SARJOO PROSAD, C. J. - (1.) THESE appeals are directed against the order of Jagat Narayan J. dated 4. 1. 1960 passed in the course of a proceeding for winding up Pareek Commercial Bank Ltd. which is under liquidation. They arise out of connected applications presented by the official liquidator of the Bank under sec. 235 of the Companies Act, 1913.
(2.) SHRI Vastu Lalk, respondent No. 1, was the Chairman of the Bank and SHRI Ishwar Das, SHRI Ishwardutta and SHRI Ghanshyam Dass, respondents 2 to 4 (no longer parties to the appeal) were its Directors. Under the Articles of Association of the Bank the general management of its business was vested in the Chairman, subject to control and supervision of its Directors. The Chairman used to preside over the meeting of the Board of Directors and the Directors had conferred full authority on him to carry on the business of the Bank including sale and purchase of shares and securities. It appears that initially the Pareek Commercial Bank had been started by SHRI Vastulal in the year 1921 as his sole proprietary concern. Later, in 1943, this Bank was registered as a public limited company with all its assets and liabilities. The financial condition of the Bank eventually started deteriorating and the position became such that in February, 1952 it found itself unable to make payments to its depositors. This led to an application for winding it up under the Indian Companies Act in the court of the District Judge, Bikaner, in February, 1951; but when it was discovered that under the Banking Companies Act of 1949 the High Court alone was empowered to wind up a Banking Company an application to that effect was presented by one of the depositors to this Court on 15. 4. 52. This application was allowed on 31st July, 1952 and one SHRI Lalita Prasad, an Advocate of Bikaner, had been appointed official liquidator. By an earlier order this gentleman had been appointed provisional liquidator and in this capacity he made various attempts to obtain possession over the documents and assets of the Bank from SHRI Vastulal but was unsuccessful. Ultimately, he was able to obtain charge from SHRI Vastulal through the intervention of the District Magistrate, Bikaner sometime in 1953. An examination of the books of the Bank disclosed that a sum of Rs. 66,821/-stood in the cash credit accounts of six stock brokers which had been transferred to their accounts from Sundries Register. The items were as follows: - 1. Rs. 700/- M/s Lallu Bhai Nagar Das. 2. Rs. 8,500/- M/s Naraindas Aidan. 3. Rs. 18,500/- M/s S. Ramdas. 4. Rs. 20,000/- M/s Lewis & Jones. 5. Rs. 9,700/- M/s Kantilal Madhodas. 6. Rs. 9,421/-M/s Sharaf & Co. Payments appear to have been made in the accounts of the above stock brokers in different Banks, on instructions issued on behalf of the Bank under liquidation by Shri Vastulal. There was no record in the Bank to show why these payments were made. On the contrary, the Directors' report and the statement of accounts for the year ending 31st December, 1950 contain the following remark under the heading "loans, advances, cash credit and over draft. " "debts considered good for which the Bank holds no other security than the debtor's personal security. " This also includes Rs. 66,821/'- which is the balance of various parties' accounts from whom shares were purchased and sold. These are not transacted through share account. Such purchases and sales are unverified owing to the lack of information. It is not known whether this amount represents loss or their costs. " This inevitably led to public examination of Shri Vastulal at the instance of the liquidator, as contemplated by sec. 45-G of the Banking Companies Act, 10 of 1949, but the explanation offered by the said Respondent was not considered satisfactory. The liquidator then addressed the stock brokers concerned who intimated that the above items were credited by them to the account of M/s B. R. Pareek & Sons Ltd. , a private concern, of which Shri Vastulal was the Managing Director, and were utilised towards payment of losses of this concern in its dealings in shares through those very stock brokers. The liquidator presented an application under sec. 45-D of the Banking Companies Act on 28. 4. 55 against the first five of the above six stock brokers, against Sahukars Bank Ltd. Ludhiana, against the New Bank of India, Delhi, and against, the respondent Shri Vastulal for recovery of the various amounts. His application was dismissed by the court on 6. 1. 56 on the ground that the payments in question were not apparently advances as simple debts which could be settled on the list of debtors. It was held that the proper course for the liquidator was to file claims under sec. 45-B of the Banking Companies Act.