THE OFFICIAL LIQUIDATOR, MADRAS HIGH COURT, THE OFFICIAL LIQUIDATOR OF THE KALEESWARAR MILLS, LTD., COIMBATORE Vs. AL. SP. PL. THIRUNAVUKKARASU CHETTIAR AND OTHERS

JUDGEMENT

(1.) Arising out of the Liquidation Proceedings relating to the Kaleeswarar Mills Ltd., the two applications were filed before Venkatadri J, namely, Company Appn. Nos. 398 of 1960 and 123 of 1961. The first was by the Official Liquidator, on behalf of the company in liquidation, for directing the Dr. Alagappa Chettiar Educational Trust, hereinafter referred to as the "trust" (second respondent), to pay a liquidated sum of Rs. 4,40,000, out of the amounts in the hands of the Trust, belonging to AL. SP. PL. Thirunavukkarasu Chettiar (first respondent), and to retain the balance pending settlement of accounts between the company in liquidation and the aforesaid first respondent. Appn. No. 123 of 1961 was also by the Official Liquidator, for an injunction restraining the Alagappa Textiles (Cochin) Ltd., hereinafter referred to as the "Textiles" from paying to any party or otherwise disposing of a sum of Rs. 2,70,000 in their hands to the credit of Thirunavukkarasu Chettiar (first respondent), and directing them to pay the said sum instead to the appellant on behalf of Kaleeswara Mills Ltd. The learned Judge (Venkatadri J.) after setting forth the facts in considerable detail, held that the sole remedy available to the Official Liquidator, in the light of the history of these matters, was to take possession of all the shares purchased by Thirunavukkarasu (first respondent) from and out of the funds of of Kaleeswarar Mills Ltd., (in liquidation), while he was the Managing Administrator of that company, as 20,000 shares had been already sold under orders of Court and moneys realised, the remedy still available to the Official Liquidator was only to proceed against Thirunavakkerasu for criminal breach of trust, and deliberate flouting of the Court's orders concerning his utilisation of the certain funds of the Kaleeswarar Mills, which were entrusted to him. Upon the doctrine of election, following certain observations of Jessel M.R. in Re Hallett's Estate 13 Ch. D. 676 the learned Judge was of the view that the Official Liquidator had elected to pursue the property of the beneficiary, Kaleeswara Mills Ltd., wrongfully converted to other uses by the fiduciary, Thirunavukkarasu Chettiar (first respondent), in the form of the shares, to which we have just made reference. Having done this, the Official Liquidator could not pursue the moneys retained by the Trust, or the moneys standing to the credit of the first respondent with the textiles. The Official Liquidator was also entitled to proceed against the remaining 13500 shares, (namely, out of the total of 33500 shares, 20000 shares sold under orders of Court, and the balance of 12,500 shares delivered by Thirunavukkarasu Chettiar (first respondent) as pledges etc., to third parties, by taking appropriate proceedings against the holders of those shares. For the rest, the applications were dismissed. The present appeals, O.S.A. Nos. 45 and 46 of 1962, against the judgment of Venkatadri J., are being pressed not by the Official Liquidator, but, pursuant to further developments in this matter, by the Board of Directors administrating the Kaleeswara Mills Ltd., as a going concern, under the scheme recognised and ordered by this Court. O.S.A. 71 of 1962 covers the same ground but the appellant here, Somasundaram Mills (P) Ltd., was the third respondent in the Company Appn. No. 398 of 1960 before the learned Judge. The issues that arise for determination in these appeals may be tersely set forth in the following form:

(2.) Assuming that that doctrine does not apply to prevent the Board from pursuing further remedies, can it pursue further remedies against the Trust, in the light of the established facts of the record?

(3.) Similarly, can the Board pursue any further remedies, against the Textiles, with the Trust necessarily impleaded as a party to the proceedings, with regard to the moneys now with the Textiles, standing in their books, to this date, to the credit of Thirunavukkarasu Chettiar (first respondent)?