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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 ..... Company Judge of this Court on Company Application Nos. 17 of 1993 and 27 of 1994 granting applications moved by respondent-Official Liquidator to bring legal representatives of deceased respondent no.1 and of one of his legal heirs has been questioned. The legal representatives are permitted to be brought on record in Company Application Nos. 27 of 1986 under Section 542 and 543 of Companies Act. 2. Rai Bahadur Shreeram Durgaprasad Limited is the company being wound up as per orders dated 16.11.1981 in Company Petition 1 of 1981. The Official Liquidator on behalf of said company filed application No. 27 of 1986 on 04.11.1986 under Sections 542 and 543 of Companies Act 1956, against 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entions are narrated in paragraphs 1 to 5. Hence according to learned counsel there are no reasons recorded any where in the impugned order to support the conclusions recorded in para 6. He has, therefore, prayed for remand of matter back to learned Company Judge so as to have appropriate consideration of the contentions raised in defence before that Court. 6. To show to this Court the contentions raised, the earlier part of the impugned order is relied upon along with replies filed by legal representatives on 30.03.1995 and 31.03.1995. Learned counsel has stated that Misc. Civil Application no. 17 of 1993 was itself filed after more than five years of death of respondent no.1 Durgaprasad. He 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by official liquidator and hence it cannot be said that any disputed question arose before learned Company Judge. As such there is no reason for holding any enquiry and this un-rebutted fact ought to have been accepted and acted upon. The learned counsel states that here due to death at very initial stage and lapse of time legal representatives cannot effectively defend deceased Durgaprasad in proceedings under Section 542 and 543 of Companies Act and said proceedings therefore ought to have been treated as abated insofar as claim against Durgaprasad is concerned. 9. Shri De learned counsel on behalf of Official Liquidator has contended that after pursis was filed and Court was informed about death of Durgaprasad, learned 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the deceased director and it does not authorise passing of orders to compel heirs or legal representatives to do anything. It is noted that such compulsive proceedings may be necessary only against those upon whom the estate of deceased delinquent Director has devolved. In para 33 Hon'ble Apex Court has extracted Section 542 of Companies Act and then observed that where proceedings under Section 543 are covered also by the terms of Section 542, it may be possible to give directions to persons other than those whose conduct is enquired into including directions to heirs and legal representatives for the purpose of enforcing a declaration. Hon'ble Apex Court has however found it not necessary to express any final opinion on this issue. Little 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 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be noted that later view in Parthasarathi Sinha's case ( supra ) was not pressed into service. The said Division Bench has stated that when delinquent Director dies during the course of proceedings under Section 543, as per the observation of Hon'ble Apex Court, there is power in court it continue against legal representatives of deceased in appropriate cases and the Court can make an order declaring liability of deceased. It opined that such a course ordinarily be adopted only in cases where prior to his death deceased Director had already had full opportunity to give evidence and substantiate his defence before the Company Court. It has then noted that in matter before it, the proceedings were at early stage when death occurred. The three Directors had not been 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 ) D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcise discretion in favour of Official Liquidator. 15. Perusal of these judgments therefore do not show that as a matter of course after death of a Director, during proceedings under Section 543 of Companies Act, legal heirs cannot be allowed to be brought on record. The judgment of the Apex Court in Parthasarathi Sinha ( supra ) after noticing earlier view of Hon'ble Apex Court in P.A. Tendolkar's case ( supra ) allowed legal heir/representative to be brought on record. It is, therefore, apparent that each case needs to be looked into on its facts and thereafter an appropriate order is to be passed. 16. In present matter deceased Durgaprasad had engaged Advocate who had appeared on 27.03.1987. Thereafter matter was listed on various occasion and on 05.02.1988 Company Judge has recorded 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitute legal representatives on record. We, therefore, do not find the appreciation in this respect by learned Single Judge perverse. Very perusal of application for bringing legal representatives on record reveals the statement in para 2 by Official Liquidator on affidavit that said legal representatives have inherited the property of deceased respondent 1-A. In Misc. Civil Application 17 of 1993, Official Liquidator has disclosed gathering of details of legal heirs of Durgaprasad through police. It is apparent that appellants are not disputing relationship with deceased. Learned Company Judge has correctly approached the situation presented before him by parties and has recorded necessary reasons to grant the prayers made by Official Liquidator. Details not relevant and requiring inquiry have not been commented 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 54 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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