- The liquidator, however, preferred to file an application under sec. 235 of the Companies Act in relation to the first three items mentioned above. The case made out by the liquidator against Shri Vastulal is that he got various sums of money transferred from the account of the Bank to the account of the three stock brokers, not for the business of the Bank but for utilising the amount for payment of his personal losses which he incurred in transactions of sale and purchase of shares through these stock brokers and these amounts were actually credited by the stock brokers in his personal account. The liquidator accordingly prayed that Shri Vastulal, the Director of the Bank under liquidation, should repay the above sums together with interest to the Bank. As against the other three Directors the case put forward was that they rendered themselves liable under section 235 of the Companies Act, 1913 because in their capacity of Directors they either abetted or connived at the conduct of Shri Vastulal in mis-using the above sums belonging to the Bank. In substance, therefore, the case against the respondents was that in their respective capacities, of Chairman and Directors of the Bank, the respondents were guilty of misfeasance or breach of trust in relation to the company, the limited Bank under liquidation. The respondents contested the claim of the liquidator. Certain preliminary issues of law were framed and decided by the learned Judge on 4. 9. 58 in favour of the liquidator. These questions of law were: - 1. Whether the application under-section 235 of the Indian Companies Act, 1913 was maintainable? 2. Whether the provision of section 45-O of the Banking Companies Act apply to the cases? and 3. Whether the said provision of section 45-O was ultra vires article 14 of the Constitution? These questions have not been reopened in the appeals before us and, therefore, it is not necessary to advert to them. The only question which falls to be decided is the question of fact; whether the liquidator has succeeded in making out a prima facie case under section 235 of the Indian Companies Act, 1913, read with section 45-H of the Banking Companies Act of 1949 against the respondent Vastulal. Mr. C. L. Agarwal for the appellant has contended that the allegations in the petitions filed by the official liquidator do not make out a case under section 235 of the Indian Companies Act so as to justify the court to take action against the appellant in these cases. He points out that before any action can be taken the burden lies on the official liquidator to make out a prima facie case against the appellant in respect of any charge of misfeasance or breach of trust relating to the money of the company; and not only the petition on the face of it must show that such a charge has been made out, but also there should be proof given by the liquidator to establish a prima facie charge of the character indicated above. In the present case, according to the learned counsel these elements are completely absent and, therefore, the learned Judge was in error in allowing these applications and in directing the appellants to repay the amounts. In this connection, he has referred to the contents of the various petitions filed by the appellants. Sec. 235 of the Indian Companies Act provides inter alia that where in the course of winding up a company, it appears that any past or present director, manager or liquidator, or any officer of the company has mis-applied or retained or become liable or accountable for any money or property of the company, or been guilty of any misfeasance or breach of trust in relation to the company, the Court may, on application, and subject to the conditions mentioned in the section, compel the person concerned to repay or restore the money or property or any part thereof with interest. This, the court can direct notwithstanding the fact that the offence is one for which the offender may be criminally liable. Sec. 45-H of the Banking Companies Act further lays down that where an application is made to the High Court under sec. 235 of the Indian Companies Act, 1913, against any such person and the applicant makes out a prima facie case against the person concerned, the High Court shall make an order against the person to repay or restore the money or property. It is, therefore, to be seen whether on the terms of the sections, a prima facie case has been made out against the appellant. The Bank in this case is in the process of being wound up and it is in the course of the winding up proceedings that the applications giving rise to these appeals, have been presented by the official liquidator. The respondent concerned was the Chairman of the Bank. Therefore, if it is shown that he is liable or accountable for any money or property of the Bank or has been guilty of misfeasance or breach of trust in relation to its assets, the court may pass an appropriate order directing re-payment or restoration of the money or property. Let us, therefore, now turn to the recitals in the petitions under sec. 235 to see what the allegations are. After reciting the relevant facts mentioned earlier, the petitions in substance, proceed to say that Shri Vastulal the Chairman and ex-official liquidator of the Bank who was incharge of all the affairs of the company up to the date of the order of winding up, did satta business of buying and selling shares and securities in the name and style of B. L. Pareek & Sons Ltd. at Bombay, through different share brokers and particularly with those whose names have been noted earlier and incurred losses therein amounting to more than Rs. 50,000/ -. Shri Vastulal therefore made the above payments as advances in connection