WEAVERS MILLS Vs. BALKIS AMMAL

JUDGEMENT

(1.) THESE appeals arise out of the same judgment of the Subordinate Judge. Ramanathapuram, at Madurai, in a suit instituted by the appellant in A. S. 28 of 1962 for declaration of its title to the suit properties and for an injunction restraining the first defendant from executing the decree obtained by her (the first defendant who is the appellant in the other appeal A. S. 178 of 1962) in O. S. 16 of 1949 or in the alternative to set aside the judgment and decree in O. S. 3 of 1958, both on the file of the same Subordinate Judge. The appellant in A. S, 28 of 1962 is a limited liability company incorporated under the provisions of the Indian companies Act, on 12-7-48, with its registered office at Raja-palayam. Two of Its promoters, one of them the 2nd defendant in the suit and the other by name ayyadurai alias Madeswamy Moopanar, purchased the suit lands under two registered sale deeds dated June 17th and June 18th of 1945, for a total consideration of Rs. 11000 from one Ramaswami Raja and Rangammal. In O. S. 16 of 1949, the 1st defendant obtained a decree against defendants 2 and 3 for a sum of Rs. 10000 due under a promissory note that had been executed by them. Admittedly, the loan was obtained by the promisors for their personal purposes. In execution of the decree, the first defendant attached the suit properties and brought them to sale in E, P. 60 of 1955. An application of the second defendant representing the company in E. A. 301 of 1956 under O. 21. R. 58, Civil P. C. , was dismissed on 29-10-1957 and thereafter he instituted, in his capacity as Managing director of Jayam and Co, the Managing Agents of the company, O. S. No. 3 of 1958 to set aside the order in E. A. 301 of 1956, but without success. No appeal was filed from the decree in O. S. 3 of 1958. By resolutions dated 27-7-1959, the second defendant was removed from the managing directorship of Jayam and Co. , and of the plaintiff-company and one A. M. Chinna Guruswami Moopanar was appointed in his place. The present suit put of which the appeals arise has been instituted by the company through its managing agency Jayam and Co. Ltd. represented by its Managing director Chinna guruswami Moopanar. The plaintiff's case is that the suit properties were purchased by the second defendant and Ayyadurai alias Madasami Moopanar as representatives and on behalf of Raiapalayam Weavers Mills which was to be incorporated later and that on its incorporation the Municipal registry of the properties stood in the name of the company and it has been paying the Municipal tax therefore. According to the plaintiff, nevertheless, defendants 2 and 3 colluded with the first defendant and allowed the application under Order 21, Rule 58, Civil p. C. and O. S. 3 of 1958, to be dismissed and thus fraudulently allowed the properties to be attached and brought to sale in discharge of their own personal debts. On those averments, the plaintiff company sought the reliefs mentioned by us at the outset. It claimed that the suit properties belonged to the company, that this position had been accepted on all hands and building for the purpose of the company has since been erected before the attachment and that though the company was economies a party to the claim application and the suit, as the interests of the company were not properly placed and represented before the court on account of the collusion between the defendants and their fraudulent conduct, the decree in O. S. 3 of 1958 was null and void and was not binding on the plaintiff.

(2.) THE first two defendants filed separate written statements while the third defendant remained ex parte. _ The first defendant denied any collusion or fraudulent conduct on her part and asserted that the properties belonged to the second defendant and that ever since their purchase, they had been in the possession and enjoyment of the second defendant himself. The first defendant also pleaded that both the application under Order 21 Rule 58, C. P. C. and the claim suit were hotly fought out by the second defendant and that, therefore, the present suit was barred by res judicata by reason of the judgment and decree in o. S. 3 of 1958. The Second defendant also denied the plaint allegations of fraud and collusion on his part and maintained that all the directors of the company knew full well the decree in O. S. 3 of 1958 and its execution. He did not accept that he mismanaged the affairs of the company and stated that he could not be removed from directorship until the expiry of 20 years from the date of the incorporation of the plaintiff-company. On that ground he urged that the suit itself as framed was not maintainable. At the trial, the second defendant remained absent and his counsel reported no instructions.

(3.) THE Court below framed appropriate issues and found that the suit properties belonged to the plaintiff company, that the judgment and decree in O. S. 3 of 1958 on account of fraud and collusion on the part of defendants 2 and 3 were not binding on the plaintiff and that the plaint prayers should be granted. It also found that removal of the second defendant from the managing directorship was true, valid and binding on him and the suit was maintainable. This last finding is no longer in dispute before us. While granting a decree to the plaintiff as prayed for, the Court below directed it to deposit a sum of Rs. 23,301, for which the properties were purchased by the first defendant in execution of her decree within a specified period, as a condition to recover possession. The company aggrieved by the direction has appealed to this Court and likewise the first defendant against the decree declaring the title of the plaintiff-company to the suit properties and for possession.