing them to repay or restore the money or property of the Company in liquidation which they were alleged to have retained wrongfully. During the pendency of the said proceedings, Dr. S.N. Sinha died on November 16, 1969 intestate leaving behind his son, Parthasarathi Sinha and two married daughters, Maya Bose and Mira Mitra as his heirs and legal representatives. On February 12, 1970, Judges summons was taken out at the instance of the Official Liquidator for leave to continue the said proceedings against the said heirs and legal representatives, The learned Company Judge passed an order on November 9, 1970 for substitution of the said heirs and legal representatives in place of Dr. S. N. Sinha, the deceased. Against that order, the heirs and legal representatives of Dr. S. N. Sinha preferred an appeal before the Division Bench of the Calcutta High Court under Sec. 483 of the Act. That appeal was allowed by the Division Bench on August 1, 1975 and save and except that the death of Dr. S. N. Sinha was recorded, the order of the Company Judge was set aside. This appeal is filed against the order of the Division Bench.

(3.) Before the Division Bench of the High Court, the principal contention urged on behalf of the heirs and legal representatives of Dr. S. N. Sinha, since deceased was that in view of the decision of this Court in Official Liquidator, Supreme Bank Ltd. v. P. A. Tendolkar, (1973) 3 SCR 364 no further action in the misfeasance proceedings could be taken against them and we are concerned only with that contention in this appeal. Since the effect of the above decision is understood in one way by the High Court of Calcutta in this case and differently by the High Court of Kerala in Aleykutty Varke Tharakan v. Official Liquidator, (1978) 48 Corn Cas 472 and by the High Court of Punjab and Haryana in Shiwalik Transport Co. Ltd. (in liquidation) v. Thakur Ajit Singh, (1978) 48 Com Cas 465 we shall proceed to discuss the decision in Tendolkar's case (supra) at some length. Before doing so, we shall refer to the relevant provisions of law and the specific averments made in this case by the Official Liquidator. Section 543 of the Act reads as follows: