Territorial jurisdiction limits: court may not serve directors outside its territory; may examine local directors and compel repayment.

The note clarifies territorial limits on process: a court lacks power to serve process or make enforceable orders against company directors resident outside its territorial jurisdiction absent statutory authority, so applications cannot proceed against such non-resident directors. It also explains that where a director resides within the court's territory the court may, under the Companies Act examination power, enquire into conduct and compel repayment or restoration of company property for payments made after presentation of a winding-up petition that appear void under the law relating to post-petition payments.

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Issues: (i) Whether the High Court can exercise jurisdiction and order process against company directors residing outside the territorial jurisdiction of the Court; (ii) Whether the Court may entertain and allow an application under section 235 of the Companies Act to examine and compel repayment by a director who is within the Court's jurisdiction.

Issue (i): Whether the High Court can make orders or serve process under section 235 of the Companies Act on directors who are resident outside the territorial jurisdiction of the Court.

Analysis: The Court considered principles of territorial jurisdiction and service out of jurisdiction, referencing statutory limits in the Code of Civil Procedure (sections 16, 19, 20, 28) and established authorities regarding service beyond territorial limits. The Court held that, absent statutory power to confer jurisdiction over persons outside its territorial limits or enforceable service provisions, it cannot validly serve or make orders against persons resident beyond British India.

Conclusion: The Court has no jurisdiction to issue process or make enforceable orders against the three directors who are resident outside the territorial jurisdiction of the Court (in England); the application is not permitted against them.

Issue (ii): Whether the Court may examine the conduct and compel repayment from a director who resides within the jurisdiction under section 235 of the Companies Act in respect of payments made after presentation of a winding-up petition.

Analysis: Section 235 authorises the Court, on application by the liquidator or a creditor or contributory, to examine the conduct of directors and to compel repayment or restoration of company property. The impugned payments were made after presentation of the winding-up petition and the Court found that, insofar as a director (Mr. Subedar) resides within the territorial jurisdiction, the Court may proceed to enquire whether the payments were properly allowed having regard to section 227 and whether they are void and repayable under section 227, Companies Act.

Conclusion: The application under section 235 is allowed against the director who resides within the jurisdiction; the Court directs an inquiry into payments made after 5th May 1930 and whether such payments are void under section 227 and repayable by that director.

Final Conclusion: The Court declined to exercise jurisdiction over directors resident outside its territorial limits but permitted and directed an inquiry and appropriate remedial proceedings under the Companies Act against the director who is within the jurisdiction, resulting in a partial allowance of the application.

Ratio Decidendi: A court cannot serve process or make enforceable orders against persons outside its territorial jurisdiction absent statutory authority; however, where a director resides within the court's territorial jurisdiction, the court may, under section 235 of the Companies Act, examine the director's conduct and compel repayment or restoration of company property where payments made after presentation of a winding-up petition appear void under section 227 of the Companies Act.

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