TMI Blog1978 (8) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 543. The appellants who have raised this question are the legal representatives of the three deceased directors. A company by name Alwaye Chit Funds (P.) Ltd. was ordered to be wound up in C.P. No. 27 of 1965 and in the winding-up proceedings the official liquidator filed Application No. 153 of 1971 praying that action should be initiated under section 543 of the Act against the past directors of the company' on the ground that they had committed acts of misfeasance breach of trust, etc. in relation to the company. During the pendency of that application three of the respondents died. The 8th respondent died on 21st November, 1973. The 8th respondent died on 20th May, 1974 and the 9th respondent died on 18th August, 1976. Applications were filed by the official liquidator for impleading the legal representatives of these respondents only on 22nd November, 1976. The liquidator also prayed for condonation of the delay and for setting aside the abatement. Those applications were resisted by the legal representatives of the deceased respondents, who are the appellants before us, by contending that the special remedy given under section 543 of the Act does not survive the deat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our modern law of tort', was held, by applying this maxim, to be incapable of surviving the death of the wrongdoer, and, in some cases, even of the party injured. The maxim, with its extensions, was criticised by Winfield and found to be 'pregnant with a good deal more mischief than was ever born of it'. Whatever view one may take of the justice of the principle, it was clear that .it would not be applicable to actions based on contract or where a tortfeasor's estate had benefited from a wrong done. Its application was generally confined to actions for damages for defamation, seduction, inducing a spouse to remain apart from the other and adultery. We see no reason to extend the maxim, as a general principle, even to cases involving breaches of fiduciary duties or where the personal conduct of the deceased director has been fully enquired into, another only question for determination on an appeal, is the extent of the liability incurred by the deceased director. Such liability must necessarily be confined to the assets or estate left by the deceased in the hands of the successors. In so far as an heir or legal representative has an interest in the assets of the deceased and, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. But we think that the power under section 235 of the Act of 1913, which corresponds to section 543 of the Act of 1956 would not extend beyond making a declaration against a deceased director provided he, in his life time, or his heirs, after his death, have had due opportunity of putting forward the case on behalf of the allegedly delinquent director. If either a liquidator or the heirs of a delinquent director, against whom a declaration of liability has been made, can question the determination of liability of the deceased delinquent, who was alive at the time of the judgment against him, it is obvious that the appellate court could give a declaration either reducing or increasing the liability even though it may not be able to enforce it by an order under section 235 of the Act. If the declaration can be questioned by an appeal, as we think that it can, the liability can be not only wiped off or reduced but also increased on an appeal heard after the death of a director held liable." In, the light of this pronouncement it is not possible to accept the contention of the appellants that proceedings initiated against a director under section 543 of the Act would in all ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al before the Supreme Court praying that the quantum of liability of the deceased director should be further enhanced. It was against the background of these facts that the Supreme Court had to, consider the question ; whether the proceedings initiated under section 235. of .the Indian Companies Act, 1913, against Sri Tendolkar could not be continued after his death. It is necessary to notice that the concerned director, by whose legal representatives the question was raised, was alive throughout 4he course of the proceedings until, the, case had ended in a judgment against him by the company Court and an appeal filed by him against the said judgment before a Division Bench of the High Court had also been dismissed. It was only' thereafter, while an application filed by him for the grant of a certificate under art. 133 of the Constitution that he died. While, dealing with this aspect the Supreme Court has extracted the following passage from, the Full Bench judgment, of the Allahabad High Court in Muhammad Husain v. Khushalo [1886] I. L. R. 9 All 131, 134: "I have always understood the law to be that in those cases in which an action would abate upon the death of the plaintif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with the company, In such a case it will be a just and proper exercise of the discretion to drop the proceedings under section 543 of the Act against the deceased directors as was done in the case that went up to the Supreme Court arid to leave the liquidator to pursue his ordinary remedy of instituting a civil suit against the estate of the deceased. In the present case, the three, directors, whose legal representatives are the appellants before us, had died at an early stage of the proceedings before the company court. They had not been examined in the misfeasance proceedings nor had they an opportunity to place before the company court the evidence in support of their contentions, prior to their death. In these circumstances, we do not think that it would be just fair or equitable to Continue the misfeasance proceedings against the appellants who are the legal representatives of those three directors. The orders under appeal are therefore set aside and the petitions filed by the liquidator for impleading the appellants herein as supplemental respondents in Application No. 153 of 1971 will stand dismissed. The appeals are allowed as above. The parties will bear their respecti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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