Skip to content


Ganesa Seturam, Minor by Guardian and Mother Velliammai Vs. Ramaswami Servai and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtChennai
Decided On
Reported in42Ind.Cas.219; (1917)33MLJ468
AppellantGanesa Seturam, Minor by Guardian and Mother Velliammai
RespondentRamaswami Servai and ors.
Cases Referred and Subramania Aiyar v. Subramania Aiyar and Ors. I.L.R.
Excerpt:
- .....aiyar for the respondent realised the force of these observations and contended that the secretary of a fund is something more than an agent. we are unable to agree with him. there is no reason for regarding a secretary as a trustee. it is true that the evidence in this case shows that he recovered the monies from the subscribers, and that he was also one of the directors of the fund : but he is sued as secretary and in our opinion he has no higher responsibilities than an agent.5. the further contention of the learned vakil for the respondent was that the interest act on which reliance was placed for the appellant saves by the proviso claims to interest based on the law of the land, it may be conceded that if interest is payable otherwise, the interest act will not prevent its.....
Judgment:

1. The plaintiff is the liquidator of a company incorporated under the Indian Company's Act: The third defendant whose legal representative has preferred this second appeal was the Secretary of the Company: Under the Articles of the Association he was entitled to be the Secretary until removed from office. The company was voluntarily wound up in January 1911; on the 4th March of that year, the plaintiff was appointed liquidator. He made a demand on the 3rd defendant on the 12th August 1911 for the monies in his hands. (See Exhibit V).

2. The third defendant denied liability. Thereupon this suit was instituted. The 3rd defendant died during the course of the suit and the 8th defendant was brought in as his legal representative. The courts below have held and we think rightly, that the 8th defendant, the son is bound to pay the monies found to have come into his father's hands.

3. The only question on which we feel bound to differ from the courts below is as regards the award of interest. Mr. Ganesa Aiyar for the appellant contended that as there is no allegation of fraud in the plaint, the Subordinate Judge was wrong in treating the claim as one founded on misappropriation. If the right to interest was based on the ground of fraud there ought to have been a specific issue on the question. See Johnson v. Rex (1904) A.C. 817. Further as was pointed out in Turner v. Burkinshaw (1867) L.R. 2 Ch. App. 488, an agent by retaining the money due from him should not be held to have committed a fraud. Lord Chelmsford's observations in that case are in point. ' It is the first duty of an agent-as Sir Thomas Plumer said in Pearse v. Green (1819) 1 Jac & W. 133 quoting the words of the Lord Chancellor in Lord Harwicke v. Vernon (1808) 14 Ves 504-to be constantly ready with his accounts. But this must mean that the agent must be ready to render his accounts when they are demanded. If no demand is made upon him, it is the simple cause of an agent retaining money which he thought to pay over, but which he has not been required to pay; and there is no case of which I am aware, where, under such circumstances, without anything more, the agent has been made to pay interest.'

4. Mr. Muthukrishna Aiyar for the respondent realised the force of these observations and contended that the Secretary of a Fund is something more than an agent. We are unable to agree with him. There is no reason for regarding a Secretary as a trustee. It is true that the evidence in this case shows that he recovered the monies from the subscribers, and that he was also one of the Directors of the fund : but he is sued as Secretary and in our opinion he has no higher responsibilities than an agent.

5. The further contention of the learned Vakil for the respondent was that the Interest Act on which reliance was placed for the appellant saves by the proviso claims to interest based on the law of the land, It may be conceded that if interest is payable otherwise, the Interest Act will not prevent its recovery, although there may be no written demand : Section 235 of the Company's Act VII of 1913 was quoted to show that in proceedings taken under the Act, the officers of the defunct fund are bound to pay interest. But the present suit is not, a proceeding of the nature contemplated by Section 235. Consequently the question is not affected by that special rule: we must therefore hold that the plaintiff is not entitled to interest up to the date when the liquidator made a demand. By his denial of liability however, in answer to the demand, the 3rd defendant must be deemed to have retained the money illegally. Until demand he ought to have been ready to pay up : After demand, if he kept back the money, it would amount to unlawful detention. As pointed out in Turner v. Burkinshaw (1867) L.R. 2 Ch. A. 488, the liability to pay interest accrues from this moment. See also The Collector of Ahmedabad v. Lavji Mulji I.L.R. (1911) B 255. The decision in Fakir Mahomed v. Rangiah Gounden (1913) I.L.W. 181 to which the learned Vakil for the respondent drew our attention is consistent with liability being laid only after the intention becomes unlawful. Moreover in that case, the learned Chief Justice implied an user of the money which we do not find in the present case. The decision if interpreted as contended for would be opposed to Kamuammal v. Levvai Rowthen I.L.R. (1897) M. 481 and Subramania Aiyar v. Subramania Aiyar and Ors. I.L.R. (1908) M. 250.

6. In the result, we modify the decree of the Lower Appellate Court by directing that interest upon the principal sum decreed should run from the 12th of August 1911 and not from 1909. We see no reason to interfere with the rate of interest. On the amount decreed interest will be at 6 per cent. from the date of the decree till payment. Parties will pay and receive proportionate costs in this and in the Lower Appellate Court. The order of the 1st court as to costs will stand.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //