L.V. APTE AND OTHERS Vs. R.G.N. PRICE, THE OFFICIAL LIQUIDATOR OF THE ANDHRA PAPER MILL (IN LIQUIDATION) CO. LTD., AND OTHERS

JUDGEMENT

(1.) THESE are connected appeals directed against the judgment and decree of the learned District Judge East Godavari in Original Suits Nos. 41, 48 and 49 of 1956 and I. A. No. 30 of 1957 in O. P. Nos. 105 of 1955. The three suits and the interlocutory applications were filed by Mr. R. G. N. Price, the Official Liquidator of the Andhra Paper Mills Co. Ltd., Rajahmundry (which will hereafter be called the Company). O. S. No. 51 of 1956 which is the main and comprehensive suit, has been brought for the rendition of accounts and other reliefs against the managing agents of the company, the debenture trustees and their agents, Who functioned as such at various times between 23 -3 -1940 to 17 -10 -1945. Originally seven defendants were impleaded. Defendants 1 and 2, Dayaram Poddar and Prabhu Dayal Himmatsinghka, were partners of the firm Dayaram and Sons, which was appointed as managing agents of the Company by a resolution of the Company dated 25 -8 -1935, and who are alleged to have continued as such till 1 -8 -1942. They were also the trustees under the first mortgage debenture trust deed from 20 -9 -1935 till 28 -12 -1942. After the suit was filed, Dayaram Poddar, the 1st defendant, died and his legal representatives were impleaded as defendants 8 to 10 by an order of Court dated 5 -10 -1957 in I. A. No. 450 of 1957. Defendants 3, 4, Nandula Mehta and Kantilal Nahalchand functioned as debenture trustees for some time during the period in question. A firm known as Khaitan Apte and Co. was appointed as the agents of the debenture trustees with effect from 1 -8 -1942 and on 1 -6 -1945 it was also appointed as managing agents. The said firm consisted of two partners, V. S. Apte and T. M. Karundia. Both of them died before the institution of the suits. L. V. Apte, the son of the late V. S. Apte, has been impleaded as the 5th defendant, and the widow and the son of T. M. Karundia as defendant's 6 and 7 respectively.

(2.) O . S. No. 51 of 1956 as stated already is a suit filed against the managing agents and the Debenture Trustees and their agents complaining of several acts of frauds, suppressions, breaches of trust and misappropriations, in illegally carrying on the business of the company and foisting on it a huge load of false and fictitious debts, and taking away a sum of nearly 9 lakhs of rupees as dividend. The plaint, therefore, prayed for the rendition of account of the moneys due and payable to the company; for rents received or ought to have been received from 22 -3 -1940 to 17 -10 -1945; for purging the said accounts of all liabilities imposed on the company as for working expenses in relation to the business carried on by the debenture trustees and their agents from 4 -8 -1942 to 17 -10 -1945 and purging other entries alien to the mortgaged securities during the period from 22 -3 -1940 to 17 -10 -1945; for a decree against the defendants severally and jointly for such sums as may be ascertained on taking of the accounts as due and payable to the company by the Debenture Trustees, or their agents; for an account of the trade debts and liabilities incurred by the agents during the period between 4 -8 -1942 to 17 -10 -1945 to outside creditors in respect of which the said creditors obtained dividends from the Official Liquidator; for a decree against defendants 1 to 7 severally and jointly in respect of that sum; for an account to be rendered of Rupees 2,46,814 -12 -1 and Rs. 81,307 -0 -0 debited to the Company by the agents under assignments from defendants 1 to 2 and other creditors and for discharge of the debts stated to be due by the company; for a decree against the estate in the hands of defendants 5 to 7 for such sums as may be found due and payable on taking accounts in respect of the said sum; and for an account of Rs. 5,35,400/ - alleged to be held on trust by the partners of Khaitan Apte and Company, and misappropriated by them, and a decree for such sums as may be found due against the assets of the partners of Khaitan Apte and Company in the hands of defendants 5 to 7. O. S. No. 48 of 1936 is a suit filed by the Official Liquidator of the Company against defendants 5, 6 and 7 in O. S. No. 51 of 1956 for a declaration that the order of the High Court of Madras in Application No. 3514 of 1948 in O. P. No. 235 of 1947 is null and void, and for the recovery of Rs. 2,69,838 -12 -9 from the three defendants to the suit out of the assets of V. S. Apte and T. M. Karundia in their hands.

(3.) THE 2nd defendant filed a written statement which was adopted by defendants 8, 9 and 10. The 3rd defendant did not participate in the trial and was ex parte. Defendants 4, 5, 6 and 7 filed separate written statements. The contesting defendants strongly repudiated the various allegations made respectively against them and denied in toto their liability, either for the rendtion of accounts, or for the payment of moneys, in the manner prayed for. By consent of parties all the three suits (O. S. Nos. 51, 48 and 49 of 1956) and I. A. No. 30 of 1957 in O. P. No. 105 of 1955 were tried together, the evidence being recorded in O. S. No. 51 of 1956.