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TMI Blog1986 (8) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... liquidator filed MCA No. 12 of 1985 dated June 13, 1985, under sections 542 and 543(1) of the Act for an order to direct the respondents in that application to contribute jointly and severally all such sums as they may be found liable to contribute to the assets of the company. There are five respondents in this application. Now, the official liquidator wants to implead the legal representatives of respondents Nos. 3 and 4. He has filed two applications. Application No. 269 of 1985 is to condone the delay in amending the cause title of the misfeasance application by bringing in the legal representatives of the deceased respondents Nos. 3 and 4. Application No. 270 of 1985 is for adding the names of the legal representatives of respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al representatives. Further, since the misfeasance proceeding itself is a summary and discretionary proceeding, taking into account the circumstances involved in this case, even if it is found that the legal representatives can be proceeded against as a continuation of the misfeasance proceeding under section 543 of the Companies Act in certain circumstances, the peculiar facts revealed in this case should tell the court that the court should exercise its discretionary power to drop the proceedings against the legal representatives of the deceased directors. The liability of the delinquent director in a misfeasance proceeding is fundamentally grounded on the principle that a person who has caused loss to the company by an act which would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunities to be heard". The section empowers the court, if it thinks just, to order the delinquent director to contribute such sum to the assets of the company by way of compensation in respect of the misapplication, retainer, misfeasance or breach of trust, as the case may be. Certainly, the core of the section is not to punish a delinquent director who has been found guilty of misfeasance. The section only intends a speedy remedy of payment of compensation to the company in respect of the loss occasioned to the company by the misfeasance of the delinquent director. I feel that the language of the section does not empower the liquidator to initiate proceedings against the heirs of the deceased delinquent director. Having now dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of his legal representatives. The court further held that the legal representatives of course would not be liable for any sum beyond the value of the estate of the deceased in their hands. In this case, it is not a continuation of the proceedings on the death of a delinquent director. It is in the nature of fresh initiation of action for misfeasance against the legal representatives of the deceased director. It is not a continuation of the proceedings which has been taken against a delinquent director on the death of that director, against the heirs of the delinquent director. This is a significant and vital distinction. I say so since it is clear that when the misfeasance proceedings commenced, respondents Nos. 3 and 4 were not alive. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the delinquent director. In such circumstances to allow the continuation of the proceedings against the legal representatives would cause great prejudice to the legal representatives inasmuch as the legal representatives may be wholly and roundly nescient of the particulars of the transactions the deceased director had with the company or the disputed dealings which resulted in the alleged loss to the company. In such circumstances, I feel that this court should exercise its power of discretion to disallow the applications of the liquidator to implead the legal representatives, and that will be a proper and judicial exercise of discretionary power under sections 542 and 543 of the Act. The circumstances and facts I have stated tell me tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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