Misfeasance proceedings survive a director's death, and legal representatives may be proceeded against only to the extent of inherited estate.

Misfeasance proceedings under section 543 of the Companies Act, 1956 are compensatory and do not create a fresh liability; they do not abate on the death of a director, and the Official Liquidator may continue them against the legal representatives. The heirs' liability is limited to the extent of the estate of the deceased in their hands. Whether any property devolved on the heirs or was benefited by them must be proved by evidence and cannot be determined merely on affidavits at the substitution stage. Delay in bringing the legal representatives on record does not defeat substitution where there is no abatement.

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Issues: Whether proceedings under section 543 of the Companies Act, 1956 for recovery against a director of a company in liquidation abate on his death and whether his legal representatives can be brought on record and proceeded against to the extent of the estate inherited by them.

Analysis: The legal position was treated as settled that misfeasance proceedings are compensatory in nature and do not create a new liability. A director's death does not bring about abatement of such proceedings, and the Official Liquidator may continue them against the legal representatives. The liability of the legal representatives is confined to the extent of the estate of the deceased in their hands. Questions as to whether any property devolved upon the heirs or whether they derived benefit from the estate require evidence and cannot be decided merely on affidavits at the stage of substitution. Delay in bringing the legal representatives on record was also held not to defeat substitution in the absence of abatement.

Conclusion: The application to implead the legal heirs of the deceased director was maintainable and was rightly allowed. The proceedings could be continued against the legal representatives subject to proof regarding the estate of the deceased.

Ratio Decidendi: Misfeasance proceedings under section 543 of the Companies Act, 1956 do not abate on the death of the director and may continue against his legal representatives, whose liability is limited to the estate inherited from the deceased.

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