with his personal and private transactions and in any case not relating to the Pareek Commercial Bank Ltd. In each case, the payments made with their respective dates and the persons to whom paid, have been specified. According to the liquidator, the said amounts were paid to the brokers wrongfully and Without authority and Shri Vastulal committed breach of trust in respect of the moneys with an ulterior motive, knowing fully well that the money of the Bank could not be misapplied for his own purposes. Thus it was alleged that Shri Vastulal was guilty of misfeasance, malfeasance and non-feasance. It is not necessary for us now to discuss the allegations against the other respondents to the petitions. For purposes of clarity, the learned Judge has separately specified the amounts claimed in each case against the respondent and it is useful to reproduce them here: - Case No. 175: - Account of M/s Lallu Bhai Nagardas - page 75 15. 2. 50 To amount paid by Bank of India Bombay vide letter dated 11. 2. 50. Dr. 700/- 6. 12. 6l By amount transferred to cash credit amount Cr. 700/- Case No. 176 : - Amount of M/s Naraindas Aidan - page 75 9. 12. 49 To amount paid by Bank of India Bombay on 13. 12. 49 Dr. 3,500/- 6. 2. 50 To amount paid by Imperial Bank of India Bombay on 3. 2. 50. Dr. 5,000/- 6. 12. 51 By amount transferred to cash credit amount. Cr. 8,500/- Case No. 177: - Amount of M/s S. Ramdas - page 76 22. 12. 49 To cash paid by Imperial Bank of India on 19. 12. 49 Dr. 10,000/- 28. 1. 50 To cash paid by Imperial Bank of India Bombay on 7. 1. 50 Dr. 2,500/- 6. 5. 50 To cash paid by Imperial Bank of India on 20. 2. 59 Dr. 1,000/- 6. 12. 51 By cash amount transferred to cash credit amount Dr. 18,500/- Apart from the above amounts 19 shares of Kohinoor Mills Ltd. winch are said to be belonging to the Pareek Commercial Bank were delivered to S. Ramdas. According to the liquidator, the market value of there shares amounted to Rs. 6,340. 11. 0, This was also transferred to the cash credit account of S. Ramdas. Therefore, the balance against M/s S. Ramdas in the cash credit came to Rs. 24,846. 11. 0. Shri Vastulal was allowed to make a statement on affidavit in these cases. He was cross examined by the liquidator and by the other three respondents in Court; but he did not produce any other evidence in his defence. He did not dispute in the present proceedings that B. R. Pareek & Sons Ltd. is his personal concern which he manages, the initial 'b' standing for Bastimal and 'r' for his son Rameshwarlal. He also did not dispute that the items referred to above were deposited in the accounts of M/s Lallu Bhai Nagardas, M/s Naraindas Aidan and M/s S. Ramdas on his instructions and so were the 19 shares of Kohinoor Mills which were admittedly the property of the Pareek Commercial Bank delivered to M/s S. Ramdas at his instance, in his capacity of the Chairman of the Bank. His plea, however, is that the above payments were made and the shares were delivered for purpose of the Bank itself and he never authorised the stock brokers to utilise the amounts and the value of the shares to pay off any personal losses that have been incurred by him on the transactions of sale and purchase of shares of Pareek & Sons. If the stock brokers of their own accord utilised the various sums of money in that, manner without his authority, it is the brokers who were liable to repay the amounts to the Bank and the amounts could not be recovered from him. It is quite clear from the recitals that a prima facie case of misfeasance or breach of trust has been sought to be made out against the respondents; and the contention of the learned counsel that the petitions do not disclose any material on which action can be taken under sec. 235 of the Companies Act read with sec. 45-H of the Banking Companies Act is, therefore, not entertain able. The learned Judge after examination of the relevant available records of the Bank and the entries in the books of accounts and other documents of the Banking Company as also the evidence produced before him held that in each of the cases Vastulal should pay to the Bank with interest the amounts which were paid to the various stock brokers. He, however, exonerated the defendants 2 to 4 from liability for the payment and dismissed the applications against them though at the same time the learned Judge remarked that these respondents failed to exercise any control or supervision over the business of the Bank which they were expected to do under the articles of Association; and even though they put their signatures to the report of the Director made to the share-holders tor the year ending 31st December, 1950, in which a remark of the auditors with regard to the disputed items was incorporated, they took no steps to find out the circumstances in which such huge sums of money belonging to the Bank were paid to various stock brokers or do something to recover them from the latter or from Vastulal. The question then is whether any such prima facie case has been established and the findings of the learned Judge are correct. In dealing with the evidence in the case one has to bear in mind the fact that in a liquidation proceeding the difficulty of establishing a claim against