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Issues Involved:
1. Period of limitation applicable to misfeasance proceedings under Section 235, Companies Act, 1913. 2. Whether the 1936 amendment to Section 235, Companies Act, 1913, allows claims for wrongful acts that were time-barred before the amendment. Detailed Analysis: 1. Period of Limitation Applicable to Misfeasance Proceedings: The case concerns a misfeasance application under Section 235 of the Companies Act, 1913, related to Benares Bank Ltd., in liquidation. The Official Liquidators initiated proceedings against various directors and officers for transactions conducted years before liquidation. The winding-up petition was filed on 3rd August 1939, a provisional liquidator was appointed on 14th February 1940, and the compulsory winding-up order was made on 1st March 1940. The misfeasance application was filed on 12th February 1943, within three years from the appointment of the Provisional Liquidator and the Official Liquidators, as required by the amended Section 235(1). The original Section 235 did not specify a time limit for launching misfeasance proceedings but included Sub-section (3), which applied the Indian Limitation Act, 1908, to such applications as if they were suits. The 1936 amendment introduced a three-year time limit and removed Sub-section (3). The issue was whether this amendment allowed the Official Liquidators to claim compensation for wrongful acts that had become time-barred before the amendment. 2. Interpretation of the 1936 Amendment: The respondents argued that the three-year limit in the amended Section 235(1) was not an "enlarging" amendment but rather imposed a new condition without removing the benefit of the ordinary law of limitation. They also contended that the amendment could not have retrospective effect to deprive them of any concluded period of limitation available before the amendment. The court examined the true construction of Section 235 as amended. It was argued that the amendment introduced a new factor into the liquidator's procedure, requiring applications to be made within three years from the first appointment of a liquidator or the misfeasance, whichever was longer. The court noted that under the old Act, the liquidator merely took up the position as it stood and was governed by a period of limitation starting from the date of misfeasance. However, the removal of Sub-section (3) indicated the Legislature's intent to eliminate all obstacles of limitation other than those expressly contained in the amended section. The court concluded that the only period of limitation to be applied in cases governed by the amended section is that contained in Sub-section (1). The jurisdiction of the court remains discretionary, and the lapse of time could still be a sufficient reason for refusing to exercise discretion in the liquidator's favor. 3. Retrospective Application of the 1936 Amendment: The court addressed whether the amended Section 235(1) allowed reopening claims that had become time-barred under the old law. The court emphasized that the amendment was not retrospective for liquidations that commenced after its introduction. The question was whether the amendment permitted the liquidator to ask the court to investigate acts of misfeasance that were time-barred before the amendment. The court held that the amended section, by removing Sub-section (3), entrusted everything to the court's discretion, aiming for what was "just" rather than legally recoverable at any particular time. The court noted that the procedure prescribed by Section 235 is a matter of "procedure," and laws of limitation are procedural. The court cited precedents establishing that procedural laws can have retrospective application unless an express intention to the contrary is found. The court concluded that the 1936 amendment affected the position of delinquent directors adversely and intended to apply the new procedure to all misfeasance discovered or discoverable after the amendment. The discretion of the court remains a safeguard against unjust applications of the law. Conclusion: The court determined that, despite the 1936 amendment to Section 235, Companies Act, 1913, the Official Liquidators of Benares Bank Ltd. are entitled to examine the conduct of any promoter, director, manager, or officer and claim compensation for wrongful acts, even if such acts would have been time-barred under the old law, provided the express provisions of the amended Section 235(1) are observed.
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