TMI Blog1955 (1) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Sons at a salary of Rs. 1,000 a month and allowances and he began to supervise under the directions of the managing agents. He was appointed a director of the company on February 12, 1951, according to his own affidavit and continued to act as the manager of the company and drew from the company certain sums for expenses incurred by him on behalf of the company for travelling and other charges. According to the liquidator's affidavit in paragraph 6 the respondents took a sum of Rs. 17,350 in 1951 and paid back Rs. 6,000 leaving in that year a balance due to the company of Rs. 10,818 and at the end of the year 1952 according to the liquidator the company is entitled to recover from the respondent a sum of Rs. 32,943. The respondent in his affidavit says that he had not at any time in his hands any moneys belonging to the company. He disputes the items as debited to his account. Before considering this preliminary question I may state two points, one is that in the letters of demand addressed by the liquidator's solicitors the claim is described as loans made by the company. Much has been made of this, but it is clear on the reading of the affidavit in support and exhibit "A", n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is proceeding. The counter-claim is a matter of convenience namely, that if defendant has a cross-claim that should be simultaneously heard and disposed of so that instead of there being two separate litigations there will be one. That to my mind is only a device prescribed by law for the purpose of expeditious despatch of simultaneous claims and no party has the inherent right to say that he has a claim which would be described as a counter-claim, nor can an officer of the company claim a set-off against assets of the company wrongfully in his hands. Therefore, in my opinion, there is no substance in this particular point raised on behalf of the respondent. It has been very strenuously argued by Mr. Mistree that the terms of the section itself are such that the claim of the liquidator does not fall thereunder. Section 235 says that where in the course of winding up a company it appears that any person who has taken part in the formation or promotion of the company or any past or present director, manager or liquidator or any officer of the company has misapplied or retained or become liable or accountable for any money or property of the company or been guilty of any misfeasance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, In re Mercantile Trading Company called Stringer's case [1869] LR 4 Ch. App. 475. The observations there made by Lord Justice Selwyn are of great importance. Until that judgment was delivered the line of decisions leaned more towards not applying such a summary procedure than in its favour. After reviewing the decisions Lord Justice Selwyn observed as follows (at pages 485-6); "Under these circumstances it appears to me that we should be doing something which is entirely inconsistent with the provisions of the Act of Parliament, so general as they are, if we were to introduce any such qualification as that said to have been laid down by the Master of the Rolls in the case of the Royal Hotel Company of Great Yarmouth [1867] LR 4 Eq 244 . Otherwise, having regard to what I have always understood to be his own opinion upon this subject, and to his own decision in the case. of Cardiff Preserved Coal and Coke Company v. Norton [1867] LR 2 Ch 405 , I could not help thinking that there must be some error in that report I feel bound to say that I do not think there is to be found, either in the words of the present Act of Parliament or in the conclusion which is j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicant is bound to show that he is interested in the result of the application, but I think it must be so. I cannot think that Parliament intended that a person who happens to come under the description of a creditor or a contributory may take upon himself the functions of a public prosecutor " Mr. Justice Maugham proceeded to say that the language would be quite wrong and misleading if the truth were that in every case in which the company has a claim to recover damages from an officer of the company the section is applicable. That is the only qualification set out by Mr. Justice Maugham as regards the applicability of such section. The learned Judge came to the conclusion as follows (page 875): "The conclusion at which I have arrived is that section 215 is not applicable to all cases in which the company has a right of action against an officer of the company. It is limited to cases where there has been something in the nature of a breach of duty by an officer of the company as such which has caused pecuniary loss to the company. Breach of duty of course would include a misfeasance or a breach of trust in the stricter sense and the section will apply to a true case of m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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