the Director or an officer of the Bank under sec. 235 of the Companies Act, 1913, is not inconsiderable. This is so, because the material facts in all such cases are within the special knowledge of the persons against whom the applications are made and the official liquidator appointed in the case at whose instance the application is presented may have no personal knowledge of the details relating to the alleged transactions. He is bound to rely on the records of the Bank, such as are available to him; and, therefore, it is only fair that no such burden of proving act of misfeasance or breach of trust in respect of the assets of the Bank should be placed on the applicant as to render his task impossible. This appears to be the meaning underlying sec. 45-H of the Banking Act. Under the law all that has to be shown by the applicant or should appear to the Court from the evidence is that there is a prima facie case made out against the officer complained against, in order to make it obligatory on the court to pass an order directing the officer to repay or restore the assets, unless the person concerned proves that he is not liable to make the repayment or restore the property. The Court had to be armed with such summary power in order to protect and pursue the assets of the Bank under liquidation which otherwise may be irretrievable. This principle, therefore, should be the guiding factor in appraising the evidence placed before us. To make out a prima facie case, ofcourse the burden lies upon the applicant; but if the records do show a prima facie case the task of rebutting that evidence or of exonerating himself of liability would lie upon the person against whom the application has been made, since he is the person who knows about the business of the Company and is expected to throw greater light on the points in controversy in order to satisfy the conscience of the court that no liability should rest on him and that his conduct of the affairs of the Bank has been fair and above board. The initial burden on the applicant, having regard to the very nature of the case, has to be lightly placed, so as to compel the officer concerned to disclose his cards, failing which the claim should be allowed against him. Most of the arguments of the learned counsel for the appellant have been directed to case No. 177 which involves the largest sum of money. The amount involved is sum of Rs. 18,500/- in addition to the value of 19 shares of Kohinoor Mills Ltd. " Rs. 10,000/- paid on 19. 12. 49 Rs. 5,000/- paid on 7. 1. 50 Rs. 2,5co/- paid on 6. 2. 50 Rs. 1,000/- paid on 20. 2. 50 It will be proper, therefore, to deal primarily with this case before taking up the appeals in the other two cases. The case of the Bank is that the above sums and the shares in question were not handed over to the stork brokers in connection with any transaction of the Bank but were given to cover losses incurred by Shri Vastulal in his personal business of sale and purchase of shares, which was carried on through M/s S. Ramdas in the name of B. R. Pareek & Sons Ltd. and that these amounts in addition to the value of the shares were actually appropriated towards the payment of those personal losses. We have already pointed out that Shri Vastulal d d not dispute that the above amounts and the 19 shares of Kohinoor Mills belonged to the Bank and were given to the broker M/s S. Ramdas under his direction. He also did not dispute that he carried on his personal share business through the same broker in the name of B. R. Pareek & Sons Ltd; but his case was that the above sums were paid for the purchase of debentures of the face value of Rs. 50,000/- of the Calcutta Electric Supply Co. , Ltd. for the sake of the Bank and the 19 shares of Kohinoor Mills were delivered for sale; the stock brokers, therefore, had no authority to credit the amount and the sale proceeds of the shares to his personal account in the name of B. R. Pareek & Sons Ltd. Shri Vastulal examined himself and filed his written statement but did not produce any other evidence in respect of his own personal transactions which he carried on through the same stock broker. The stock broker Ramdas, who is concerned in this case, has been examined for the liquidator. He states that he had dealings with Shri Vastulal in the name of Pareek Commercial Bank as well as in the name of B. R. Pareek & Sons. He produced his ledger to prove the transactions which were carried on in the name of M/s B. R. Pareek & Sons Ltd. and it is to be found that the disputed sums of money received through the Imperial Bank of India were all credited to this account and so were the sale proceeds of 19 shares of Kohinoor Mills. The account shows even after crediting all these items a debit balance of Rs. 891/10/6 outstanding against M/s B. R. Pareek & Sons Ltd. We will have to say something later about the correctness of this debit balance. If the statement of Ramdas and the entries in the account filed by him are to be accepted they clearly go to show that these disputed sums of money were advanced and appropriated by Ramdas towards the business of M/s B. R. Pareek & Sons Ltd. which was a private concern of Shri Vastulal. The learned counsel for the appellant, however, contends