MODERN TRANSPORTERS P LTD Vs. JAGDISHRAJ MEHTA

JUDGEMENT

(1.) MODERN Transporters Private Ltd. was ordered to be wound up. Mulkh Raj Mehta, Dewan Chand Magon and Gian Chand Magon were the directors of the said company. In C. O. No. 89 of 1963, proceedings for misfeasance against the said three directors under sections 542 and 543 of the Companies Act were initiated. The matter was tried by a learned single judge of this court and it was ultimately held that Mulkh Raj Mehta, director, was liable to a sum of Rs. 10,000 individually, Dewan Chand Magon, director, to a sum of Rs. 10,000 and Gian Chand Magon to Rs. 6,000. All the three directors were made liable individually and joint liability was not imposed. This order of the learned judge was appealed against by Mulkh Raj Mehta, Dewan Chand Magon and Gian Chand Magon in L. P. A. No. 359 of 1966, and the same was also challenged by the official liquidator in L. P. A. No. 364 of 1966. The appeal of the directors was that they were not liable and the order fixing their liability be set aside, whereas the appeal on behalf of the official liquidator was that the liability of the directors be increased and that they should be made liable severally and jointly. The appeal filed by the directors was dismissed whereas the appeal filed on behalf of the official liquidator was accepted to the extent that the liability against all the three directors was made severally and jointly. However, the amount of the liability was not increased. This appeal admittedly was decided on September 24, 1970. Before this appeal was decided, Mulkh Raj Mehta, admittedly, died on April 21, 1969. It is again an admitted fact that the legal representatives of Mulkh Raj Mehta were not brought on record and in fact the judgment of the Letters Patent Bench making the liability several as well as joint, as far as Mulkh Raj Mehta was concerned, was made against a dead person.

(2.) IT may be pointed out here that as far as the individual liability of Mulkh Raj Mehta was concerned, the sum of Rs. 10,000 plus interest, whatever amount was due in accordance with the order of the learned single judge, was realised from him during his lifetime. In respect of Dewan Chand Magon and Gian Chand Magon, proceedings for recovery of the amount for which they were adjudged liable were taken. But no amount could be recovered from both these directors. After the judgment in Letters Patent Appeal was passed, the official liquidator took proceedings for recovery of the amount from Dewan Chand Magon and Gian Chand Magon and also initiated execution proceedings against the estate of Mulkh Raj Mehta on the ground that the Letters Patent Bench fixed the joint liability of all three directors. In these execution proceedings objections were taken by the legal representatives of Mulkh Raj Mehta that the order of the Letters Patent Bench having been passed against a dead person, the estate of Mulkh Raj Mehta is not liable for any such liability which was fixed against a dead person. During the pendency of the proceedings, the land which was originally owned by Mulkh Raj Mehta was attached and auctioned, but the sale was not confirmed and the amount realised out of sale proceeds had been deposited in the court.

(3.) THE learned counsel for the official liquidator vehemently contends that the order -of the Letters Patent Bench is not a decree as, according to him, the provisions of the Code of Civil Procedure are not applicable to the cases under the Companies Act. It is contended by the learned counsel that the said order is in fact a payment order as postulated under the provisions of sections 542 and 543 of the Companies Act. Therefore, the order passed against Mulkh Raj Mehta who was dead can be executed. I am afraid this contention cannot prevail. It is conceded by the learned counsel for the official liquidator that even in case the proceedings are to be taken under sections 542 and 543 of the Companies Act no order can be passed without the person concerned having been given an opportunity of being heard. It is basic that where an order in the form of a decree or any other liability is fixed, the same cannot be fixed against a dead person. When Mulkh Raj Mehta was alive the order of the learned single judge fixing his individual liability to the extent of Rs. 10,000 was in operation. His joint liability was only fixed after he was dead and his legal representatives had not been brought on record. In this view of the matter it is not necessary to decide in this case whether the order passed by the Letters Patent Bench was a decree or an order not amounting to decree or not. The matter may be viewed from another angle. If the order of the Letters Patent Bench is a decree no decree can be passed against a dead person and if the same is passed the decree is a nullity and if it be taken as an order not amounting to a decree even then no order can be passed against a dead person enhancing his liability. From whatever angle the matter may be viewed, it is obvious that the decision of the Letters Patent Bench, as far as Mulkh Raj is concerned, is a nullity. His legal representatives are well within their rights to take this objection when the property belonging to them is being attached in pursuance of an order which was passed against a dead person.