RAO BAHADUR PYDAH VENKATACHALAPATHI; THE GUNTUR COTTON, JUTE AND PAPER MILLS CO LTD Vs. GUNTUR COTTON, JUTE AND PAPER MILLS, CO LTD; LINGAMALLURAMACHANDRA RAO

JUDGEMENT

(1.) This is a connected series of four appeals arising out of a suit by the Guntur Cotton, Jute and Paper Mills Company, Limited, against the two defendants, their former secretaries and treasurers, for a declaration that these defendants ceased to hold office from 31 March, 1918, for an injunction restraining them from interfering with the management of the Company, for correct accounts and damages for the loss sustained by the Company by reason of their several acts of fraud and misappropriation. A preliminary judgment in the case was passed on 24 April, 1922, and the final judgment on 4 April, 1924 Defendant No. 1 has not appealed but he was heard in his own case on the appeals by plaintiffs. Defendant No. 2 has preferred Appeal No. 75 of 1923 against the preliminary decree and Appeal No. 237 of 1924 against the final decree. The Company has preferred Appeal No. 215 of 1923 against the preliminary decree and Appeal No. 457 of 1924 against the final decree.

(2.) Various matters fall to be dealt with in these appeals, the decision in which, as in the original trial, has not been assisted, but considerably hampered by the action of the plaintiffs in not clearly realising before they came into Court and not clearly setting out in their pleadings what their causes of action were and what remedies at law were open to them on these causes of action. It will be convenient to follow the order taken by the lower Court in dealing with the several matters in issue in this litigation and has deal with both appeals against the preliminary decree at the same time.

(3.) The first and most important matter relates to a mortgage of Rs. 1,23,354 over the mill property in favour of the wife of the 2nd defendant. This was taken on 2nd January, 1918, in continuation of, and by way of security for, various loans taken at various times by the Company from her. The lower Court has held on this matter that, though the 2nd defendant had an interest in this mortgage which conflicted with his duty to the Company and, therefore, an interest which he should have disclosed, and though he was liable, therefore as agent for the profits he had gained and as a trustee for any loss which the Company may have suffered, yet since no profits were gained and no loss incurred, 2nd defendant is free of any civil liability in this suit. This decision is the main ground of attack in the plaintiffs appeal.