1935 (5) TMI 23 - HC - Companies Law

Summary

Issues Involved:
1. Conspiracy and embezzlement claim.
2. Authority and fraud by Mela Ram.
3. Liability of Raghu Mal's estate.
4. Limitation and bar of suit.
5. Quantum of damages.

Issue-wise Detailed Analysis:

1. Conspiracy and Embezzlement Claim:
The plaintiff alleged a conspiracy between Mela Ram and Beltie Shah Gilani, resulting in the embezzlement of Rs. 39,750. The judgment states, "the evidence falls far short of establishing any such conspiracy." It was concluded that "Mela Ram was not in Beltie Shah's confidence when the latter misappropriated the various sums making up Rs. 39,750." The embezzlement was detailed, and it was found that Mela Ram's involvement was not in the embezzlement but in preventing its disclosure.

2. Authority and Fraud by Mela Ram:
The judgment found that Mela Ram acted within his authority when issuing receipts to Beltie Shah. It was noted, "if Mela Ram had the authority to grant the receipts and if his conduct amounted to fraud, his principals are liable to the company for the fraud of their agent." The court emphasized that "the evidence as a whole excludes all hypothesis of good faith on the part of Mela Ram in granting the receipts to Beltie Shah Gilani."

3. Liability of Raghu Mal's Estate:
The defendants argued that Raghu Mal's estate was not liable due to the maxim "actio personalis moritur cum persona." The court noted that while English law supports this maxim, Indian law, particularly the Legal Representatives Act and the Indian Succession Act, provides exceptions. The judgment stated, "I would hold that the executors of Raghu Mal are liable for damages just as he would have been liable if he had been alive." It was concluded that the cause of action survived against Raghu Mal's estate.

4. Limitation and Bar of Suit:
The defendants contended that the suit was barred by limitation. The court held, "This is clearly a suit for a relief on the ground of fraud and Article 95 applies to it." The fraud was discovered in 1928, and the suit filed in 1929 was within the limitation period. It was also argued that the suit was barred due to previous proceedings under the Companies Act. The court found that those proceedings did not bar the current suit, stating, "The fact in this case is that the liquidators never sought and never obtained any decree for damages for tort either against Beltie Shah or against the auditors."

5. Quantum of Damages:
The plaintiffs claimed the entire sum embezzled by Beltie Shah. The court differentiated between the embezzlement and Mela Ram's role in concealing it. It was stated, "The plaintiffs are, in my opinion, entitled to recover from the employers of Mela Ram such loss as can be said to have arisen from the wrongful act of the latter." The court remitted the issue of the exact amount recoverable to the lower court, noting, "We think that we should have the benefit of the finding of the Court below on this question of fact."

Conclusion:
The court concluded that Mela Ram was liable for the fraud, and Raghu Mal's estate was also liable. The suit was not barred by limitation or previous proceedings. The exact amount of damages to be awarded was to be determined by the lower court based on further findings.