Decided on October 29,1968



- (1.) The Popular Bank Ltd. now in liquidation was incorporated in 1944 with head office in Alleppey. It established three branch offices at Vaikom, Sherthallai and Kuthiathode respectively. The Bank suspended business on the 16th August 1956. A petition for winding up the Bank was presented in this Court and was ordered on the 19th December 1956. Thereafter, two applications were made by the Official Liquidator of the Bank. Application No. 1 of 1959 from which these appeals arise, was under S.542(1) of the Companies Act 1956, read with R.260 to 262 of the Companies Court R.1959. Application 2 of 1959 from which the connected appeals heard along with these arise, was under S.543 of the Companies Act, read with S.45H of the Banking Companies Act 1949. These were disposed of by our learned brother Raghavan J.
(2.) Except where expressly indicated, reference hereinafter would be to the ranks of the parties as in Application No. 1 of 1959 which appears to have been treated as the main application by the learned judge, and a copy of the judgment in which, was ordered to be appended to the judgment in Application No.2 of 1959. Respondents 1 to 8 and the deceased Damodara Pai were the Directors of the Popular Bank Ltd. Of these, respondents 1 and 8 were in Trivandrum and the rest were in Alleppey. The 1st Respondent was the Chairman of the Board of Directors. The 9th Respondent was appointed General Manager of the Bank on 21-11-1955 in pursuance of a resolution dated 10-11-1955. The 10th Respondent was the Manager of the Bank from its inception till the appointment of the 9th Respondent, after which, he was made to work as Secretary, under the 9th Respondent. The 11th Respondent was a clerk under the 10th Respondent. The 8th Respondent is the son inlaw of the 1st Respondent; the 5th Respondent is the brother inlaw of the 1st Respondent, being the 1st Respondent's wife's brother.
(3.) The learned trial Judge, Raghavan J found that the business of the Bank was carried on with intent to defraud the creditors of the Banking Company, and, at any rate, for other fraudulent purposes as contemplated by S.542(1) of the Companies Act, that respondent Nos. 1 to 8 and 10 and 11 were knowingly parties to the carrying on of the said business in the manner aforesaid, and that the 9th Respondent was not a knowing party to such carrying on of the business. He further held that Respondents 1 to 8 and 10 were personally liable without any limitation of liability for the debts of the Company. The learned Judge found that the Popular Bank is an insolvent Company and the deficiency in its assets to pay creditors in full is Rs. 6,50,000/-. He directed that the Liquidator may sell by public auction or otherwise ' the assets belonging to the Company which are considered unrealisable and that the amounts realised will be applied in reduction of the decree amount and in proportionate reduction of the liability of the directors as settled by the decree. Subject as above the learned Judge found respondents 10 and 11 jointly and severally liable for the entire amount of Rs.6,50,000/-. This was apportioned between the various respondents as follows: The 3rd Respondent was found liable for a sum of Rs.2,00,000/-; Respondents 1, 4, 5 and 7 were made liable for a sum of Rs.75,00/,- each and Respondents 2, 6, and 8 were held liable for a sum of Rs.50,000/- each. The Liquidator was held entitled to his costs from the Respondents in proportion to their liabilities.;

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