Debenture trustees can legally carry on the business of the company under the trust deed, and the company is liable for debts incurred; allegations of fraud were unfounded, leading to claim dismissal.

1. These are connected appeals directed against the judgment and decree of the learned District Judge East Godavari in Original Suits Nos.41, 48 and 49 of 1956 and I.A. No.30 of 1957 in O.P. Nos.105 of 1955. The three suits and the interlocutory applications were filed by Mr. R.G.N. Price, the Official Liquidator of the Andhra Paper Mills Co. Ltd., Rajahmundry (which will hereafter be called the Company).O.S. No.51 of 1956 which is the main and comprehensive suit, has been brought for the rendition of accounts and other reliefs against the managing agents of the company, the debenture) trustees and their agents, who functioned as such at various times between 23/03/1940 to 17/10/1945. Originally seven defendants were impleaded. Defendants 1 and 2, Dayaram Poddar and Prabhu Dayal Himmatsinghka, were partners of the firm Dayaram and Sons, which was appointed as managing agents of the Company by a resolution of the Company dated 25/08/1935, and who are alleged to nave continued as such till 01/08/1942. They were also the trustees under the first mortgage debenture trust deed from 20/09/1935 till 28/12/1942. After the suit was filed, Dayaram Poddar, the 1st defendant, died and his legal representatives were impleaded as defendants 8 to 10 by an order of Court dated 05/10/1957 in I.A. No.450 of 1957. Defendants 3, 4, Nandula Mehta and Kanitilal Nahalchand functioned as debenture trustees for some time during the period in question. A firm known as Khaitan Apte and Co. was appointed as the agents of the debenture trustees with effect from 01/08/1942 and on 01/06/1945 it was also appointed as managing agents. The said firm consisted of two partners, V.S. Apte and T.M. Karundia. Both of them died before the institution of the suits. L.V. Apte, the son of the late V.S. Apte, has been impleaded as the 5th defendant, and the widow and the son of T.M. Karundia as defendants 6 and 7 respectively.

2. O.S. No.51 of 1956 as stated already is a suit filed against the managing agents and the Debenture Trustees and their agents complaining of several acts of frauds, suppressions, breaches of trust and misappropriations, in illegally carrying on the business of the company and foisting on it a huge load of false and fictitious debts, and taking away a sum of nearly 9 lakhs of rupees as dividend. The plaint, therefore, prayed for the rendition of account of the moneys due and payable to the company; for rents received or ought to Have been received from 22/03/1940 to 17/10/1945; for purging the said accounts of all liabilities imposed on the company as for working expenses in relation to the business carried on by the debenture trustees and their agents from 1942 to 17/10/1945 and purging other entries alien to the mortgaged securities during period from 22/03/1940 to 17/10/1945; for a decree against the defendants severally and jointly for such sums as may be ascertained on taking of the accounts as due and payable to the company by the Debenture Trustees, or their agents; for an account of the trade debts and liabilities incurred by the agents during the period between 04/08/1942 to 17/10/1943 to outside creditors in respect of which the said creditors obtained dividends from the Official Liquidator; for a decree against defendants 1 to 7 severally and jointly in respect of that sum; for an account to be rendered of Rupees 12,46,814-12-1 and Rs.81,307-0-0 debited to the Company by the agents under assignments from defendants 1 to 2 and other credit