Directors of Companies are not considered trustees for the purpose of Section 10 of the Limitation Act, and the right of a liquidator under Section 235 is not a new right accruing by reason of the winding up.

Ramesam, J.

1. This is an appeal against an order of our brother Beasley, J., as he then was, dismissing an application of the Official Liquidator of the City Hygienic Milk Supply Co., Ltd., under Section 235 of the Indian Companies Act for an order compelling the Directors of the Company to pay certain amounts by way of compensation in respect of their acts of misfeasance, etc. Two points were raised before the learned Judge and both were decided against the applicant. The Official Liquidator appeals.

2. In appeal the two points that arise are: (1) . Whether Directors of Companies under the Indian Companies Act are trustees for the purpose of Section 10 of the Limitation Act; and (2) if they are not trustees, from what date does limitation run.

3. Taking up the first point, it is now clear that, even in England in spite of occasional use of loose expressions to the contrary, it is now settled that Directors of - Companies are not trustees. In In re Forest of Dean Coal Mining Company (1878) 10 Ch.D. 450, Jessel, M.R., said at page 451 Directors have sometimes been called trustees, or commercial trustees, and sometimes they have been called managing partners. and at page 453 They are no doubt trustees of assets which have come into their hands, or which are under their control but they are not trustees of a debt due to the company.

4. In Flit-crofts case (1882) 21 Ch.D. 519, Bacon, V.C., no doubt said That the relationship of trustee and ceslui que trust subsists between the directors of joint stock companies and the shareholders, I do not entertain the slightest doubt.

5. But this statement is inconsistent with the remarks of Lords Justices in the Court of Appeal and with later special judicial opinions. On appeal in the same case Jessel, M.R., said: "If directors who are quasi trustees for the company, etc." Brett. L.T., said: "They are trustees for the company not for the individual shareholders." But even this statement is too wide. Cotton, L.J., said: "They have misapplied funds as to. which they stood in the position of trustees." In In re Faure Electric Accumulator Company (1888) 40 Ch. D. 141 at 150, 151, Kay, J., says:

They certainly are not trustees in the sense of those words as used with reference to an instrument of trust, such as a marriage settlement or a will. One obvious distinction is that the property of the company is not legally vested in them, etc.

6. In re Lands Allotment Company (1894) 1 Ch.D. 616 Kay, L.J., says at page 639 As directors they are not trustees at all. They are only trustees qua the particular property which is put into their hands or under their control, etc.

7. Lindley,.., L. J., says: "Although directors are not properly speaking trustees, etc." in re City Equitable Fire Insurance Company (1925) 1 Ch. 407, Romer, J., observes: "To say that directors are trustees is a wholly misleading statement." It is unnecessary to refer to English decisions at greater length, for all that we are concerned with is whether they are trustees for the purpose of Section 10 of the Limitation Act.

8. In Kathiawar Trading Company, Limited v. Virchand Dipchand (1893) I.L.R. 18 B. 119 it was held by Sargent, C.J., and Bayley, J., that Directors of Companies are not trustees in whom the property of the Companies has become vested in trust for any specific purpose. 1 entirely agree with this decision. It is contended that the purposes of the Company are specific purposes within the meaning of the section. The purposes of the Company are too wide, and far from being specific, one would say they are very general purposes, and even then it is doubtful whether it can be said that the property of the Company is vested in the Directors. Two decisions have been referred to by the learned advocate for the appellant as somewhat weakening the decision in Kathiawar Trading Company, Limited v. Virchand Dipchand (1893) I.L.R. 18 B. 119. These are Kishtappa Chetty v. Lakshmi Ammal (1923) 44 M.L.J. 431 and Pachaiyappa Chetti v.