that the evidence of Ramdas as pointed out by the learned single Judge himself, is unreliable and that the entries in his books of account even if genuine were not admissible under sec. 34 of the Evidence Act. It is true that the learned Judge observes that Ramdas was deliberately lying when he said that all the dealings entered in the account in the name of M/s B. R. Pareek & Sons Ltd. might have been transacted on behalf of Pareek Commercial Bank Ltd. ; but at the same time the learned Judge opines that the general trend of Ramdas's evidence was that the witness tried to favour Shri Vastulal. The learned counsel for the appellant submits that the learned Judge was in error in making any such assumption for the simple reason that Ramdas was interested in his own protection in trying to throw the blame upon the respondent. The evidence of Ramdas has to be examined not because of its intrinsic merit, but merely to see how he utilised the various advances which from time to time were made to him by Shri Vastulal from the coffers of the Bank. It is not for us at this stage to determine the liability of Shri Vastulal vis-a-vis the witness Ramdas or vice-versa. The liability of the parties can be determined in a regular suit for the purpose. We are only concerned to find out: whether the disputed sums of money advanced by Shri Vastulal belonging to the Bank were really utilised for the purposes of the Bank or were utilised for purposes of the appellant's own business. As we shall presently see, even on these accounts it seems that there should be a credit balance in favour of Shri Vastulal and not a debit balance as shown by Ramdas; nevertheless the accounts do clearly indicate that Ramdas was dealing with all this money as if the money belonged to Shri Vastulal himself and not really to the Bank and that Shri Vastulal was freely operating on these accounts. Since Shri Vastulal has neither produced his own account books of M/s B. R. Pareek & Sons Ltd. nor is there any paper available in the records of the Bank to show the appropriation of these sums for the purposes of the Bank, we are left with no other alternative but to infer that these sums of money were utilised for the business of Shri Vastulal. If the case of Shri Vastulal were correct, it would have been easy enough for Shri Vastulal to produce the books of account in possession of M/s B. R. Pareek & Sons Ltd. to contradict the entries made in Ex. C-1 by Ramdas and to show that none of these advances were utilised for the purposes of his business. The burden of rebutting the case of any mis-use or mis-appropriation of the monies lay upon him, as otherwise prima facie the fact that Ramdas utilised these moneys for the appellant's business would be assumed to be correct. It has been contended that the entries in the account books were not admissible under section 34 of the Evidence Act and that they have not been duly proved by the person who made the entries. These arguments were not advanced before the learned single Judge and we think that they have no force at all. Ramdas of course admitted that several of the entries in the Khata were written by his accountant Mr. Vengulkar and this accountant has not been examined. Non examination of the accountant, however, does not affect the position because the transactions could be equally proved by Ramdas who had knowledge of them. It is also to be remembered that the account books have not been proved in this case for the purpose of fastening any liability. They have been merely proved to show how these disputed advances of money were dealt with by Ramdas. It is beyond dispute that the appellant had transactions with Ramdas in the sale and purchase of shares and, therefore, Ramdas could as i well prove the transaction and the entries made in his books of account. For these reasons, we are unable to entertain the submission of the learned counsel that the entries in the books of account were inadmissible and not of any evidentiary value in this case. The most impressive argument of Mr. Agarwal, however, is based on the entries in the accounts themselves. He has endeavoured to show that some of the credit entries actually went to the credit of the Bank under liquidation and, therefore, in spite of the fact that the Khata stands in the name of M/s B. R. Pareek & Sons Ltd. the moneys were actually utilised for the purposes of the Bank. This aspect of the case was unfortunately not specifically urged before the learned trial Judge and we have been therefore obliged to scrutinise the argument in some detail. The account shows on the credit side an entry of Rs. 6,206. 4. 0 by settlement in November 15, 1949 and on the debit side there is a corresponding entry on November 17,1949 (Folio 98) showing payment of the amount by cheque. The copy of credit and debit voucher of the Imperial Bank of India, which is certified to be true copy of the original entries, shows that the amount was deposited by cheque on 17th November, 1949 to the credit of the Bank along with certain other amounts. Next, the learned counsel points ' out that there is a credit entry for Rs. 15,244. 8. 