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IN THE HIGH COURT OF BOMBAY
Smt. Sujata Manohar N.D. Vyas, JJ.
The Official Liquidator, High Court, Bombay.... Appellant.
Versus
Taru Jethmal Lalvani and others.... Respondents.
Appeal No. 1650 of 1988 in Company Application No. 75 of 1988 in Company Application No. 161 of 1981 in Company Petition No. 481 of 1975, decided on 4/5-8-1993.
Advocates appeared :
K.D. Parikh i/b. Talsania Co., for the appellant.
N.K. Mudnaney, for respondent No. 1.
Mrs. Anita Shekhar, for respondent No. 8.
N.G. Thakkar with P.R. Diwan i/b. Little Co., for respondent No. 12.
Order 1, Rule 10.-See Companies Act, 1956, Section 553 (1) and (2).
Section 543 (1) and (2)-Civil Procedure Code, 1908, Order 1, Rule 10 - Limitation Act, 1963, Section 2l-Applicability of.
Under Order 1, Rule to of the Code the Court has the power to strikes out or add parties to the suit. However, where the suit is brought against a person who is found to have died before institution of the suit (he being the only defendant) the plaint cannot be amended by bringing his legal representative on record though the suit may have been filed in ignorance of his death. This is because a suit against a dead man is a nullity. Of course if a suit is against several defendants and only one of them is found to have died before its institution the entire suit will not fail and can proceed against the other defendants. The legal representatives of the deceased defendants can be joined, provided a fresh suit could have been filed On that date. Therefore, on an anlogous principles, if a misfeasance summons is instituted against several respondents and some of them are dead, the heirs of the dead respondents can be joined as party respondents by amendment, provided that a fresh misfeasance summons could have been taken out against the heirs on the date on which they are sought to be joined. Once an application is made, somebody can be subsequently joined as a party to it. Such an interpretation cannot be accepted. Section 543 (2), when it refers to an application, must necessarily refer to an application against a specified person or persons. It cannot be an application in the abstract. Therefore, when the heir of a respondent who was non-existent at the time when the original misfeasance summons was taken out, is brought on record, it is equivalent to taking out a fresh misfeasance summons against the heir. There is no question here of the amendment relating back to the date of the original misfeasance summons against some other parties.
Section 543 (1) and (2) and Section 634-Civil Procedure Code, 1908, Section 50-Maxim "action personali maritur Cum personal" - Its applicability.
Held. Section 543 does not create any new liability. It only provides for a summary remedy for determining the amount payable by a person who has caused loss to the Company by an act amounting a breach of trust. The section authorised the Court to direct such persons to pay a sum of money to the Company by way of compensation or to bring back the money. This is not a provision intended to punish a man who has been found guilty of misfeasance but for compensating the Company in respect of loss occasioned by his misfeasance. Whenever there is a relationship based on contract, quasi-contract, some fiduciary relation or a failure to perform a duty, there is no abatement of the liability on the death of the wrong doer. When once the liability is declared it is open to the official liquidator to realise the amount due by resorting to Section 634 of the Companies Act and Section 50 of the C. P. C. In a proceeding under Section 543 of the Companies Act, the death of one of the officers will not result in abatement of his liability. His heirs can be brought on record for the purpose of pursuing the remedy under Section 543 as against the estate of the deceased officer or director.
Section 21-See Companies Act, 1956, Section 543 (1) and (2), Section 21.
Section 21-See Companies Act, 1956, Section 543 (1) and (2), Section 21.
2. Eight years thereafter, the Official Liquidator took out Company Application No.75 of 1988 by which the Official Liquidator sought to bring on record the heirs of deceased respondent Nos.1 and 16 in Company Application No. 161 of 1981. This Company Application No.75 of 1988 has been dismissed by the learned Single Judge. Hence the present appeal is preferred by the Official Liquidator. For the sake of convenience respondent Nos.1 and 16 in Company Application No.161 of 1981 are hereinafter referred to as respondent Nos.1 and 16.
3. It is necessary to note the following facts:
The order of winding up against the Company was made on 23-6-1976. Respondents Nos.1 and 16 being the Managing Director and Auditor of the Company respectively, both died prior to 1980. Respondent No.16 died in September 1977. The misfeasance Summons (Company Application No.161 of 1981) was taken out by the Official Liquidator on 16th June, 1981. Therefore, at the time when the Misfeasance Summons was taken out against respondent Nos.1 and 16, both were dead. It seems that respondent No.9 in the Misfeasance Summons filed an affidavit dated 11th September, 1981 in which he set out that the Misfeasance Summons was bad in law inasmuch as it was taken out against respondent Nos.1, 2, 4, 5, 6, 12, 13 and 16 who had all died prior to 1980.
4. According to the Official Liquidator in view of this statement in the affidavit of 11th September, 1981, he made certain enquiries but was unable to find out the heirs of the dead respondents. It is not clear what these inquiries were. According to the Official Liquidator he received information for the first time from the Advocates of respondent No.13 in the misfeasance summons when they wrote a letter dated 12th January, 1988 informing the Official Liquidator of the heirs of deceased respondent No.1. The Official Liquidator has not set out anywhere how he discovered the name of the heir of the deceased respondent No.16. But he appears to have written a letter dated 11th December, 1987 to Dilip Jayantilal Thakkar, the son and heir of respondent No.16 asking for the date of death of respondent No.16 and enquiring about other heirs and legal representatives of the deceased respondent No.16. Therefore, the name of at least one heir of respondent No.16 was known to the Official Liquidator in December, 1987. He thereafter took out the present Company Application No.75 of 1988 on 19th February, 1988 to bring the heirs of respondent No.1 who are arraingned before us as respondent Nos.9, 10 and 11 in the appeal and the heir of respondent No.16 viz., Dilip Jayantilal Thakkar who is respondent No.12 in the appeal.
5. Under section 543 of the Companies Act sub-sections (1) and (2) provide as under :
"543. Power of the Court to assess damages against delinquent directors, etc.-
(1) If in the course of winding-up a company, it appears that any person who has taken part in the promotion or formation of the company or any past or present director, managing agent, secretaries and treasurers, manager, liquidator or officer of the company-
(a) has misapplied, or retained, or become liable or accountable for, any money or property of the company, or
(b) has been guilty of any misfeasance or breach of trust in relati
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