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TMI Blog1964 (11) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... sits were no longer required. On 9th June, 1952, he wrote to defendant No. 3, who was the then chairman of the defendants' company for the refund of his deposit amount. By a circular letter dated 10th June, 1952, the defendants' company informed him that his deposit amount would be returned to him on his intimating to the defendants the amount of deposit due to him by the company. He was also informed that at a general body meeting of the defendants' company held on 9th June, 1952, a sub-committee was formed and appointed the defendants Nos. 8 to 10 to go into the accounts of the company and make a report and he was asked to appear before the said sub-committee. He appeared on 28th June, 1952, but the said deposit was not refunded to him. Subsequently, he was informed that in a general body meeting of the defendants' company held on 7th August, 1952, it was decided that the security amount due to him should be provided for on the contingent fund and that on repeated demands the defendants' company did not return the said N.G.P. notes to him. He, however, admitted that he received Rs. 500 in the shape of N.G.P. notes in full satisfaction of the original admission fee of Rs. 1,000. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence was produced on behalf of the parties. The trial court found issues Nos. 1, 2 and 5 in favour of the plaintiff. On issue No. 3, it found that G.S. Alshi was not authorised to receive N.G.P. notes of the value of Rs. 4,500 on behalf of the plaintiff. On issue No. 4, it found that the plaintiff was entitled to interest also. In the result, the trial court decreed the suit against the appellants for the refund of the value of the notes together with interest till realisation. Against this judgment and decree is this appeal on behalf of defendants Nos. 1 to 10. In this appeal Mr. Jain, the learned counsel for the appellants, apart from other contentions, contended that the case of the appellants was that the N.G.P. notes were endorsed in favour of the plaintiff who subsequently endorsed it in favour of the 13th defendant who, in turn, endorsed them in favour of the Hyderabad Bank Ltd. (12th defendant) and subsequently the notes were transferred in favour of the Hyderabad State Bank ; and unless the plaintiff proves that the endorsement alleged to have been made by him in favour of the 13th defendant was a forged one, the plaintiff cannot succeed in this action. He further dre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... num. The suit against defendants Nos. 11 and 12 was dismissed by the lower court with a further direction that the appellants, defendants Nos. 1 to 10, shaft pay the costs of defendants Nos. 11 and 12. The plaintiff, S.D. Kamlapurkur, was a member of the Hyderabad Bullion Exchange Ltd., which is the first defendant (hereinafter referred to as the company). This is a limited company incorporated under the Hyderabad Companies Act. Defendants Nos. 2 to 7 were the directors of the said company. The allegations in the plaint were shortly as follows : The plaintiff was admitted as a member of the first defendant-company on 10th November, 1945, and he paid the membership fee of H.S. Rs. 1,000. On 8th December, 1945, the plaintiff deposited as security with the first defendant-company three N.G.P. notes of the total value of Rs. 2,500. Again on 6th August, 1946, he deposited thirteen more N.G.P. notes of the total value of Rs. 2,500. Thus, the plaintiff deposited in all sixteen N.G.P. notes as security deposit with the first defendant-company of the total value of Rs. 5,000. From August, 1947, till the end of the year 1950, the plaintiff was in the United States of America for his studies. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies, dated 25th December, 1949, and published in the Government Gazette, the first defendant-company was declared defunct on account of not carrying on any business, and that, ever since, it had remained defunct and has not been restored to the register either by the order of the Registrar or by the High Court. They admitted that the plaintiff appeared before the sub-committee consisting of defendants Nos. 8 to 10; but they stated that, on enquiry, it was found that the N.G.P. notes were delivered to one G.S. Alshi on producing a receipt signed by the plaintiff. Relying on G. S. Alshi's representation that he was authorised by the plaintiff to receive the N.G.P. notes, the secretary of the company, after taking two receipts, one represented to be signed by the plaintiff and another from G. S. Alshi that he was authorised to receive the N.G.P. notes under instructions from the plaintiff, delivered the N.G.P. notes to G.S. Alshi after endorsing them in favour of the plaintiff. The sub-committee submitted its report on 7th August, 1952, wherein in paragraph 15, the claim of the plaintiff regarding the return of the security deposit amount was deferred pending enquiries with the Pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd members from their liability and that persons, who are in possession of the assets of the company, are bound to discharge the liabilities of the company. He denied that he authorised G.S. Alshi to receive the N. G. P. notes. If the first defendant-company or any of its office bearers have either deliberately or negligently delivered the N.G.P. notes to G.S. Alshi on the latter's representation that he was the agent of the plaintiff, without making enquiries, the first defendant-company and all its directors and office bearers are