S V VENKATASUBBU Vs. UTILITIES INDIA LTD

JUDGEMENT

(1.) THIS appeal is from the judgment and decree in O. S. No. 216 of 1958 on the file of the Sub-Court, Coimbatore. The decree has been passed against the appellants, defendants in the suit, for payment of a sum of Rs. 19,585. 23 np. to the plaintiff-respondent, which is a company under voluntary liquidation. The correctness of this decree is called in question by the appellants, mainly on the ground that the suit is not maintainable.

(2.) THE facts are these. The Utilities (India) Ltd. , a company registered under the indian Companies Act, which will be referred to in this judgment as the company, was managed by a certain Venkatesalu Naidu. The defendants are his sons. The company did not function properly, and consequently, the members (shareholders)passed a special resolution in the General Body meeting held on 24-81955, that the company be wound up voluntarily. One of the directors, R. T. Naidu, was appointed as the liquidator. The Managing Director, Venkatesalu Naidu had in his hands a sum of Rs. 25,585. 23 np. belonging to the company, and was also in possession of the company's account books. In spite of the request of the liquidator, he failed to hand over the cash or the account books. He, however, remitted into the bank to the credit of the company various amounts between 2110-1955 and 18-4-1957, aggregating to Rs. 6,000. Venkatesalu Naidu died in or about July 1957. In this suit, the liquidator claims, after giving credit to the sum. of Rs. 6,000/- paid by Venkatesalu, balance of Rs. 19585. 23 np. left with him. It is alleged in the plaint that the defendants are his undivided sons, and that the amount claimed belong to the company, but was improperly utilised by venkatesalu, for the purpose of his family business and for improving his family lands. It is stated further that the defendants were benefited by reason of the utilisation of the company's funds, and that therefore they are liable to re-pay the amount to the company from and out of the assets of their joint family.

(3.) THE defendants no doubt resisted the suit, but they did not deny that venkatesalu, their father, had with him the amount claimed in the suit, belonging to the company. They contended that Venkatesalu was not the only managing director, that the management of the company was with a firm of managing agents called Mitra and Co. consisting of two partners, Venkatesalu Naidu and the present liquidator K. T. Naidu. They pleaded that the liquidator was as much a person liable to make good the payment to the company as Venkatesalu. himself and that therefore, the suit against the legal representatives of Venkatesalu would not be maintainable. They also stated that no amount of the company remained with them. They alleged that a sum of Rs. 15,000/- was used by Venkatesalu himself, for the purpose of acquisition of the shares belonging to the other members of the company, and that another sum of Rs. 12,000/- had been paid by venkatesalu on various occasions. In effect therefore, their plea was twofold: (1)discharge and (2) non-maintainability of the suit. At the time of the trial of the suit, it appears that the defendants further pleaded that the suit itself was barred by reason of Section 543 of the Indian Companies Act. These contentions on the part of the defendants were overruled by the learned Subordinate Judge, who, as stated already, granted a decree in favour of the plaintiff as prayed for.