OFFICIAL LIQUIDATOR, SUPREME BANK LTD. versus P. A: TENDOLKAR (DEAD) BY LRS. AND ORS.

Citation: [1973] 3 S.C.R. 364 · Decided: 19-01-1973 · Supreme Court of India · Bench: A.N. GROVER · Disposal: Disposed off

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

orFICIAL LIQUIDATOR, SUPREME BANK LTD. 
v. 
P.A. TENDOLKAR (DEAD) BY L. RS. AND ORS. 
Januar:r 19, 1973 
[A. N. GROVER, M. H. BEG AND A, K. MUKllERJEA, JJ.J 
Comp<nie.< Act (1 of 1913), s. 235 and Companies Act (I of 1956), 
s. 543-Pou•er of Court to 1nake conzpulsive orders agalnst heirs of de-
ccaJetl director in 111isfeaw111ce 
p1·ocf.·edings-Actio 
pei.rsonGlis 111oritt11 
cunz persona-Scope of-Rig/it of appeal h,v end again~t heir. 
Banking Companies Act (IO of 1949), ss. 45(G) and 45(0)-0fficial 
liquidc .. tor, •;vhether should apply for public exaniiluztion of directors under. 
s. 45(G) to s. 45 0(2) as amended by Act 33 of 1959-Scope of t/ze 
fresh petiocl of li111itatiQn-S. 45 (0) (2) pre1:ai/s over s. 235 Co111panies 
·Act, 1913, ln relation ~o Banking Co111pa111es. 
Pi1·inciples deter111ini11g liabilit,v of nu;,iaging director and Board of 
J)irectors in 111isfeasance proceedlngs, 
On -an app1icati-on tor winding· up 'of a. bank a provisional Jiquidator 
was appointed on 15th March 1956. The appellant, who was 
there· 
'after appointed as Jiquidator filed an application o:n 27th August. -1960,. 
for misfcasanc.~ proceedings under s. 45H of the 
Banking 
Companies 
Act, 
1949, 
and 
s. 235 
of 
the 
Indian. 
Companies 
Act, 1913. 
Under s. 45 0 (2) in respect of all other claims by the Banking Com-
pany against" its directors, the period of limitation shall be 12 years 
from thz date of the accrual of such claims'.. 
By Am·~nding Act 33 
of 1959 the words 'or five yea'rs from the date of the first appointment 
of the liquidator whichever is longer', \Vere '3.dded at the end 
of the 
sub-section. 
The official Jiquidator relied upon several reports made by 
the Rescrvq Bank and by others under orders of the High Court. 
The 
procecdi,ngs \\Crc taken against the directors, managing 
director 
and 
officers of the company. 
Two of the directors died while the proceed-
ings '\-;Cr~ pe;nt.!ing. 1"hc Com~any judge dismissed the proceedings against 
the employees as time-barred, and held that the heirs of the deceased 
l.Jirectors could not be proceeded against: but, in respect of the manag-
ing dircc:tor and those Directors \liho were alive \vhen he 
gave 
his 
<lecision it was held that the procecdCngs v.·.erc 
\Vithin 
tin1e, 
bCir.g 
covered by the _special provisions of s. 450 of the Banking Compani-cs 
Act. The directors contended that the whole responsibility 
for-
the 
fraud and misappropriation 'lay with the managing director." 
who- had 
\vide powers under the Articles of ASsociation, and in 
whose 
favour 
the directors had executed ·a power of attorney. The rna;naging director 
however contended that he acted 'according to 
the 
policy 
and 
in 
accordance with directions of the directors in whose hands he \\'as a 
mere tool'. 
The Company Judge determined the loss to 
the Company 
and gave directions as to the liabilities of the managing director 
n:rrd 
other directors. In appeal, the Division Bench reduced the total liabili· 
tv of directors and ttte individual remaining' liability of too 
managing 
director though it placed a larger share of the .burden of contribution on 
.the mana~ing director. The appellant appealed agaimt the 
order 
in 
relation of the liability of the manoging direc!'or and two other directors. 
A 
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! 
SUPREME DANK LTD. V. P. A: TENDOLKAR (Beg,/.) 
365 
One of these t\vo directors died pendi~g the grant of his O\\'n appli· 
cation for a certific-atc under Art. 136 _ of the Constitutio,n. 
His heirs 
got . themselves impleadcd and contended that the proceedings 
against 
them could not continue and also .. on the mcfits regarding the 
liability 
of that director. 
· 
HELD: (I) The contention that s. 235, · Compa;nies 
Act, 
1913, 
_could apply to these proceedings is erroneous because, the proceedings 
are governed expressly by the spcci-al la\v on the subject contained 
1n 
s. 45-0 of the Banking Companies Act, 
[376F-G] 
• (2) The plea that 12 years from the 'accrual of claims' had expired 
before s. 45-0(2) was amended by the Amending Act of 
1959, 
and 
that, therefore; the enlarged period of limitation of 5 years from 
the 
date of the first appointment of the liquidator was not available to 
the · 
Official Liquidator in the present case is also unacceptable .. The . facts 
necessary to determine whether any part of ~he claims ace.rued 
against 
any director have riot bec:n examined. 
Such 
a 
point 
involvinr;; 
an 
invest

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