Skip to content


In Re: Peerdan Juharmal Bank (In Liquidation) by Joint Official Liquidator - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtChennai High Court
Decided On
Reported in(1958)2MLJ167
AppellantIn Re: Peerdan Juharmal Bank (In Liquidation) by Joint Official Liquidator
Cases ReferredSankaram v. Kottayam Bank
Excerpt:
.....the position in india is not precisely the same. all we are concerned with is to answer the question we have set out above :can the proceedings under section 235 of the act be continued against the deceased gopalachariar 11. we re-affirm the well-settled principle which was followed in sankaram v......of law.4. that under the corresponding statutory provisions in the english law the estate of a deceased director is not liable for any misfeasance of his appears to have been well settled ever since feltom's executors' case (1865) 1 eq. cases. 219, which was followed in in re british guardian life assurance company (1880) l.r. 14 ch. 335. at page 340 of the report in in re british guardian life assurance co. l.r. (1868) 3 ch. 335 hall, v.c., observed:first as to the objection taken that the 165th section is not capable of being put in operation against the executors of a deceased director. it has been contended that the question was expressly decided by vice-ghancellor kindersley in feltom's executors' case (1865) 1 eq. cases. 219, and that the decision was recognised by lord justice.....
Judgment:
ORDER

1. After the Peerdan Juharmal Bank, Limited, was ordered to be wound up^ the Joint Liquidator preferred Application No. 4394 of 1952, under Section 235 of the Indian Companies Act (Act VII of 1913), in which charges of misfeasance among others were levelled against the respondents who had been directors of the Bank. One of them was A.V. Gopalachariar, who was impleaded as the sixth respondent in that application. Ramaswami Goundar, J., dismissed the application against the sixth respondent as well as against Respondents 5 and 7. The Joint Liquidators appealed against these directions : O.S.A. No. 142 of 1954 : Gopalachariar was impleaded as the third respondent in that appeal. During the pendency of that appeal Gopalachariar died on 14th September, 1957. On 3rd January, 1958, the appellants preferred G.M.P. No. 347 of 1958 to set aside the abatement of the appeal as against Gopalachariar and. G.M.P. No. 348 of 1958 to bring on record the legal representative of Gopalachariar. A further affidavit was filed on 21st February, 1958, to explain the delay in preferring these applications.

2. The question for consideration is, whether the proceedings taken under Section 235 of the Act against Director of a Banking Company, ordered to be wound up, can be continued after his death, and whether the liability, if any, of such a Director can be enforced against his legal representative in those proceedings. That the appeal is a continuation of those proceedings does not admit of any doubt.

3. The question was answered in the negative by Shahabuddin, J., in Sankaram v. Kottayam Bank : AIR1946Mad304 , the only reported decision of this Court on this point. But the learned Judge applied in that case what was considered a well-settled principle of law.

4. That under the corresponding statutory provisions in the English Law the estate of a deceased Director is not liable for any misfeasance of his appears to have been well settled ever since Feltom's Executors' case (1865) 1 Eq. Cases. 219, which was followed in In re British Guardian Life Assurance Company (1880) L.R. 14 Ch. 335. At page 340 of the report in In re British Guardian Life Assurance Co. L.R. (1868) 3 Ch. 335 Hall, V.C., observed:

First as to the objection taken that the 165th Section is not capable of being put in operation against the executors of a deceased director. It has been contended that the question was expressly decided by Vice-Ghancellor Kindersley in Feltom's Executors' case (1865) 1 Eq. Cases. 219, and that the decision was recognised by Lord Justice Selwyn in Ex Parte Hawkins L.R. (1868) 3 Ch. A. 787, and I think that the express point was decided, and upon the literal words of the 165th Section

Hall, V.C., proceeded:

Looking at the language of the Section in reference to making an offender who is criminally responsible liable, it appears to me that there is a total absence of power to investigate the conduct of a dead man under it.

5. The position under the English Statute was thus summed up in Buckley in the 'Companies Act,' 12th Edition, at page 682:

The Section is personal only as against the director or officer and does not apply as against the executors of a deceased director or officer

6. Courts in India have been consistent in placing the same construction on the analogous provision, Section 235 of the Indian Companies Act.

7. In Manilal Brijlal v. Rao Saheb Vandrawandas I.L.R. (1944) Bom. 284, a Division Bench of the Bombay High Court (Beaumount, C.J. and Rajadhyaksha, J.) held that on the language of Section 235 it would be wrong to allow proceedings to be taken against the personal representative of a deceased liquidator under Section 235. After referring to Feltom's Exectuors' case (1865) 1 Eq. Cases. 219 and In re British Guardian Life Assurance Co. (1880) L.R. 14 Ch. 335, Beaumont, C.J., observed:

Those cases proceed rather on the strict language of the Section. As I have said, this'sectioa has been copied into the Indian Act, and, prima facie, I think the same construction should be put upon the words of the Indian Act, though, no doubt, the position in India is not precisely the same.

8. After pointing out that others besides the executors and administrators were recognised in the Indian Law as the personal representatives of a deceased liquidator (or director) and that defences were open to them which would involve an enquiry quite foreign to the purpose of Section 235, Beaumont, C.J., observed:

Section 235 is concerned only with an enquiry into the conduct of the officers of the company in relation to the company's property, and in my opinion, it was never intended to involve the Court on an application under that Section in an enquiry relating to the estate of a deceased person.

9. The same principle was laid down earlier in Billimoria v. Mrs. DeSouza I.L.R. (1926) Lah. 549 and in Official Liquidators, Mufassil Bank v. Jugal Koshore I.L.R. 1939 All. 6, and it was reiterated in Sankaram v. Kottayam Bank : AIR1946Mad304 Section 306 of the Indian Succession Act was relied upon by the applicants both in the Lahore and Allahabad cases even as it was relied on before us. We are in respectful agreement with what Harries, J., said at page 14 of the reported judgment in Official Liquidators., Mufassil Bank v. Jugal Kishore I.L.R. 1939 All. 6.

when the law which gives a person a right to institute proceedings gives him a right to institute and continue those proceedings against a man only in his life-time, then if the defendant dies the right dies with him and the suit or proceeding cannot be continued against his executors.

10. It is the language of Section 235 of the Act that decides the issue. It was a limited right. It ended when Gopalachariar died. We are not concerned with the question whether the liquidators have any other remedies against the estate of the deceased Gopalachariar. All we are concerned with is to answer the question we have set out above : Can the proceedings under Section 235 of the Act be continued against the deceased Gopalachariar

11. We re-affirm the well-settled principle which was followed in Sankaram v. Kottayam Bank : AIR1946Mad304 and answer in the negative.

12. In the view we have taken that the right to continue the proceedings under Section 235 of the Act ended when Gopalachariar died, the further question of condoning the delay in setting aside the abatement does not arise for consideration. G.M.P. Nos. 547 and 348 of 1958 are dismissed.


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