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TMI Blog2011 (10) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst deceased Durgaprasad son of Shreeram Saraf and 6 other persons. On 21.11.1986 Company Judge issued notices in the matter. The Official Liquidator took out misfeasance summons dated 19.02.1987. Respondent no.1 therein namely said Durgaprasad expired on 25.07.1988. His Advocate filed Counsel Note dated 19.08.1988 and communicated that death. 3. Because of that pursis application was moved by Official Liquidator seeking direction to furnish names of legal representatives of deceased. It was stated that two of his heirs were already on record. On 27.01.1989 three names were supplied. Application No. 21 of 1989 was then filed on 17.02.1989 and it was allowed on 24.02.1989. It appears that accordingly three names i.e. Vithaldas, Ramkrishna and Murlidhar all sons of deceased Durgaprasad were substituted on record as respondents 1-A, 1-B, 1-C. In the process names of two ladies in the family were not disclosed. Another application was then filed vide Company Application 17 of 1993 pointing out that these ladies were not impleaded. But on 03.09.1993 Company Judge directed issuance of notices to proposed legal representatives of deceased respondent no.1 Durgaprasad. It appears that or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has further contended that orders dated 24.02.1989 permitting legal representatives of Durgaprasad to be brought on record or then orders dated 14.03.1990 permitting names of three sons of Durgaprasad to be brought on record are without any notice or opportunity to legal representatives and hence not binding. Learned counsel states that for the first time an appropriate application was moved on 17.09.1993 as Misc. Civil Application No. 17 of 1993 and opportunity to show cause was extended to these appellants. Accordingly a valid cause raising various defences was raised and substantiated but have not been appreciated. 7. It is pointed out that when Durgaprasad died the proceedings before learned Company Judge were at initial stage. At that stage Durgaprasad had no opportunity to effectively defend himself and in view of his death at that stage, his legal representatives cannot be brought on record. Judgment of the Apex Court Official Liquidator, Supreme Bank Ltd. v. P.A. Tendolkar A.I.R. 1973 SC 1104 is pressed into service to urge that only when deceased Director had opportunity and defended himself, the Hon'ble Apex Court has upheld the continuation of action against his legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company Judge on 24.02.1989 permitted Official Liquidator to bring his legal representatives on record. This order was not challenged and names supplied as legal representatives of Durgaprasad were added on record as respondents 1-A, 1-B, 1-C on 14.03.1990. Even this action was never questioned. He contends that after the names of remaining legal representatives were learnt an application was moved on 17.09.1993 to bring total 7 persons on record as legal representatives of deceased Durgaprasad. As two legal representatives of Durgaprasad were on record since beginning and three were permitted to be added and were brought on record on 14.03.1990, the application has been rightly allowed by learned Company Judge. 10. He had invited attention to provision of Section 10 of Limitation Act, 1963 to urge that in any such dispute for accounts, limitation is not applicable. He has further contended that question whether the legal representatives of deceased Durgaprasad have received any property or not is a disputed question which can be resolved only after enquiry. He had attempted to distinguish various judgments on which Shri Thakur, learned counsel for appellant has placed reliance b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttle later in very same paragraphs with reference to Section 543 proceedings the Hon'ble Apex Court has stated that power there under would not extend beyond making a declaration against a deceased Director provided he, in his life time or his heirs after his death, were given due opportunity of putting forward the case on behalf of alleged delinquent Director. 12. In Parthasarathi Sinha's case (supra) the proceedings were under Section 543 of the Companies Act. The order of winding up was passed by High Court of Kolkata on 08.01.1958 and summons under Section 543(1) against directors including one Dr. S. N. Sinha were taken out on 02.01.1963. Said Dr. S. N. Sinha died on 16.11.1969 leaving behind him his son Parthasarathy Sinha who was respondent before Hon'ble Apex Court. The Company Judge on 09.11.1970 allowed substitution of legal representatives and appeal preferred by legal representatives against that order was allowed by Division Bench of High Court on 01.08.1975. The death of Dr. S. N. Sinha was only recorded and rest of the order of Company Judge was set aside. It is in this background that the Hon'ble Apex Court referred to its earlier view in P.A. Tendolkar's case (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examined in misfeasance proceedings and they had no opportunity to place before Company Court evidence in support of their contentions prior to their death. Because of these facts Kerala High Court found it just fair and equitable to discontinue misfeasance proceedings against legal representatives. 14. In Official Liquidator, High Court Bombay & Liquidator of Jai Hind Estate & Housing Co. Ltd.'s case (supra ) Division Bench of this Court has looked into misfeasance proceedings under Section 543(1) of Companies Act, it noted that misfeasance summons itself was bad as it was taken out against respondents nos. 1, 2, 4, 5, 6, 12, 13 and 16 who had already died prior to 1980. The Official Liquidator had taken out Company Application No. 161 of 1981 under Section 543(1) and Company Application no. 75 of 1988 was then moved almost 8 years later to bring on record the heirs of deceased respondent no.1 and 16 in that Company Application. That application was dismissed by learned Single Judge and then matter went in appeal before the Division Bench. In this background, Division Bench in para 13 has, after making reference to judgment of the Apex Court in P. A. Tendolkar's case (supra) fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded that no reply was filed inspite of above five opportunities, hence directed matter to proceed further and official liquidator was directed to file list of witnesses within two weeks. It is, therefore, obvious that deceased Durgaprasad had not raised any defence before Company Judge. It is in this situation that he expired on 25.07.1988. The subsequent events are already mentioned by us above. On 24.02.1989 Company Judge permitted Official Liquidator to bring legal heirs on record. Order is not passed on any application but because of counsel note/pursis dated 19.08.1988. On 14.03.1990, Official Liquidator, accordingly substituted three names as legal representatives of deceased Durgaprasad. All these three persons are sons of deceased Durgaprasad. Vithaldas son of Durgaprasad thus came on record on 14.03.1990 and he expired on 26.01.1993. In this situation when 5 legal representatives of deceased Durgaprasad were already on record, Misc. Civil Application No. 17 of 1993 was moved on 17.09.1993 seeking leave to bring on record as legal representatives of deceased Durgaprasad-total 7 persons. Five out of them were already on record. Objections being pressed into service before u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmented to avoid any prejudice to the appellants. We find the order perfect and valid. 18. Whether as legal representatives the persons substituted are in position to effectively defend their legal rights will become apparent during trial. Upon enquiry Shri De learned counsel has disclosed that other directors have taken appropriate defence in reply to charge under Section 542 and 543 of Companies Act. Hence at this stage, without anything more on record, we are not in a position to apprehend any prejudice to the interest of the legal representatives of deceased Durgaprasad or deceased Vithaldas in the matter. 19. In view of this, we leave all contentions and objections raised by Shri Thakur learned counsel, on behalf of these legal representatives and appellants before us open for consideration at appropriate stage before learned Company Judge. We clarify that mere grant of permission vide impugned order to bring them on record does not mean and cannot be construed to mean that any of their defences are in any way vitiated or prejudiced. Company Court is free to consider all these defences after the relevant material is brought on record in inquiry as per law. With these observ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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