Territorial jurisdiction limits in winding up do not bar section 235 inquiry against a director where the court controls the company.

A court ordinarily cannot serve or enforce its process against directors outside its territorial jurisdiction unless a statute clearly authorises it, and the Code of Civil Procedure did not confer a general power for that purpose here. On that basis, proceedings could not continue against directors residing outside British India. By contrast, section 235 of the Companies Act permitted examination of a director's conduct in winding up and recovery of misapplied company assets. Because the company was registered in Bihar and the court treated itself as having jurisdiction over the company, it held that an inquiry could proceed against the Bombay-resident director in respect of payments made after the winding-up petition.

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Issues: (i) Whether the Court could issue or enforce proceedings against directors who were outside its territorial jurisdiction. (ii) Whether the Court could proceed under section 235 of the Companies Act against a director residing in Bombay in respect of payments made after the winding-up petition.

Issue (i): Whether the Court could issue or enforce proceedings against directors who were outside its territorial jurisdiction.

Analysis: The governing principle was that a court does not ordinarily serve its process upon persons outside its territorial jurisdiction unless statute clearly authorises it. The provisions of the Code of Civil Procedure dealing with local jurisdiction and service out of jurisdiction did not confer a general power to proceed against persons beyond the Court's limits in a matter of this kind.

Conclusion: The application could not be proceeded with against the directors residing outside British India.

Issue (ii): Whether the Court could proceed under section 235 of the Companies Act against a director residing in Bombay in respect of payments made after the winding-up petition.

Analysis: Section 235 authorised the liquidator or a creditor or contributory to have the conduct of a director examined and to obtain repayment or restoration where company assets had been misapplied. The company was registered in Bihar, and the Court treated itself as having jurisdiction over matters relating to the company. On that footing, the Court held that the inquiry could proceed against the director residing in Bombay, notwithstanding the jurisdictional difficulty as to the others.

Conclusion: The Court assumed jurisdiction and directed an inquiry against the Bombay-resident director under section 235.

Final Conclusion: The application failed against the directors outside territorial jurisdiction but succeeded in part as against the Bombay-resident director, and an inquiry into the impugned payments was directed.

Ratio Decidendi: A statutory power to examine a director's conduct in winding up may be exercised where the Court has jurisdiction over the company, but process cannot be enforced against persons beyond territorial jurisdiction absent clear statutory authority.

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