0 on November 25, 1949 regarding sale of 55 Wimco and 19 Kohinoor shares. It appears that in respect of this amount there is a corresponding entry of debit on December 5, 1949 (ledger folio 106) of Rs. 10,697. 8. 0 as being paid to the Imperial Bank of India against 55 Wimco shares. In this connection also the learned counsel refers to certain vouchers in the name of the imperial Bank of India, Bombay, to show that a sum of Rs. 12,084/- and Rs. 1,405/- were deposited in the Imperial Bank to the credit of the Pareek Commercial Bank Ltd. The learned counsel for the respondent-liquidator has objected to the reception in evidence of these vouchers, which according to him, have neither been duly proved nor duly exhibited. It is then pointed out that there is apparent mistake in regard to the entry of Rs. 15,166. 4. 0 on account of settlement and sale of 1200 B. I. C. shares. This entry, according to the learned counsel for the appellant,should have been on the credit side and not on the debit side, because otherwise there is no corresponding entry on the credit side in regard to the purchase of these shares. We have no doubt that there is a good deal of force in this contention and, in our opinion, the entry cannot be explained except on the hypothesis that the sum should be shown on the credit side. It is only then that it may account for the payment of Rs. 10,893. 12. 0 by cheque as shown on the debit side to the Imperial Bank of India on account of 1200 B. I. C. shares. If this item of Rs. 15,166. 4. 0 erroneously shown, in our opinion, on the debit side is taken to the credit side, then instead of the debit balance there ought to be a credit balance to the extent of a large sum of money in favour of the appellant Vastulal. It is unfortunate, however, that this aspect of the matter has not been fully brought out in the cross examination of Ramdas when he was in witness box and no opportunity was given to him to explain the position. We would, therefore, like to say as little as possible on this subject; because even if we proceed on the assumption that this entry should have been on the credit side as contended by the learned counsel for the appellant and that there would be a large credit balance in favour of the appellant as against Ramdas,the position of the appellant does not improve in this case. For the present, we are examining the debit entry of 10,893. 12. 0 as shown in the account in respect of payment by cheque to the Imperial Bank of India for 1200 B. I. C. shares. In regard to this also, the learned counsel has drawn our attention to a copy of letter dated 16th January, 1950, sent by the Imperial Bank of India to the Pareek Commercial Bank Ltd. advising having credited the current account of the Pareek Commercial Bank with Rs. 10,880. 2. 0 being the proceeds of 1200 ordinary shares British Indian Corporation Ltd. , as per statement enclosed. This statement refers to the purchase of 1200 British India Corporation shares on January 16,1950 at Rs. 9. 1. 3 per share out of which a commission of Rs. 13. 10. 0 was deducted, leaving the above balance of Rs. 10,880. 2. 0 in favour of Pareek Commercial Bank. This letter has also been certified to be a true copy. All these documents are however open to the same objection by the respondent namely that they have not been duly proved or exhibited. It would have been better if these documents had been properly proved in the case. Were it necessary, we would have called for additional evidence; but even if we assume the argument of the learned counsel to be correct, it only comes to this that some of these amounts which are entered in the Khata of M/s B. R. Pareek & Ltd. . were actually credited to the Pareek Commercial Bank and that if the accounts were duly recast a balance of nearly Rs. 30, 060/- would be found in favour of the appellant. We are, however, as we said earlier not concerned with the liability of Ramdas to the appellant. All that we are concerned with is to see whether the sum of Rs. 10, 000/- paid on 19. 12. 49, Rs. 5,000/- paid on 7th January, 1950, Rs. 2,500/- paid on the 6th February, 1950 and Rs. 1,000/- paid on 20th February, 1950 were actually utilised for the purposes of the Bank. If we assume that the argument of the learned counsel is correct that the entry of Rs. 15, 166. 4. 0 should have been on the credit side, there was all the more no reason for continuing to make the advances in question to Ramdas ; in that case Ramdas had already sufficient funds in his hands to the credit of Shri Vastulal. Why then the appellant continued to make these payments? Shri Vastulal has not produced his own account books to satisfy the Court that none of the above amounts was utilised for the purpose of his business. In respect of the sum of Rs. 6,206. 4. 