9911796707
TMI Blog1971 (2) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... he second respondent, P. S. Mannadiar (hereinafter called "M") was appointed as the managing director on March 4, 1945. He continued to work as such till December 25, 1948. Afterwards he was a director till the date of his resignation on June 14, 1950. The third respondent, T. Eronanunni, was a director from November 15, 1943, onwards. The fourth respondent, V. K. Thirumalpad, was a director from 1940 till March 13,1949. The appellant, P. K. Nedungadi, was a director from October 8, 1948, till the date of the winding-up order. The fifth respondent, V. Venugopalan Thampan, was a director from June 22, 1946, till October 8, 1948. In September, 1953, the official liquidator filed a petition under sections 183(3) and 235 of the Indian Companie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Act. That by this and other connected wrongful devices you caused loss to the aforesaid bank of a sum of Rs. 49,608-4-3". A learned single judge took the view that all the directors left everything in the hands of respondent No. 2 and that was the reason why the transactions which had been brought about had taken place. According to the learned judge any criminal prosecution in the circumstances disclosed would have failed and therefore he dismissed the application of the official liquidator. On appeal by him a Division Bench of the High Court held that the appellant and respondent No. 2 had been guilty of acts of misfeasance, etc., and directed that they should jointly and severally pay to the official liquidator a sum of Rs. 46,616 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was the appellant. M purporting to act on behalf of the tank drew a cheque on the Indo-Mercantile Bank Ltd. on February 8, 1948, for a sum of Rs. 13,000 and with the help of the appellant that amount was adjusted against his overdraft account. In the accounts of the Indo-Mercantile Bank this sum was debited against Rs. 50,000 standing to the credit of the bank. M, however, did not debit himself with the sum of Rs. 13,000 in any of his accounts with the bank. The amount was shown only in the suspense account. On October 8, 1948, the appellant, who was formerly the agent of Palghat branch of Indo-Mercantile Bank, was appointed a director of the bank. On taking charge he discovered that M had not brought to account the sum of Rs. 13,000 which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mortgage which had been created on a defunct company like the mills were (1) the wiping out of the liability of M to the bank to the extent of Rs. 14,623-4-2 which consisted of a sum of Rs. 13,000 and interest; (2) wiping out of liability of Ravi Verma, a solvent debtor of the Indo-Mercantile Bank, to the extent of Rs. 12,083-9-7 and (3) the creation of the fixed deposit for the benefit of the fourth respondent for a sum of Rs. 6,000. The appellant obviously got the benefit for bringing about this transaction because of his relationship with Rukmini. The High Court found that the assets of the mills were worth not even Rs. 10,000 and to obtain a fourth mortgage of the property of that company could not be an error of judgment on the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Saw & Oil Mills Ltd., which he had no hopes of realising. He should be made liable to the entire amount decreed against the first respondent" Under section 235 of the Indian Companies Act, 1913, which was in force at the material time, the court has been given the power to assess damages against the delinquent directors, etc. If the money or the property of the company has been misapplied or there has been misfeasance or breach of trust in relation to the company by a director, an officer or other person mentioned in the section the court, after examining the matter, can compel him to repay or restore the property with interest at such rate as the court may think fit or to contribute such sums to the assets of the company by way of compens ..... X X X X Extracts X X X X X X X X Extracts X X X X
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