OFFICIAL LIQUIDATORS Vs. JUGAL KISHORE

JUDGEMENT

(1.) This is an application by the Official Liquidators praying that the name of Mr. Jugal Kishore, opposite party No. 1, be removed from the array of opposite parties and that the names of his two sons and widow be brought on the record in bis wtoad. On 31 July 1935 the liquidators presented an application under Section 235, Companies Act, in this Court against certain directors of the Mofussil Bank Ltd. including Mr. Jugal Kishore. In this application certain acts of misfeasance were alleged and certain definite allegations were made against Mr. Jugal Kishore. On 29 March 1.938 during the pendency of the proceedings, Mr. Jugal Kishore died and on 5 May 1938 the present application was filed. It is to be observed that the widow of Mr. Jugal Kishore, Mt. Dularna Bibi, is already in the array of opposite parties and the prayer in so far as it concerns her is that a note be made that she is also the legal representative of Mr. Jugal Kishore. As to the two sons, Nawal Kishore and Kamal Kishore, it is prayed that their names should be brought upon the record as opposite parties as two of the personal representatives of the late Mr. Jugal Kishore. The opposite parties have objected and contend that in proceedings under Section 235, Companies Act, no such substitution can be effected. Section 235(1), Companies Act, under which the misfeasance proceedings were instituted is in these terms: Where in the course of winding up a company it appears that any parson who has taken part in the formation or promotion of the company or any past or present director, manager or liquidator or any officer of the company has misapplied or retained or become liable or accountable for any money or property of the company or been guilty of any misfeasance or breach of trust in relation to the company, the Court may, on the, application of the liquidator or of any creditor or contributory (made within three years from the date of the first appointment of a liquidator in the winding up or of the misapplication, retainer, misfeasance or breach of trust as the case may be whichever is longer) examine into the conduct of the promoter, director, manager, liquidator or officer and compel him to repay or restore the money or property or any part thereof respectively with interest at such rate as the Court thinks just or to contribute such sum to the assets of the company by way of compensation in respect of the misapplication, retainer, misfeasance or breach of of trust as the Court thinks just. (2) This Section shall apply notwithstanding that the offence is one for which the offender may be criminally responsible.

(2.) It has been contended on behalf of the Official Liquidators that this right to bring summary proceedings under this Section survives as against the personal representatives or heirs of a deceased director. It is to be observed that the opposite parties are not in the true sense of the words executors or administrators. They are the heirs of the deceased man and it is in that capacity that they are said to represent his estate. On behalf of the opposite parties, it has been contended that the terms of this Section made it clear that no right to institute or continue the proceedings against a personal representative was contemplated, by the Legislature. Section 235, Indian Companies Act, is in the same terms as Section 276, English Companies Act, 1929, and Section 215 of the earlier English Companies Act, 1908. Those two Secs.were reproductions of Section 165 of the earlier English-Companies Act, 1862.

(3.) Section 165 of the English Act of 1862 has been the subject of judicial construction in: the English Courts and it has always been the view in England that there is no right to institute or continue summary proceedings for misfeasance against the personal representatives of a deceased director. The matter was first considered in In re East of England Bank; Ex Parte Flton's Ececutors (1865) 1 Eq. 219 in which Kindersley V.C. held that Section 165, Companies Act, 1862, which conferred powers on the Court to compel payment by directors and officers of companies in respect of misfeasance or breach of trust relating to the affairs of the company, did not apply as against the executors of a. deceased director. The learned Vice-Chancellor pointed out that in that Section the? Court was authorized to compel payment of any moneys which upon investigation should be found to be payable by any person to whom the Sec. was intended to apply. He was of opinion that with regard to executors or administrators who are on the list of contributories as representing, the estate of a deceased shareholder, the; Court in the winding up could not compel them to pay anything which was payable by the estate of the deceased. The Court winding up the company had no power to administer the estate of the deceased and all that it could do was to make an order directing payment to be made out of the deceased's estate and so in effect declare, the Official Liquidator to be a creditor of the deceased, tie was of opinion that the-use of the phrase compel him to pay led irresistibly to the conclusion that the Section was not intended to apply to the case of executors or administrators of a deceased person, because it was clear that they could not be compelled to pay in the winding up.