1965 (8) TMI 51 - HC - Companies Law

Summary

Issues Involved:
1. Extinction of the cause of action with the death of Swaminatha Iyer.
2. Bar of limitation for the claim preferred in 1963.
3. Maintainability of the appeal under various legal provisions.
4. Validity of the release deed executed by Swaminatha Iyer.
5. Application of limitation periods under different laws.

Detailed Analysis:

1. Extinction of the Cause of Action with the Death of Swaminatha Iyer:
The appellants argued that the cause of action did not survive the death of Swaminatha Iyer, invoking the maxim actio personalis moritur cum persona. They contended that the liability was in tort and did not extend to his estate. The court held that the liability was not purely in tort but involved a breach of fiduciary duty, akin to a breach of trust. Directors are considered in a fiduciary position, and their obligations survive their death. The court concluded that the maxim did not apply to breaches of fiduciary duties, and therefore, the cause of action survived against the estate of Swaminatha Iyer.

2. Bar of Limitation for the Claim Preferred in 1963:
The appellants contended that the claim was barred by limitation, arguing that the appropriate articles of the Limitation Act would render the claim time-barred. The court examined the applicability of Section 45-O of the Banking Companies Act, which provides a special period of limitation. It was held that Section 45-O(1), which excludes the period commencing from the date of the presentation of the winding-up petition, applied to the case. The court also considered the retrospective application of Section 45-O(3), concluding that it applied to claims subsisting on the date of the presentation of the winding-up petition, thus saving the claims from being time-barred.

3. Maintainability of the Appeal under Various Legal Provisions:
The court addressed the preliminary objection regarding the maintainability of the appeal under Clause 15 of the Letters Patent and Section 202 of the Indian Companies Act, 1913, and Section 45N of the Banking Companies Act, 1949. It was held that the order in question was a "decision" within the meaning of Section 45N, and thus, the appeal was maintainable. The court emphasized that the right of appeal conferred by Section 45N is substantial and should not be curtailed.

4. Validity of the Release Deed Executed by Swaminatha Iyer:
The court noted that the validity of the release deed executed by Swaminatha Iyer in favor of his sons was a matter to be considered only if the liquidators succeeded in establishing the liability of Swaminatha Iyer's estate. This issue was left open for future consideration.

5. Application of Limitation Periods under Different Laws:
The court discussed the historical context and amendments to the Banking Companies Act, emphasizing the legislative intent to extend the period of limitation for claims by banking companies in liquidation. The court held that Section 45-O applied retrospectively to claims subsisting on the date of the presentation of the winding-up petition. It was also held that Article 120 of the Limitation Act applied to the claims, providing a six-year period, extended by one year under the Banking Companies Act's special provisions, making the claims within time.

Conclusion:
The appeal was dismissed, and the matter was remanded for further inquiry into the merits of the claims, excluding the claim for payment of dividends out of capital, which was not pressed by the liquidators. The court's decision clarified the application of special limitation provisions under the Banking Companies Act and the survival of fiduciary obligations against the estate of a deceased director.