Sir Lionel Leach, C.J:— This is an appeal from an order passed by Gentle, J. on a misfeasance summons taken out by the liquidator of the Pollachi Vellala Union Mills Company, Limited. The liquidator alleged that the appellant, who had been the manager of the company, was liable under section 235 of the Indian Companies Act to pay two sums of money, one of Rs. 3,448-10-6 and the other of Rs. 700-7-0. The liquidator also asked that an order be passed against the appellant directing him to produce all books, papers, documents and correspondence relating to the company which were still in his possession. The learned Judge field that the appellant was not liable in the sum of Rs. 3,448-10-6 and the liquidator withdrew the summons so far as Rs. 700-7-0 was concerned. With regard to the books it was said that the appellant had wrongfully retained the following: (i) The inventory or stock book, (ii) the directors' circulation book, (iii) the shareholders' circulation book and (iv) the share-transfer application register. The learned judge found that the first two of these books were with the appellant, but that the remaining two were not with him. Accordingly he passed an order directing the appellant to deliver over to the liquidator the inventory book and the directors' circulation book. This order was not complied with and the learned Judge then called upon the appellant to show cause why he should not be committed for contempt of Court. In the meantime the appellant filed this appeal and as the result the contempt proceedings have been stayed.
Dr. John has contended that the learned Judge erred in law in confining his order to the delivery of the books. He says that unless a loss has been suffered by the company there can be no order under section 235 and that when an order is passed for the return of property it must also state the amount for which the person against whom it is passed is liable in the event of the non-delivery of the property. In this connection the learned Counsel has quoted the decisions of the Court of Appeal in Coventry and Dixon's case(1) and of the House of Lords in Cavendish Bentinck v. Fenn(2). In the first of these cases the Court held that under section 165 of the English Companies Act, 1862, in order to make a person, liable under the section he must be shown to have been guilty of misconduct by which the company has suffered loss. The section was not for punishing a man who had been guilty of misfeasance, but for compensating the company for the loss suffered. In that case it had not been shown that there was any less. This interpretation of the section was accepted, by the House of Lords in the second case. There is, however, a great difference between section 165 of the English Companies Act, 1862, and section 235 of the Indian Companies Act, 1913, as amended by Act XXII of 1936. Section 165 of the English Act reads as follows:—
“Where, in the course of the winding up of any company under this Act, it appears that any past or present director, manager, official, or other liquidator or any officer of such company, has misapplied or retained in his own hands or become liable or accountable for any monies of the company, or been guilty of any misfeasance or breach of trust in relation to the company, the Court may, on the application of any liquidator, or of any creditor or contributory of the company notwithstanding that the offence is one for which the offender is criminally responsible, examine into the conduct of such director, manager, or other officer, and compel him to repay any monies so misapplied or retained, or for which he has become liable or accountable, together with interest after such rate as the Court thinks just, or to contribute such sums of money to the assets of the company by way of compensation in respect of such misapplication, retainer, misfeasance, or breach of trust, as the Court thinks just.”
section 235 of the Indian Companies Act reads as follows:—
“Where in the course of winding up of a company it appears that any person who has taken part in the formation or promotion of the company or any past or present director, manager, or liquidator, or any officer of the company has misapplied or retained or become liable or accountable for any money or property of the company or been guilty of by misfeasance or breach of trust in relation to the company, the Court may, on the application of the liquidator, or of any creditor or contributory (made within three years from the date of the first appointment of a liquidator in the winding up or of the misapplication, retainer, misfeasance or breach of trust, as the case may be, whichever is longer) examine into the conduct of the promoter, director, manager, liquidator or officer, and compel him to repay or restore the money or property or any part thereof respectively with interest at such rate as the Court thinks just, or 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 Court thinks just.
This section shall apply notwithstanding that the offence is one for which the offender may be criminally responsible.”
Under this section the Court may compel an officer of a company against whom a misfeasance summons has been taken out (i) to repay the money, or (ii) to restore the property or (iii) to pay compensation. The difference between the two sections is that under section 165 of the English Act the Court was not given the power to compel an officer of a company to restore property. He could only be compelled to make payment either by way of refund or compensation, and this was the position in England until the Companies (Winding up) Act, 1890, was passed. There, power was given to the Court to order the restoration of property, and the corresponding sections of the English Acts of 1908 and 1929 have been drafted on the same lines.
The appellant is in possession of two books belonging to the company and therefore he is in possession of property of the company. It is true that section 235 contemplates a loss to the company before an order can be passed under the section. This was pointed out by Maugham, J., as he then was, in In re Etic where he stated:
“The conclusion at which I have arrived is that section 215 (the corresponding section of the English Act to section 235 of the Indian Act) is not applicable to all cases in which the company has a right of action against an officer of the company. It is limited to cases where there has been something in the nature of a breach of duty by an officer, of the company as such which has caused pecuniary loss to the company. Breach of duty of course would include a misfeasance or a breach of trust in the stricter sense, and the section will apply to a true case of misapplication of money or property of the company, or a case where there has been retention of money or property which the officer was bound to have paid or returned to the company.”
The liquidator says that the retention of these two books by the appellant is likely to lead to considerable loss to the company. That has not been found, but obviously these books must have some value and their retention by the appellant means a loss to the, company. There being a loss, the learned Judge had the power to pass an order for the delivery of the books to the liquidator without giving the appellant, the option of paying compensation, and it was a proper order to pass. The appeal must be dismissed with costs.
G.R