TMI Blog1945 (11) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... dators. Section 235(1), Companies Act, 1913, (as now amended) is the section under which the Official Liquidators moved. It runs: 235. (1) 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 or breach of trust in relation to the company, the Court may, on the application of the liquidator, or of any creditor or contributory made within three years from the date of the first appointment of a liquidator in the winding up or of the misapplication, retainer, misfeasance or breach of trust, as the case may he, whichever is longer, examine into the conduct of the promoter, director, manager, liquidator or officer, and compel him to repay or restore the money or property or any part thereof respectively with interest at such rate as the Court thinks just, or to contribute such sum to the assets of the company by way of compensation in respect of the-misapplication, retainer, misfeasan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... my view, it can be reduced, if not to simple, at least to short terms. The case for the respondents is twofold. They say first that the time limit of three years in the amended Section 235(1) is not an enlarging amendment, but is, on its true construction as it now stands, an amendment restricting the Official Liquidator's power by imposing on him a new condition, without depriving the objects of his suspicion of the benefit of the ordinary law of limitation. Alternatively, the respondents say that even if, as a matter of construction, that is not the meaning of the amendment, then in that case the amendment, which came into force on 15th January 1937, cannot on general principles have a retrospective operation so as to deprive them of any concluded period of limitation which at that date might have been available to them as a defence to the claim under the unamended Act. 4. Both these contentions, when examined, resolve themselves to my mind into questions involving nothing but the true construction of Section 235 as now amended, and I think that, if this is recognized, it may obviate the risk of arguing in a circle. As regards the former of these two contentions, I thin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t so far as to say at p. 296 of his reported judgment that, had there not been any express period of limitation contained in the old section, it would have been at least doubtful whether any period of limitation at all would have applied and whether, in that case, the Court, in exercising its jurisdiction under the section, would not be thrown back merely on its discretion. That may be a material observation in view of the circumstance that, as we have seen, the express period of limitation was deliberately removed from the section in 1937. 6. In the view I take the first part of the argument addressed to us is sufficiently answered by the fact that the Legislature, when it made the amendment of 1936 which took effect in 1937, went out of its way to remove Sub-section (3) from the old section altogether. If the Legislature in doing that did not intend in the case of those liquidations to which the amendment was to apply, to remove from the liquidator's path all obstacles of limitation other than those which were expressly contained in the amended section itself, then I cannot understand what object the Legislature could have had in doing away with the old Sub-section (3). No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the construction of the Indian section as it now stands and that neither authorities on the unamended Section 235 of the Indian Act, nor on Section 276 of the English Act, are of any real assistance to us. For these reasons, in my view, on the true construction of Section 235(1), Indian Companies Act, 1913, asit now stands, the only period of limitation to be applied, in cases governed by the amended section, is that contained in Sub-section (1) itself. That of course, does not mean that the section has ceased to be a discretionary section. The jurisdiction of the Court remains discretionary. And it may be that in a proper case, the Court might still view lapse of time as a sufficient reason for refusing to exercise its discretion in the liquidator's favour. But that is not the question now before us, and nothing I have said above is intended to prejudice any discretion the Court might be free to exercise on any ground in any proceedings under section 235. 8. The second of the two questions is more difficult. Assuming that the amended Section 235(1), Companies Act, 1913, removes from the liquidator's path all obstacles of positive limitation (as opposed to the Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, because other particular amendments of other particular statutes have been held not to have had a retrospective operation, the same effect ought to follow in the case of the amendment of Section 235, Companies Act, in 1936. I accept, as I must, in their entirety the principles laid down in innumerable cases, in this and other Courts that the effect of an amendment of a statute is not to take away accrued rights, immunities and privileges, unless an intention to do so is clearly found in the amending Act. But, beyond establishing that, I doubt if these cases have been helpful to us. They may have rather served to draw our attention away from the fact that the solution of the question before us is to be found within the amended Section 235 itself, with the assistance perhaps of a consideration of the circumstances in which the amendment was enacted. 