0, the finding of the learned judge is that the cheque issued by Ramdas appears to have been cashed by Shri Vastulal through the Pareek Commercial Bank. That is not unlikely. On the face of the entry in Ex. C-1 it does not appear to whom this money was actually paid nor was Ramdas able to show anything to the contrary. It further appears that Shri Vastulal was confronted by a copy of the statement of account No. 1752/53 dated 4th February, 1950 filed by Ramdas in miscellaneous case No. 5/55 and was asked whether he received this amount from Ramdas. This statement of account also stood in the name of M/s BR. Pareek & Sons Ltd. and showed that the disputed sums were credited to this account. Shri Vastulal did not deny that this account was received by him. He merely said that he could not say whether he had received it. It shows that the appellant had full knowledge of the accounts. Ordinarily, there can be hardly any question of a Bank making advances for the purchase of shares or securities, because when called upon to make payment the Bank is expected to do so. The allegation of Vastulal is that the above sums were paid to Ramdas for the purchase of debentures to the value of Rs. 50,000/- of the Calcutta Electric Supply Company Ltd. The case is that the order of the purchase was placed sometime in the last week of January, 1950 which was subsequently cancelled on 14th February, 1950 at the request of Shri Vastulal. There is nothing to substantiate this allegation and there is no evidence or circumstance to support it. There is no document in the Bank showing that these sums were paid as advances for the purchase of debentures. Ramdas no doubt admits in paragraph 9 of his reply dated 15th October, 1955 that an order for the purchase of the said debentures was placed by the Bank in the last week of January, 1950 and was subsequently cancelled on 14th February, 1950. But when he was asked whether any sums were paid by the Bank for the purchase of those debentures, he stated that he had no recollection about the receipt of any such amount. In the remaining part of paragraph 9 Ramdas stared definitely that the Bank made no payments towards the said debentures either by way of value or advance for the purchase because the debentures had not come in the market till then and so no bill was presented to the Bank for the cost of the same. Ramdas may be an unreliable witness but there is nothing to show that any advances were made by the Bank on account of the purchase of those debentures. Shri Vastulal sought to rely upon two letters of Ramdas which he produced before the Court. The learned Judge has very rightly commented that these letters were surreptitiously removed from the Bank before handing over charge. They should have been in the custody of the liquidator and not in the custody of the appellant; but even these letters are not helpful to the appellant. The first letter, which is dated 25th January, 1950 acknowledges the order for the purchase of debentures worth Rs. 50,000/-, but it makes no reference to any sum having been paid by way of advance on that account. The amount of Rs. 10,000/- was paid on 19. 12. 49 and if this amount had been paid for the purchase of these debentures as stated by the appellant, it stands to reason that it would have been mentioned in the letter of Ramdas dated 23. 1. 50. The other letter dated 14th February, 1950 relates to the cancellation of the order. In this also, there is no mention of any money having been paid for the purchase of the debentures. Vastulal has not produced any copy of the letter of cancellation sent by the Bank nor is there any explanation why if the purchase had been cancelled, the amount of Rs. 1,000/- would be paid to the amount of M/s Ramdas on 23. 2. 50. Obviously, the advice for cancellation, if any, must have been sent earlier. These factors clearly establish that the explanation given by the appellant to justify those advances was incorrect and that he had been freely operating on monies of the Bank with some ulterior purpose and handing them over to the stock broker Ramdas who had been conducting the business of sale and purchase of shares on his behalf. It may be open to Shri Vastulal to sue the stock broker Ramdas for any money that may be payable to him by the latter, but this had nothing to do with misuse of the assets of the Bank by Vastulal himself even if it were through the agency of Ramdas. For the above reasons, we agree with the finding of the learned Judge that the payment of Rs. 18,500/- and the delivery of 19 shares of Kohinoor Mills to Ramdas was not for any purposes of the Bank but the probabilities are that these moneys were utilised for the purposes of M/s B. R. Pareek and Sons Ltd. which is the private concern of Shri Vastulal and they were utilised as such with the knowledge and at the instance of Shri Vastulal. He is, therefore, liable to repay the amount of Rs. 24,846. 11. 0 with interest under the provisions of sec. 235 of the Companies Act 1913, read with sec. 45-H of the Banking Companies Act as ordered by the learned Judge. The other appeal relates to the sum of Rs. 8,500/- shown in the cash credit account of the Bank as paid to M/s Naraindas Aidan. It arises out of case No. 176, the appellant not having challenged the decision of the learned Judge in case No. 175 which related to a sum of Rs. 700/- only. The appellant's position is much weaker in this appeal; which in our opinion has little or no substance. Here again, the case of the liquidator is that Shri Vastulal was carrying on his personal business of sale and purchase of shares and securities, through M/s Naraindas Aidan, another firm of stock brokers. Shri Vastulal, therefore, got paid a sum of Rs. 3,500/- on 13. 12. 49 and a sum of Rs. 5,000/- on 3. 2. 