JUDGMENT

FAZAL ALI, J. :— This appeal by certificate is directed against the judgment of the High Court of Madhya Pradesh dated 20th April, 1967 affirming the decree passed by the Additional District Judge, Indore decreeing the plaintiffs suit.

2. The facts of the case are detailed in the judgment of the High Court and that of the District Judge and it is not necessary for us to repeat the same all over again.

3. Briefly, the present action was brought by the plaintiff for recovery of a sum of Rs. 2,00,000 invested by the plaintiff in the Adarsh Bima Company being defendant No. 1 and the predecessor of the appellant, who is defendant No. 3 (Life Insurance Corporation of India). The action was brought on the basis that the Managing Director of the Adarsh Bima Company by practising fraud and misrepresentation on the plaintiff induced him to part with a sum of Rs. 2,00,000 by purchasing 2000 shares of Rs. 100/- each. The courts below have recorded clear findings of fact that the fraud alleged by the plaintiff has been clearly proved and that the plaintiff had parted with a sum of Rs. 2,00,000 by investing the same in purchase of 2000 shares as a result of which the shares scripts were handed over to the plaintiff and he was assured of a dividend of 4%. It has also been found as a fact that such a resolution was contrary to the statute of the company.

4. The suit was contested by the appellant who is defendant No. 3 in the courts below mainly on the ground that after the appellant took over the Adarsh Bima Company which was ultra vires the statutes of the company.

5. In support of the appeal the Solicitor General submitted two points before us. In the first place, it was contended that on the finding that a fraud was committed on the plaintiff and the act of the Managing Director being ultra vires of the statues of the company, the company would not be liable although the Managing Director may be personally liable. Secondly, it was argued that assuming that the company was liable but in view of the provisions of S. 7 (2) of the Life Insurance Corporation Act, 1956 (hereinafter called the Act), the liability of the appellant would extend only to matters appertaining to the controlled business as defined in the Act.

6. As regards the first contention we find absolutely no substance in the same. There was absolutely no pleading by the defendants that the monies were received by the Managing Director personally and that the same did not go to the coffers of the company. On the other hand, the plaintiff clearly pleaded in paras 3 (b), 8 (a) and 8 (b) of the plaint that the money was paid to defendant No. 1 company which after receiving the amount issued share scrips to the plaintiff. The relevant portions of the aforesaid statements may be extracted thus: -

"3 (b) Relying upon the said guarantee and promise given by the defendant No. 2 on the Companys behalf plaintiff No. 1 on 11th June, 1947 gave at Jhabua to defendant No. 1 Company through defendant No. 2, Government of India 3 percent Loan Bonds of 1953-55 of the value of Rs. 1,00,000 duly endorsed in favour of defendant No. 1 company .... .... ... ...

The company addressed a letter acknowledging receipt of the application for 1000 shares and the full consideration of the said shares at the rate of Rs. 100 per share and agreed to allot the said 1000 shares to plaintiff No. 4".

"8 (a) .... .... ... ...The plaintiffs submit that the transaction of selling the said 2000 shares of defendant No. 1 Company and registering the same as aforesaid in the names of Plaintiffs Nos. 2 to 4 with a guarantee of minimum return is ultra vires the defendant No. 1 Company and is found to be void and inoperative in law.

8 (b) The said 2000 shares of defendant No. 1 Company are as aforesaid applied for and registered in the names of plaintiffs Nos. 2 to 4. At all material times when the said shares were registered in the names of plaintiffs Nos. 2 to 4, the plaintiffs Nos. 2 to 4 were minors. the plaintiffs submi