Ultra vires deposit-taking prevents creditor status and bars misfeasance summons for lack of locus standi.

Deposit-taking by a company department that exceeded the objects in the memorandum was held ultra vires, so such deposits did not create personal debtor-creditor relationships; legal principle applied treats the contracts as void for in personam liability and confines remedies to recovery of money or proprietary claims. Applying these principles, depositors were not creditors in law and therefore lacked locus standi to maintain a misfeasance summons under Section 235; the preliminary objection was upheld and the misfeasance summons dismissed.

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Issues: Whether the applicants, as depositors in the Deposit Branch, are creditors of the company and therefore have locus standi to maintain a misfeasance summons under Section 235 of the Indian Companies Act.

Analysis: The Deposit Branch had carried on banking-type operations beyond the company's memorandum and therefore such deposit-taking was ultra vires. Established authority holds that where a company engages in ultra vires borrowing or deposit-taking, the transactions do not create a personal debtor-creditor relationship; the contracts are void for the purposes of personal liability and the remedy of the payor is in respect of the money or specific proprietary claims rather than in personam. Prior orders in the winding up proceedings and the decisions of higher courts on the nature of the Loan and Deposit Branches were considered in light of these principles, and the effect of ultra vires deposit-taking on the applicants' claims was applied to determine their standing under Section 235.

Conclusion: The applicants are not creditors in the legal sense with locus standi to maintain the misfeasance summons; the preliminary objection is upheld and the misfeasance summons is dismissed.

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