50 belonging to the Pareek Commercial Bank Ltd. into the account of the said stock brokers with the intention that these sums may be utilised in payment of his own losses on account of his personal business. According to the liquidator, these sums were actually credited in the personal account of Shri Vastulal and no transactions of the Pareek Commercial Bank were carried out through the stock brokers. Shri Vastulal in his written statement admitted having carried on his personal transactions of the sale and purchase of shares through M/s Naraindas Aidan in the name of B. R. Pareek & Sons Ltd. , but he alleged that the above sums were paid for the purposes of the Pareek Commercial Bank. He took the plea that he could not specifically say for what purpose they were paid without looking into the records of the Bank. Even on an examination of the records, Shri Vastulal was unable to explain satisfactorily why these two items were deposited in the account of the stock brokers on behalf of the Pareek Commercial Bank.
(3.) SO far as the records of the Bank are concerned, they do not throw any light on the subject. It does not appear that Pareek Commercial Bank had ever any dealing with M/s Naraindas Aidan. Tulsidas- - a partner of the firm of the stock brokers has been examined as a witness in this case on behalf of the liquidator. He produced all his account books and stated that his firm had never carried out any transaction on behalf of the Bank under liquidation. There is no khata in the name of the Pareek Commercial Bank in his account books. The disputed sums were ' credited in the account books of his firm (vide entries Exs. 6 and 7) as having been paid by Pareek Commercial Bank on behalf of B. R. Pareek and SOns Ltd. , and Shri Vastulal Pareek respectively. Tulsidas has also produced carbon copies of contract notes and statements of accounts relating to the transactions contained in bound books and stated that the original were sent to Shri Vastulal from time to time. The witness has also tried to prove the losses incurred by Shri Vastulal in his personal transactions which appears to amount to above Rs. 50000/ -. He also proves that his firm had instituted a suit against M/s B. R. Pareek & SOns Ltd. , and against Shri Vastulal but the suit was dismissed on compromise. The allegation of Shri Vastulal that his suit was dismissed because the clearance sheets were not produced by the firm, is falsified by the order of the Bombay High Court which bears out the statement of Tulsidas that the suit was dismissed by consent and there was no order as to costs. Shri Vastulal, as we have noticed already; has not produced the books of account of M/s B. R. Pareek & SOns Ltd. , which were in his possession; and the natural inference from their non-production is that if produced the result may have been unfavourable to him. Shri Vastulal has also admitted that even in the suit instituted by the stock brokers the above two sums were shown as credited in favour of B. R. Pareek & SOns Ltd. The observations made earlier in regard to the absence of documents in the Bank, the remark of the Auditors contained in the Director's report for the year ending 31st December, 1950, with the certificate appended at the end, the unauthorised removal of documents pertaining to the disputed items by Shri Vastulal from the Bank before handing over charge to the liquidator and the fact that ordinarily it would not be the practice of a concern like the Pareek Commercial Bank Ltd. , to make payments in advance for the purchase of shares and securities, apply with equal force to the facts of the present case. It is significant that even after inspection of all the records of the Bank of which possession was delivered to the liquidator, Shri Vastulal could not point to any document which could throw light on the subject. If the moneys were utilised for the purposes of the Bank there would naturally be copies of letters advising the stock brokers on the point. The Auditors also were not able to find for what purpose the amounts had been utilised. The argument that the clearance sheets were suppressed is in our opinion, an argument of despair; because by production of his own account books, if the case of the appellant was correct, he could have falsified the entries in the account of the stock brokers. The learned judge has commented on the written statement filed by Shri Vastulal and observes that it could not be clearly inferred even from the written statement that the sum of Rs. 8,500/- was paid to the stock brokers for any purpose of the Bank. From all these facts, there can be hardly any doubt that Shri Vastulal abused his position as Chairman of the Pareek Commercial Bank Ltd. , and paid the above sums belonging to the Bank to the stock brokers M/s Naraindas Aidan for his own purposes to meet his own personal losses. He is, therefore, liable to repay these amounts as ordered by the learned Judge with interest under sec. 235 of the Companies Act, 1913, read with sec. 45-H of the Banking Companies Act. These appeals, therefore, must fail and are hereby dismissed with costs. The order of the learned Judge under appeal is upheld. There will be only one set of hearing fee in both the appeals. . ;