SHANMUGAM SUNDARAM CHETTIAR Vs. AARANGARAMA NAICKER

JUDGEMENT

(1.) The plaintiff is the appellant in the present appeal. The 1 defendant was the President of a Company called The Dhanday udhapani Co., Ltd." and the 2nd defendant was its Managing Director. The plaintiffs case was that the 2nd defendant represented to him that the Company was working properly and that on the strength of this and of the prospectus Ex. A he induced him to take shares to the value of Rs. 1,000. The share certificate, Ex. B has been signed by the President. It was found afterwards that the Company was not working and that the representations with respect to it in Ex. A were fake. The plaintiff sued for the return of his money.

(2.) The 2nd defendant, who is said to have become bankrupt, remained ex parte. The trial Court stated that the plaintiff was proceeding against the 1 defendant on two grounds, (1) for his having, along with the 2nd defendant, received the money and for having made misrepresentations as to the affairs of the Company and (ii) for his liability on account of the misrepresentation contained in the prospectus issued by the Company. On the first point, the plaintiff examined himself and one other witness and the 1 defendant examined himself on the other side. The trial Court remarked that the evidence of the plaintiff's witness was not at all satisfactory and did not deal with the evidence of the plaintiff. It did not find it proved that the 1 defendant was present when the amount was paid and that he along with the 2nd defendant made any representations to the plaintiff. On the second ground it was admitted that the representations in Ex. A that the Company had purchased the Star Mills for Rs. 25,000 as also the wood saws in the Coimbatore Industrial School were false. The statement that the Company was now carrying on business was also false. As regards the issue of prospectus the 1 defendant admitted that the 2nd defendant was appointed the Managing Director, that he was to look after everything, that it was in his power as Managing Agent to issue the prospectus and that he himself took no steps to supervise him. On these admissions and findings the trial Court held that the 1 defendant as a Director of the Company was liable under Section 100 of the Indian Companies Act of 1913.

(3.) On appeal the learned Subordinate Judge dismissed the suit. As regards the first ground, the learned Subordinate Judge set out the evidence of the plaintiff and his witness and of the defendant and without further comment said I therefore agree with the dower Court that there is no sufficient evidence of misrepresentation or fraud of the 1 defendant.