Lord Thankerton:-

This appeal is from a decree of the High Court of Judicature at Allahabad, dated 1st September 1936, which reversed a decree of the Subordinate Judge at Dehra Dun dated 4th February 1931 and granted a decree to the plaintiff-respondent for a sum of Rs. 13,100 with interest at 6 per cent. from 31st August 1923. The suit arises out of the misdeeds of Beltie Shah Gilani, who was the promoter and managing agent and managing director of the Dehra Dun-Mussoorie Electric Tramway, which was registered under the Indian Companies Act, 1913, on 23rd August 1921, and was ordered to be wound up by the High Court on 26th March 1926, N. P. Asthani and Bhagwati Shanker being appointed the Official Liquidators. On investigation, it was found that large sums of the Company's monies had been misappropriated by Beltie Shah. Certain contracts with the Company were made by Lala Raghumal, who carried on business as a contractor under the name of Madho Ram-Hardeo Dass at Calcutta and under the name of Madho-Ram-Budh Sing in Delhi. He was also a large shareholder in the Company. Raghumal died in September 1926, and appellants 1 to 5 (appellant 3 being since deceased) are his legal representatives. Appellant 7 is the Official Receiver of the Calcutta High Court, who was appointed Receiver of the estate of Raghumal by an order of that Court dated 16th June 1931. Appellant 6, Lala Mela Ram, was in the service of Raghumal and was the manager of his Delhi business.

On 25th June 1929, the Company through its Official Liquidators instituted the present suit claiming a sum of Rs. 39,750 with interest at 12 per cent. per annum, i. e., Rs. 30,240-14-9, and future and pendente lite interest, on the ground of fraudulent conspiracy of Raghumal and his authorized agent, Mela Ram, with Beltie Shah in the misappropriation of the sum of Rs. 39,750 of the Company's monies. Historically, it should be mentioned that in 1927 the Liquidators had taken misfeasance proceedings under S. 235, Companies Act, against Beltie Shah, which resulted in an order dated 3rd April 1927, against Beltie Shah for sums amounting to over three lakhs, which included the sum of Rs. 39,750 here in question. Beltie Shah was also criminally prosecuted and was sentenced to imprisonment for a period of five years. In March 1928 the Liquidators applied under S. 186 Companies Act, for recovery from Raghumal of two sums of money, of which one was the amount here in dispute, but the application failed. The Liquidators also took misfeasance proceedings against the Company's auditors. Mukerji J., on 26th February 1929, decreed the Official Liquidators application and held the auditors liable to pay Rs. 89,812-8-0, including the amount here in dispute. On appeal, the High Court affirmed with this modification :

Though we affirm the order of the learned Judge that the auditors are to compensate the company to the extent of Rs. 39,750 we direct that execution for this amount shall be stayed until further order. The Liquidators are to be at liberty to make an application to discharge the stay order hereby granted in respect of this sum of Rs. 39,750 when the contest between themselves and the contractors has been finally decided (a) adversely to the Liquidators or (b) in favour of the Liquidators, and they, after taking all reasonable steps to recover the amount, have failed wholly or in part to do so. If the Liquidators recover a portion of the Rs. 39,750 from the contractors, they should then apply to the Court giving credit to the auditors for that amount and seeking execution as to the balance only.

The auditors obtained leave to appeal to His Majesty in Council, but the appeal was compromised by the auditors paying Rupees 18,500 to the Liquidators in full and final discharge of the said decree. As will be seen, their Lordships do not consider these various proceedings material to the only issue which they find it necessary to consider. Their Lordships do not find it necessary to review the