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Issues Involved:
1. Whether Directors of Companies under the Indian Companies Act are trustees for the purpose of Section 10 of the Limitation Act. 2. If they are not trustees, from what date does limitation run. Detailed Analysis: 1. Whether Directors of Companies under the Indian Companies Act are trustees for the purpose of Section 10 of the Limitation Act: The first issue revolves around whether Directors of Companies can be considered trustees under Section 10 of the Limitation Act. The judgment clarifies that Directors are not trustees in the traditional sense. The court references several English cases to support this view: - In *In re Forest of Dean Coal Mining Company (1878) 10 Ch.D. 450*, Jessel, M.R., stated that Directors are not trustees of a debt due to the company. - In *Flitcroft's case (1882) 21 Ch.D. 519*, Jessel, M.R., referred to Directors as "quasi trustees" for the company, not for individual shareholders. Cotton, L.J., further clarified that Directors misapplying funds are in a position similar to trustees but are not actual trustees. - *In re Faure Electric Accumulator Company (1888) 40 Ch. D. 141*, Kay, J., emphasized that Directors are not trustees in the sense used in instruments of trust like marriage settlements or wills. - *In re Lands Allotment Company (1894) 1 Ch.D. 616*, Kay, L.J., and Lindley, L.J., reiterated that Directors are not trustees except for specific property under their control. In the Indian context, the court refers to *Kathiawar Trading Company, Limited v. Virchand Dipchand (1893) I.L.R. 18 B. 119*, where it was held that Directors are not trustees with property vested in them for specific purposes. The court concurs with this decision, noting that the purposes of a company are too general to qualify as specific purposes under Section 10 of the Limitation Act. Consequently, Directors can plead limitation. 2. If they are not trustees, from what date does limitation run: The second issue concerns the starting point for the limitation period if Directors are not considered trustees. The court examines whether new rights with a new cause of action arise upon the winding up of a company. The court references English and Indian authorities to conclude that the winding up of a company does not create new rights but only provides a summary and efficient remedy. - The court cites the House of Lords decision in *Cavendish Bentinck v. Fenn (1887) 12 A.C. 652*, which held that the corresponding section of the English Act of 1862 creates no new rights but provides a summary mode of enforcing existing rights. - Similarly, *The City Equitable Fire Insurance Company's case (1925) 1 Ch. 407* and *Coventry and Dixon's case (1880) 14 Ch.D. 660* support the view that the section deals only with procedure and does not confer new rights. The court notes conflicting decisions from Indian High Courts on this matter. It prefers the decision of the Punjab High Court in *Bhim Singh v. Liquidator, Union Bank of India I.L.R. (1926) Lah. 167*, which aligns with the view that the right of a liquidator under Section 235 does not create new rights but provides a procedure for enforcing existing rights. The court concludes that if the cause of action arises from the time of the misfeasance, the application is barred whether Article 36 or 120 applies. It is unnecessary to determine which article applies in this case. Conclusion: The appeal is dismissed with costs. The court agrees with the discretion exercised by the learned Judge, who has given leave to the Official Liquidator to appeal and authorized the expenses of the appeals from the assets of the Company. There will be one set of costs to the respondents.
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