TMI Blog1946 (8) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... ge amounts are recoverable from the respondents for misfeasances consisting for the most part in their having granted loans contrary to the bye-laws of the Company. It is alleged that these loans, which are now, I understand, irrecoverable, were granted at the absolute discretion of the first respondent without any previous sanction by the Board and, accordingly, that the first respondent is primarily liable for these losses. It is claimed by the liquidator that the other Directors, the auditor and the head clerk, i.e., the respondents now before me, were aware of these loans and were negligent in the performance of their duties in that they did not take steps to prevent them, or to recover the amounts so lent. In these circumstances, the case for the liquidator is that they are equally liable along with the first respondent. The winding-up order was made on the 9th January, 1942, and it is common ground that the business of the Company was discontinued as from the 7th April, 1941. Under the order of the Court there have been investigations into the conduct of the Managing Director and Directors of this Company and as it appeared that they had been guilty of offences relating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 165 of the Act of 1862. In Stringer's case [1869] 4 Ch. App. 475 the jurisdiction of the Court in summary proceedings under sections 165 and 101 (which corresponds to section 186 of our present Act) was considered and Selwyn, L.J., at page 484 of the report observed, "that in these summary proceedings every objection is just as open to the person sought to be charged as it would have been if a bill had been filed." There have been many decisions in the English Courts on these two sections since Stringers case ( supra ) was decided, but so far as I am aware, it has never been doubted that a defence of limitation which would have been available in an action will be equally available in proceedings of that nature. Recently in Hansraj Gupta v. Official Liquidators of Dehra Dun etc. Co. [1932] 54 All. 1067; 3 Comp. Cas. 207 , the Privy Council has laid down that this defence of limitation is open to a party charged under section 186 of our Act. But I am here concerned with section 235 of the Act, which has undergone certain changes since it was first enacted in India. It will be convenient, I think, if I now set out the changes which have been made in this section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lature, as it may be gathered from that history. Whilst, as I have already observed, the English Courts have throughout recognised that applications of this nature are subject to the same limitation as would be applied to suits for the same relief, this does not appear to have been the view generally accepted in India. Mr. Nara-simhachari has drawn my attention to the authorities, one of this Court and one of the Allahabad High Court. In 1895 a Bench of the Allahabad High Court (Edge, C.J., and Banerji, J.) held in Connel v. The Himalaya Bank Ltd. [1895] 18 All.12 that proceedings under the section as it then stood were not subject to the period of limitation prescribed by the Limitation Act. In that case it was suggested that Article 36 of Schedule I would apply, but it was observed as follows at page 15 of the report: "In our opinion Article 36 does not apply to this case. It may well be that the Legislature intended not to provide any limitation in cases in which Courts proceeded to enforce the provisions of section 214 of Act No. VI of 1882 (section 235 of the present Act). The provisions of that section could seldom be put in force if Article 36 of Schedule II of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there were many and conflicting decisions of the Indian High Courts as to its application. It is, I think, unnecessary for me to refer to any particular one of those decisions. It will suffice if I say that, broadly speaking, the difference of opinion that emerged was as to the application, on the one hand, of Article 36 with its two year period of limitation and, on the other hand, Article 120 with its six year period from the date when the cause of action accrued. As to Article 120 there was a further difference of opinion as to the correct method of fixing the date on which the cause of action could be said to accrue in the case of the liquidator. In 1929 Sir Amberson Marten, C.J., observed in Govind Narayan v. Ranganath Gopal [1930] 54 Bom. 226 , which was a case under section 235 of the Act, at page 235 of the report, as follows: "I would also like to add that in my opinion this appeal shows the desirability of some amendment of the Indian Companies Act, 1913, so as to nullify the existing difference of opinion in various High Courts as to the effect of section 235 of that Act . . . ." Then in 1936 the Legislature removed sub-section (3) from the section and added ..... X X X X Extracts X X X X X X X X Extracts X X X X
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