10. The 1936 amendment of Section 235, Companies Act, is not in one sense retrospective at all as regards any liquidation (such as that of the Benares Bank Ltd., in this case) which came into being after its introduction. The amended Companies Act after 15th July 1937, constituted, so far as winding up was concerned, the Code to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the very deliberate removal of the period of limitation formerly contained in Sub-section (3) 11. But this, of course, does not prevent anyone from saying that, even if this is now the law, it is insufficient to deprive a delinquent director or officer of any protection already secured to him. There are, I think, three general propositions which are supported by too great a weight of authority now to be contradicted. The first is that the whole of the process prescribed by Section 235 Companies Act, to be followed by a liquidator in respect of the investigation of misfeasance in a winding up is itself a matter of procedure, secondly, that a law of limitation fixing a period within which a particular remedy is to be enforced, if at all, by a suit is itself a matter of procedure; and, thirdly, that the general principle that statutes are not to be held to act retrospectively unless an express intention to that effect is manifested applies only where the matter in question is one affecting an existing right in the sense of a substantive right, and not where it affects a mere matter of procedure only. High authority for the first of these propositions is to be found in In r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of action which the company itself might, but for the liquidation, have en-forced, it is a confusion of thought to say that the special statutory procedure prescribed for the liquidator, must necessarily be limited by all those rules of law which would be applicable if the company itself had brought the suit. It is the preservation of the Court's discretion which takes the place of the rules of law. Nor can I see anything in any way shocking in the general principle that, in relation to misfeasance proceedings in a winding up, a special procedure should apply in favour of the liquidator and against a malfeasant director. There seems to me, therefore, no doubt that Section 285 itself is a procedural section. Nor can it be doubted that a law of limitation is itself a law regulating procedure. It is adjective and not subjective law. The late Sir Shah Sulaiman and Mr. Justice Mukerji were in the fullest agreement on this, since the latter in the case in Jaunpur Sugar Factory Ltd. v. Behari Co. ('33) 55 All. 947 (F.N.) at p. 951 said: The rule of limitation is a rule of procedure, a branch of the adjective law, and does not either create or extinguish rights, except in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, they were governed by the latter procedure and by nothing else. They could lawfully have applied none other. And the sole question which we now have to decide is whether the law contained in the amended Section 235, Companies Act, 1913, enables them to obtain the reopening of a question relating to misfeasance which may have become barred under the old law. In construing the amended Section 235 for this purpose we are, on the authority of Colonial Sugar Refining Co. Ltd. v. Irving (1905) 1905 A.C. 369, not bound to presume that the amendment cannot have a retrospective effect unless an express, or some virtually express, declaration or indication of intention is to be found in it. We are free to construe the Act as we find it in the light, both of the language and of the circumstances in which the amendment wa8 made : Ex parte Raison (1891) 60 L.J.Q.B. 206. It is as clear as anything can be that the 1936 amendment of Section 235, Companies Act, 1913, was intended to affect the position of delinquent directors, and to affect it adversely. No other conclusion can be drawn from the removal from the section of Sub-section (3). But a great deal more than that is to be inferred from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erately protected by the discretion of the Court. And conversely, the public interest may be manifestly benefited by the amendment. 16. I need not deal at length with the argument based on Section 6, General Clauses Act, except to say that with respect I entirely agree with the late Sir Shah Muhammad Sulaiman that it does not apply to cases in which there has been a repeal followed by fresh legislation : Danmal Parshottam Das v. Babu Ram Chhotey Lal ('36) 23 A.I.R. 1936 All. 3 at p. 504. In this case there has not, in form at least, been even a repeal. For these reasons, in my judgment, the issue before us now ought to be answered by saying that, notwithstanding the amendment of Section 235, Companies Act, 1913, effected in 1936, the Official Liquidators of the Benares Bank are entitled to have the conduct of any promoter, director, manager or officer of the Bank examined under that section and to claim compensation for the wrongful act of any such person, discovered and proved as a result of such inquiry, notwithstanding that a cause of action on the act would in a suit by the company itself have been barred by the law of limitation in force prior to the coming into operati ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