liable to make good the value thereof to the plaintiff. The plaintiff had not received the N.G.P. notes nor had he endorsed them in favour of any person. The 2nd defendant is admittedly holding the assets of the company as trustee for the benefit of all the members including the plaintiff. Therefore, he is liable to pay the same to the plaintiff from the company's assets. The fact that the company became defunct does not affect the plaintiff's claim. On the plea raised by the defendants, the Hyderabad State Bank and the Hyderabad Bank Ltd. are made parties to the suit as defendants Nos. 11 and 12 and G.S. Alshi was made a party as the 13th defendant b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... costs of defendants Nos. 11 and 12. Defendants Nos. 1 to 10 filed the above appeal. The plaintiff is the first respondent in the appeal and respondents Nos. 2 to 4 are defendants Nos. 11 to 13. When this appeal was first heard by this court, this court, by its order dated 13th December, 1961, called for a finding from the lower court on the following issue : "Whether the plaintiff has not received the endorsed promissory notes from the 13th defendant and also not endorsed the same in iavour of that defendant, viz., G.S. Alshi ?" Pursuant to this order the lower court submitted its finding on this issue by its judgment dated 15th February, 1962. It found the issue in favour of the plaintiff. After the receipt of the finding by this High Court, this appeal is again argued before us. The following facts are now not in dispute : The plaintiff was a member of the first defendant-company. He deposited N.G.P. notes of the total value of Rs. 5,000 with the first defendant-company as security deposit. He left for the United States of America in the year, 1947, and returned to Hyderabad towards the end of 1950. But, meanwhile, it appears from the evidence that G.S. Alshi claiming t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raph 12 of the plaint it is alleged that the defendants Nos. 2 to 7 being the directors of the company and being in possession of the assets of the said company are personally liable to refund the same to the plaintiff. The lower court, in its judgment, observed : "It is admitted that provision has been made in the contingent fund for the payment of this deposit by Kapurchand subject to plaintiff establishing his claims." Therefore, the lower court decreed the suit against defendants Nos. 1 to 10. But it is not the plaintiff's case in the plaint that any money was deposited with the directors Nos. 2 to 7 or that there was an agreement between the said directors and the plaintiff that the former would pay the amount to the plaintiff. Under these circumstances, it is difficult to see how a decree can be passed against the directors for the suit amount. But Mr. V.R. Sawarekar, the learned counsel for the plaintiff, first respondent, relied upon the proviso to clause (5) of section 247 of the Indian Companies Act (7 of 1913) which corresponds to clause (5) of section 560 of the Companies Act (1 of 1956). Section 247 of the Indian Companies Act reads as follows : "247. (1) Where t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the company having been struck off the register, the court on the application of the company or member or creditor, may, if satisfied that the company was at the time of the striking off carrying on business or in operation, or otherwise that it is just that the company be restored to the register, order the name of the company to be restored to the register and thereupon the company shall be deemed to have continued in existence as if its name had not been struck off, and the court may by the order give such directions and make such provisions as seem just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off. (7) A letter or notice under this section may be addressed to the company at its registered office, or, if no office has been registered, to the care of some director, manager or other officer of the company, or, if there is no director, manager or other officer of the company whose name and address are known to the Registrar, may be sent to each of the persons who subscribed the memorandum, addressed to him at the address mention ed in the memorandum." That section confers power on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 52, itself. Resolution No. 6 passed at the said meeting is as follows : "Regarding the claim of Mr. Kamalapurkur referred to by the committee under No. 15 it was resolved by the general body that the claim of Mr. Kamalapurkur be postponed till the result of the investigation with the P. D. 0. in this behalf is known. It was further resolved to provide for the amount in the contingent fund." In paragraph 12 of the plaint, it is stated that defendants Nos. 8 to 10 were the members of the sub-committee appointed by the first defendant-company for the purposes of settling and paying the plaintiff and that to the best of the plaintiff's information, defendants Nos. 8 to 10 are in possession of the amounts set apart for payment to the plaintiff. Therefore, a decree was asked for against defendants Nos. 8 to 10 also. As members of the Hyderabad Bullion Exchange Ltd., the liability of defendants Nos. 8 to 10 was limited. The mere fact that they were formed into a subcommittee to enquire into the claims made by the members cannot render them personally liable for the suit claim. Therefore, the decree passed by the lower court against them cannot be sustained and has to be set aside. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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