SHIWALIK TRANSPORT CO LTD Vs. THAKUR AJIT SINGH

JUDGEMENT

(1.) THE question for our consideration is whether proceedings initiated against the director of a company under Sections 542 and 543 of the Companies Act, 1956, may be continued, after his death, against his legal representatives and, if so, what is the nature of the directions that may be issued on them ?

(2.) SECTIONS 542 and 543 are as follows :

(3.) IN our view, the question whether proceedings under Sections 542 and 543 survive the death of the director is not to be answered with reference to the maxim actio personalis moritur cum persona or on a consideration of the question whether the liability sought to be imposed by Sections 542 and 543 is tortious, quasi-contractual or otherwise. The question has to be answered with reference to the object and the language of the two provisions. If the object of the provisions is punitive, to punish the wrongdoing director, the proceedings must die with the director. If the object of the provisions is also to recompense the company for the injury done to it or the loss suffered by it on account of the fraudulent acts or acts of misfeasance or acts in breach of trust, of a director, then the cause must survive the death of the director and attach itself to the estate of the director. The language of the provisions has to be examined. If the language is clear and compelling that an order can only be made against the director personally, the proceeding must, of course, abate ; but, if the language is not restrictive and is such that the provisions cannot be said to be directed personally against the director, the proceeding must bate.