Necessity of sanction for instituting proceedings against defaulting Director of Court.

The appellant in this appeal is one Loomchand Sait, who was the Managing Director of the Peerdan Joharmal Bank, Ltd., in liquidation. He has preferred this appeal against the order of Krishnaswami Nayudu, J., who held that the appellant had acted fraudulently and had brought himself within the purview of section 282-A of the Indian Companies Act. The learned Judge found all the charges framed against him proved and sentenced him to pay a fine of Rs. 1,000 and directed him to pay Rs. 42,527-12-9, deliver the jewels particulars of which were given in the schedule to the charge excepting some three items referred to in the judgment and also to pay a sum of Rs.87,000 plus Rs. 199-12-0 being the value of the securities wilfully misapplied by the said appellant on or before the 12th September, 1951. In default, he ordered that the appellant should undergo imprisonment for two years. The appellant was given time till the 12th September, 1951 to which date the matter stood adjourned. On the 14th September, 1951, the appellant having failed to comply with the order, dated the 29th August, 1951, the matter came up before the learned Judge on the 14th September, 1951. The respondent was ordered to undergo imprisonment as directed in the order, dated 29th August, 1951, for a period of two years and that the necessary warrant should issue. This appeal is preferred against the said order.

The earlier history of the application taken out by the Official Liquidators of the said Peerdan Joharmal Bank, Ltd., in Thiruchirapalli (in liquidation) under section 282-A of the Indian Companies Act, for passing appropriate orders against the respondent, has been elaborately set out in the order passed by Krishnaswami Nayudu, J., under appeal, and it is therefore unnecessary to traverse the entire ground in this judgment. Suffice it to mention that the application of the liquidators in its final form was ordered by Mack, J., on the 11th January, 1950, by which he held that the appellant was liable to bring in a sum of Rs. 2,00,000, being the value of the securities, jewels and of the unaccounted cash balance. He was directed to pay a fine of Rs. 1000 under section 282-A and ordered to pay up within three months the sum of Rs. 2,00,000 and in default sentenced to suffer imprisonment for a period of two years. The appellant preferred O.S.A. No. 20 of 1950, against this order of Mack, J. The appellate Court set aside the order of Mack, J., and remanded the application to be heard and disposed of in an elaborate judgment delivered by the Honourable the Chief Justice sitting with Viswanatha Sastri, J. On remand, Krishnaswami Nayudu, J., after hearing the evidence on behalf of the applicants, the Official liquidators, framed three charges against the appellant on the 25th April, 1951, under section 282-A of the Indian Companies Act. After holding an elaborate enquiry into the said three charges, which have been set out in the order of the learned Judge, and after giving every opportunity to the appellant who was represented by counsel to cross-examine the applicants’ witnesses and also adduce defence evidence, the learned Judge, as already stated, came to the conclusion that the charges had been proved and imposed the sentence of fine of Rs.1,000 and imprisonment for two years.

When the appeal came on for hearing before us the appellant wanted a counsel to be appointed by the Court to conduct his case, but we could not persuade ourselves to comply with his request. Thereupon, the appellant engaged the services of Mr. Rajah Aiyar assisted by three other counsel. Mr. Rajah Aiyar argued the appeal at length and placed before us every aspect of the case which was in favour of the appellant. We are thankful to Mr. Rajah Aiyar for his able argument.

After having heard the arguments of Mr. Rajah Aiyar, and those of the Official liquidators and having perused the entire evidence in the case, both oral and documentary, and having considered all t