OFFICIAL LIQUIDATOR Vs. SAILENDRA NATH SINHA

JUDGEMENT

(1.) This is an application by the official liquidator of the Ballygunge Real Property & Building Society Ltd. (in liquidation) for an order that (a) leave be given to the applicant to continue the misfeasance proceedings against the heirs and legal representatives of the respondent No. 1, Dr. Sailendra Nath Sinha, since deceased, and (b) for substitution of the said heirs and legal representatives in the place and stead of the deceased and for other incidental and ancillary reliefs. The official liquidator instituted the misfeasance proceedings on the 2nd January, 1963, under Section 543(1) of the Companies Act, 1956, which runs thus :

(2.) This application under Section 543 has to be made, under Subsection (2), within five years, (a) from the date of the order of winding-up, or (b) of the first appointment of the liquidator in the winding-up, or (c) of the misapplication, retainer, misfeasance or breach of trust, as the case may be, whichever is longer. In the instant case the order for winding-up was made on the 8th January, 1958, and this court was moved under Section 543(1), as I have said, on the 2nd January, 1963. Sub-section (3) of this section provides that it would apply " notwithstanding that the matter is one for which the person concerned may be criminally liable ".

(3.) Dr. Sailendra Nath Sinha, the respondent No. 1, was, at all material times, one of the managing directors of the company. He died on the 16th November, 1969, leaving, it is alleged, (1) Shri Partha Sarathi Sinha, his only son, (2) Smt. Maya Bose, and (3) Smt. Mira Mitra, the last two being his married daughters. These are the persons whom the liquidator is seeking to substitute in his place and stead. Needless to point out that if the liquidator fails in this application he will be without any remedy against the estate of the deceased in respect of the alleged misfeasance as a suit against these legal representatives is now barred by limitation. The Bombay High Court in Kathiawar Trading Co. v. Virchand Dipchand, [1893] I.L.R. 18 Bom. 119 held that a liquidator's suit against the directors for recovery of money spent by them in respect of ultra vires transactions was governed by Article 120 of the then Limitation Act corresponding to Article 113 of the Limitation Act, 1963. In fact, the period under Article 120 was six years from the date the right to sue accrued ; but it has now been reduced to three years. The Bombay High Court in Govind Narayan v. Rangvath Gopal, A.I.R. 1930 Bom. 572; I.L.R. 54 Bom. 226 has held that a suit against directors for misfeasance was also governed by Article 120 and the time would run from the date of loss or injury caused by such misfeasance. The Allahabad High Court in In re Union Bank, Allahabad Ltd., A.I.R. 1925 All. 519; I.L.R. 47 All. 669 also held that Article 120 applied, but limitation would not run (dissenting from the Lahore High Court in Bank of Multan Ltd. v. Hukam Chand, A.I.R. 1923 Lah. 58(2); [1922] 71 I.C. 899 and Bhim Singh v. Liquidator, Union Bank of India, A.I.R. 1927 Lah. 433 ; I.L.R. 8 Lah. 167), from the date of misfeasance but from the time of appointment of the liquidator, where the application was taken out under Section 235 (now Section 543) of the Companies Act, 1913. The Madras High Court followed the Lahore view and held that in similar circumstances limitation would run from the date when the misfeasance was committed: vide Narasimha Aiyangar v. Official Assignee of Madras, [1931] 1 Comp. Cas. 39 ; A.I.R. 1931 Mad. 58; I.L.R. 54 Mad. 153. Whatever view, however, is taken in the matter, there is no doubt that a suit by the liquidator in the instant case is now hopelessly barred.