Assets of the defunct company concealed by fraud.

This is an appeal by the plaintiffs in the Court below representing the entire body of shareholders of a private limited company, the O.V. Estates Ltd. (16th defendant) which was liquidated, for possession vesting or reconveyance of the suit properties (Schedules A to D) alleged to have been transferred through the exercise, of fraud, misrepresentation and undue influence on the part of defendant 1 (Messrs. Pierce Leslie &38; Co., Ltd.) and defendants 2 to 14 through the 1st defendant, who stood to the plaintiffs in a fiduciary relationship of trust and confidence, in favour of the O.V. Estates (1939) Ltd., the 15th defendant (new company).

The learned Subordinate Judge of Nilgiris dismissed this suit upon findings adverse to the plaintiffs upon all the main issues, including limitation.

In the presentation of this appeal before us, learned counsel for the appellants has attempted, to base their case upon certain principles of equity jurisprudence, which have received both statutory recognition and the affirmation of Courts in many precedents, within the ambit of the specific case of actual fraud, wilful misrepresentation and the deliberate exercise of undue influence, which were not proved, and which have now been abandoned. But this is in no sense the superimposition of a new case ; it is not any other frame of suit upon the facts and probabilities of the record. It is the consideration of those facts and probabilities in a somewhat different complexion, because the plaintiffs (appellants claim to be entitled to succeed, in the light of certain principles of law repeatedly applied by Courts, particularly Courts exercising a jurisdiction in equity, conceding that they had failed in proof in certain areas of their claim. The tenability of this, in the wide sense, is not disputed by learned counsel for the first defendant (Messrs. Pierce Leslie &38; Co., Ltd.) or the 15th defendant, which may be hereinafter termed ‘The New Company’ as distinguished from the ‘Old Company’ (the 16th defendant), who are the main contesting respondents in appeal.

The case of the appellants may be further clarified as follows: The plaintiffs, who were all members of a single British family, the Wapshares, conducting planting operations in an estate in the Nilgiris, formed the exclusive body of shareholders of a private limited company founded by the late J.H. Wapshare. The 1st defendant company were the secretaries in actual conduct of the planting operations, under the directors of this old company (16th defendant), who included defendants 2 and 4. In the context of increasing pressure from the Imperial Bank of India, who were the financiers and debenture trustees under a debenture trust deed (Exhibit A-18) which created an English mortgage in their favour over the properties to sell the estates and liquidate the indebtedness under threat of foreclosure and actual entry upon the properties, the plaintiffs (appellants) entered into the impugned transactions, and consented to the liquidation of the old company. They were persuaded to this course by the 1st defendant company, which stood to them in a fiduciary relationship of trust and active confidence. In these transactions, they were in terrorem as far as the threats of the Bank to foreclose and to enter upon the properties were concerned and further an actual date-line (the 15th November, 1937) had been fixed by the Bank. They had no independent legal advice ; in fact, they had no disinterested advice of any kind. Though the transactions were inform with the new company, the 15th defendant, it was really the 1st defendant and two or three of the directors of the old company (16th defendant) itself, who were the promoters of the vendee company, responsible for its flotation. Quite apart from any actual fraud, wilful misrepresentation, or under influence, the transactions are impeachable upon the principle of what is kown as ‘Constructive Fraud’. There is also a heavy burden on the