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TMI Blog1930 (1) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... peals. 2. In appeal the two points that arise are: (1) . Whether Directors of Companies under the Indian Companies Act are trustees for the purpose of Section 10 of the Limitation Act; and (2) if they are not trustees, from what date does limitation run. 3. Taking up the first point, it is now clear that, even in England in spite of occasional use of loose expressions to the contrary, it is now settled that Directors of - Companies are not trustees. In In re Forest of Dean Coal Mining Company (1878) 10 Ch.D. 450, Jessel, M.R., said at page 451: Directors have sometimes been called trustees, or commercial trustees, and sometimes they have been called managing partners. and at page 453: They are no doubt trustees of assets whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g trustees, etc. in In re City Equitable Fire Insurance Company (1925) 1 Ch. 407, Romer, J., observes: To say that directors are trustees is a wholly misleading statement. It is unnecessary to refer to English decisions at greater length, for all that we are concerned with is whether they are trustees for the purpose of Section 10 of the Limitation Act. 8. In Kathiawar Trading Company, Limited v. Virchand Dipchand (1893) I.L.R. 18 B. 119 it was held by Sargent, C.J., and Bayley, J., that Directors of Companies are not trustees in whom the property of the Companies has become vested in trust for any specific purpose. 1 entirely agree with this decision. It is contended that the purposes of the Company are specific purposes within the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turns upon whether entirely new rights with a new cause of action arise on the winding up of a Company. That, for certain purposes, new rights may be conferred by the winding up of a Company, there can be no doubt. One such well-known case is the liability to pay calls as a contributory. Both English and Indian authorities are very clear on this matter; but it does not follow from this that the right of a liquidator under Section 235 is a case of a new right accruing by reason of the winding up. The corresponding section of the English Act of 1862 is Section 165 and it has been held by the House of Lords in Cavendish Bentinck v. Fenn (1887) 12 A.C. 652, that that section creates no new rights but only provides a summary and efficient remed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is admitted that the application is barred whether Article 36 or 120 applies. It is unnecessary to consider that question' in this case. 13. Mr. V.K. Thiruvenkatachariar appearing for one of the Directors argued that it is not all misfeasance for which Directors may be liable under Section 235. This might be so; but it is unnecessary to consider this point in this appeal. 14. The appeal fails and is dismissed with costs. 15. The learned Judge has given leave to the Official Liquidator to appeal and has authorized him to incur the expenses of the appeals from the assets of. the Company and we need not pass any further order as we agree with the discretion exercised by him. There will be one set of costs to the respondents. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been held liable to make good moneys which they have misapplied upon the same footing as if they were trustees.... 19. Lord Justice Kay, in In re Faure Electric Accumulator Company (1888) 40 Ch.D. 141, has pointed out an obvious distinction between directors and express trustees, namely, that the property of the company is not legally vested in the directors. That the property of the company does not become vested in the directors by reason of such property being under their control is also made clear by the authorities referred to in Kathiawar Trading Co., Ltd. v. Virchand Dipchand I.L.R. (1893) B. 119. The dictum of Schwabe. C.J., in Kishtappa Chetty v. Lakshmi Ammal AIR1923Mad578 , that the word vested in Section 10 of the Limitat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... breach of trust by the Directors, the remedy would be, barred whichever article governed it. But it has been contended by the learned Counsel for the liquidator that the winding-up order is the starting point of the liquidator's right of applying to the Court under Section 235 (1) of the Indian Companies Act (VII of 1913). Reliance for this proposition is placed on In the matter of the Union Bank, Allahabad, Limited I.L.R. (1925) A. 669, where this view prevailed, and the reasons for it are given by Mukherji, J., at p. 693 of the judgment as follows: The claim is by the liquidator who had no existence at the dates on which the amounts claimed are alleged to have been mis-spent. If the liquidator is given permission by the law to clai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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