VEMURI PARANDHAMIAH Vs. R NARASIMHA RAO

JUDGEMENT

(1.) This is an appeal against the judgment of Bell J. in a misfeasance proceeding under Section 235, Companies Act directing that the appellant's conduct as managing director of the company should be examined under Section 235 of the Act and that the conduct of respondent 2 as Official Liquidator of the company now in voluntary liquidation should be similarly examined under the said section.

(2.) Sri Vijayavada Motor Transport Company Ltd., was incorporated as a private limited company under the Companies Act on 17th November 1944. On 26th November 1944 the Board of Directors appointed the appellant as its managing director. The company commenced its business on 1st December 1944 and the appellant continued as its managing director until 14th June 1947. On that date, the company went into voluntary liquidation and respondent 2 who was the president of the board of directors was appointed liquidator. There were some prior proceedings relating to the winding up of this company which have been referred to in the course of the arguments but which are not very material for the purpose of the disposal of this appeal. The present application was filed by one R. Narasimha Rao under Sections 216 and 235, Companies Act, for an enquiry against the appellant and respondent 2, i.e., the ex-managing director and the liquidator with reference to certain charges of misfeasance, breach of trust, malfeasance and non-feasance, particulars of which were set out more fully in the affidavit filed in support of this application. The application was resisted by the appellant and respondent 2 on the ground that as the company is under voluntary liquidation and was not wound up by an order of the Court, misfeasance proceeding under Section 235, Companies Act could not be initiated and that Section 235 has no application at all to the facts of the present case. This objection was overruled by the learned Judge and he directed an enquiry. Against this order, the present appeal has been preferred by the ex-managing director.

(3.) On behalf of the respondent, a preliminary objection was taken regarding the maintainability of the appeal. The decision of this question turns mainly upon a proper interpretation of Section 202, Companies Act. As we are, however, of opinion that the appeal should fail on merits, it is unnecessary to consider the preliminary objection and express an opinion upon it.