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1969 Supreme(Raj) 76
High Court Of Rajasthan
Judgename : P.N.Shinghal
JAIPUR VASTRA VYOPAR SANGH LTD. - Appellant
Versus
SHYAM SUNDER LAL PATODIA - Respondent
Company Petn. 24 Of 1963
Decided On : 04/18/1969
D.P.GUPTA, M.D.BHARGAV
An application under Section 543 of the Companies Act, 1956, is not barred by Order 9, Rule 9, C. P. C. or by limitation.
Headnote:
COMPANIES ACT - SECTION 543 - APPLICATION BY OFFICIAL LIQUIDATOR - EXAMINATION OF CONDUCT OF PAST DIRECTOR - RECOVERY OF MONEY - INTEREST - MAINTAINABILITY OF APPLICATION - BAR OF ORDER 9, RULE 9, C. P. C. - LIMITATION - REPEAL OF PREVIOUS COMPANIES ACTS - EFFECT.
Fact of the Case:
The Official Liquidator of Messrs. Jaipur Vastra Vyopar Sangh Ltd. filed an application under Section 543 of the Indian Companies Act, 1956, for examination of the conduct of respondent Shyam Sunder Lal Patodia, a past director of the Company, and for an order compelling him to restore the money, with interest, or to contribute to the assets of the Company by way of compensation in respect of misapplication, retainer or breach of trust.
Finding of the Court:
The Court found that the respondent had misapplied, or retained, or became liable or accountable for the sums of Rs. 2,07,832 and Rs. 19,588/4/6, making a total of Rs. 2,27,420/4/6. It ordered that he shall repay to the Official Liquidator the said sum of Rs. 2,27,420/4/6. He shall pay interest at 6 per cent per annum on the sum of Rs. 2,07,832 from April 29, 1948 down to the date of payment. Similarly he shall pay interest at the same rate on the sum of Rs. 19,588/4/6 from November 5, 1963, which is the date of presentation of the present application down to the date of payment. The respondent shall also pay the costs of and incidental to this application to the official Liquidator.
Issues: 1. Has respondent Shyam Sunderlal as managing director of M/s. Jaipur vastra Vyopar Sangh Limited, Jaipur, misapplied or retained or became liable or accountable for the sums of Rs. 2,07,832/- and Rupees 19,588/4/6 during the period March 21, 1946 to April 29, 1948? 2. If so, at what rate of interest he should be compelled to repay the money? 3. Is the present petition not maintainable on account of the dismissal of civil original suits Nos. 20 of 1953 and 21 of 1953 by the Senior Civil judge of Jaipur? 4. Is the petition not maintainable as it has been filed after great delay?
Ratio Decidendi: 1. The Court held that the respondent was liable for the sums of Rs. 2,07,832 and Rs. 19,588/4/6 as he had misapplied, or retained, or became liable or accountable for the money of the Company. 2. The Court held that the respondent shall pay interest at 6 per cent per annum on the sum of Rs. 2,07,832 from April 29, 1948 down to the date of payment. Similarly he shall pay interest at the same rate on the sum of Rs. 19,588/4/6 from November 5, 1963, which is the date of presentation of the present application down to the date of payment. 3. The Court held that the present application was maintainable as it was not barred by Order 9, Rule 9, C. P. C. or by limitation. 4. The Court held that the petition was maintainable as it was filed within the prescribed period of limitation.
Final Decision: The Court declared that respondent Shyam Sunder Lal Patodia has misapplied, or retained, or became liable or accountable for the sums of Rs. 2,07,832 and Rs. 19,588/4/6, making a total of Rs. 2,27,420/4/6. It ordered that he shall repay to the Official Liquidator the said sum of Rs. 2,27,420/4/6. He shall pay interest at 6 per cent per annum on the sum of Rs. 2,07,832 from April 29, 1948 down to the date of payment. Similarly he shall pay interest at the same rate on the sum of Rs. 19,588/4/6 from November 5, 1963, which is the date of presentation of the present application down to the date of payment. The respondent shall also pay the costs of and incidental to this application to the official Liquidator.
P. N. SHINGHAL, J.
( 1 ) THIS is an application under Section 543 of the Indian Companies Act, 1956, by the Official Liquidator of Messrs. Jaipur Vastra Vyopar Sangh Ltd. , in liquidation hereinafter referred to as "the Company", for examination of the conduct of respondent Shyam Sunder Lal Patodia, who is a past director of the Company, and for an order compelling him to restore the money, with interest at such rate as the court thinks just, or to contribute such sum to the assets of the Company by way of compensation in respect of misapplication, retainer or breach of trust as the court-may think proper.
( 2 ) THE Company was registered under the Jaipur Companies Act of 1942. It is not in controversy that the provisions of that Act were similar to those of the Indiars companies Act, 1913, and that the respondent was the Managing Director of the company from March 21, 1946 to December 31, 1948.
( 3 ) THE Company is a public company and it has been alleged that, taking undue advantage of his position as its managing director, the respondent took and utilised Rs. 2,07,832/- for his personal use and thereafter transferred the money in the name of his father Rameshwar Das Patodia on April 29, 1948. It has also been alleged" that the respondent took Rs. 19,588/4/6 from the funds of the company. Both the sums were not repaid, and this is why it has been contended that the respondent has misapplied, retained and became liable and; accountable for the money of the Company. An order for the winding up of the Company was made on March 9, 1960, and it has therefore been prayed that this Court should examine into the conduct of the respondent and make the aforesaid order under section 543.
( 4 ) THE respondent has filed a reply in which he has denied the allegation that he had taken any undue advantage of his position as the managing director of the company. He has stated that the sum of Rs. 2,07,832/-was treated as a loan and a lien was created under Article 16 of the Articles of Association of the Company which was recognised and confirmed by the District Judge. As regards the sum of rs. 19,588/4/6, it has been stated that the amount was taken "against the commission of the managing directorship" and only a formal adjustment remained to be made. Further, it has been stated that it was the business of the Company to advance loans to members and create liens on their shares. The respondent has also pointed out that the Company filed two suits for the reco very of these amounts: Civil Original Suit No. 20 of 1953 was filed for the recovery of Rupees 2,37,299/11/6 against Rameshwar Das and others, but it was dismissed in default of the plaintiffs appearance on October 15, 1959. Civil Original Suit No. 21 of 1953 was filed for the recovery of Rs, 24,571/8/-and it was dismissed in default of the plaintiffs appearance on July 15, 1958. It has therefore been urged that these amounts cannot be recovered by the present application under Section 543 and the Company is estopped from making the recovery on account of a resolution of the Company dated April 16, 1948, and also because of the bar under Order 9, rule 9, C. P. C. as well as the bar of limitation.
( 5 ) A rejoinder was filed by the Official Liquidator and the points in controversy between the parties were drawn up in consultation and with the agreement of their learned Counsel as follows,-
1. Has respondent Shyam Sunderlal as managing director of M/s. Jaipur vastra Vyopar Sangh Limited, Jaipur, misapplied or retained or became liable or accountable for the sums of Rs. 2,07,832/- and Rupees 19,588/4/6 during the period March 21, 1946 to April 29, 1948?
2. If so, at what rate of interest he should be compelled to repay the money?
3. Is the present petition not maintainable on account of the dismissal of civil original suits Nos. 20 of 1953 and 21 of 1953 by the Senior Civil judge of Jaipur?
4. Is the petition not maintainable as it has been filed after great delay? the Official L
