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TMI Blog1966 (9) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... h they were partners or to a private company of which they were directors or members and this was contrary to the provisions of section 86D of the Indian Companies Act, 1918. Therefore, i t was claimed by the plaintiff-company that the defendants who were the ex-directors and who caused the loss to the company by acting contrary to the provisions, of section 86D of the Indian Companies Act, 1963were jointly and sev erally liable to the plaintiff-company to make good the loss suffered by it. Pending the suit, the 4th defendant had died on 24th April, 1963. The plaintiff-company filed an application in the lower court on 17th February, 1964, to bring on record the legal representatives of the deceased 4th defendant with the allegation that the 4th defendant died within 90 days from the date of the filing of the application. The proposed legal representatives of the 4th defendant filed a counter dated 24th March, 1964, pointing out that the 4th defendant died about 11 months before that date. The exact date is not given. There is controversy as to when this counter was filed in court. Mr. Kuppuswamy, the learned counsel for the respondent in this revision petition, says that this coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the legal representatives of a deceased defendant or respondent and that the party in default being the Government is not a sufficient cause for excusing the delay. It was further pointed out in the decision that it is for the appellant or the plaintiff in the first instance to allege why he did not know of the death of the respondent earlier or why he could not know about it despite his efforts, if he had made any efforts on having some cause to apprehend that the respondent might have died and the court will have to decide how far those reasons have been established and suffice to hold that the appellant or plaintiff had sufficient cause for not filing an application to bring on record the legal representatives of the deceased defendant or respondent earlier on the record. It may be noticed that, in that particular case, there was no application to set aside the abatement or to excuse the delay in seeking to set aside the abatement and there was no specific prayer for setting aside the abatement. In that case the Punjab High Court refused to excuse the delay in bringing on record the legal representatives of the deceased appellant on an application filed by the Union of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to a firm of which such director is a partner or to a private company of which such director is a member or director. (2)In the event of any contravention of sub-section (1) any director of the company who is a party to such contravention shall be punishable with fine which may extend to five hundred rupees, and if default is made in repayment of the loan or in discharging the guarantee shall be liable jointly and severally for the amount unpaid. (3)This section shall not apply to a private company (except a private company which is the subsidiary company of a public company) or to a banking company. " The allegation in the present case is that, when the defendants were the directors of the plaintiff-company, they made loans to the firm of which the defendants were partners or to a private company of which the defendants were members or directors within the meaning of clause (1) of section 86D and the liability is said to arise because of clause (2) of the said section, which provides that, if default is made in repayment of the loan or in discharging the guarantee, those directors shall be liable jointly and severally for the amount unpaid. Prima facie , the suit, which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... English Acts, held that the proceedings taken under section 235 of the Indian Companies Act, 1913, against a director of a banking company, ordered to be wound up, cannot be continued after his death, and the liability, if any of such a director cannot be enforced against his legal representative in those proceedings. It is pointed out that it is the language of section 235 of the Act that decides the issue; that the right conferred under section 235 to file an application is a limited right and that it ends when the director dies and does not survive after his death. The learned judges followed the decision in Sankaran Nambiar v. Kottayam Bank [1946] 16 Comp. Cas. 36. On the basis of section 235 and on the said decision, it is argued by Mr. Venugopalareddy that, in the present case also, the right to sue the 4th defendant does not survive after his death. He also pointed out that an y claim based upon section 86D of the Act will also come under section 235 of the Act. Therefore, it is argued that the decision of the Madras High Court given under section 235 equally covers this suit and it has to be held that the suit has abated as against the 4th defendant. I am unable to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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