Director liability for void post winding payments can constitute misfeasance and attract personal liability, relief refused.

Payments made after commencement of winding up that are void under the statutory prohibition can constitute misfeasance or breach of trust and attract director liability under the Companies Act; the court held the director liable for part of the payment (4625) as misfeasance. The liquidator's claim was within the applicable limitation period governed by the relevant limitation article. Statutory relief for directors who act honestly and reasonably was refused on these facts because the director acted deliberately and the transaction was ultra vires. The court apportioned liability to one quarter of the established sum and awarded costs to the Official Liquidator.

---

---

Issues: (i) Whether the director (respondent) is liable under section 235 of the Companies Act for the payment of 6000 made after the commencement of winding up; (ii) Whether the liquidator's claim is barred by limitation; (iii) Whether the director is entitled to relief or discharge under section 281 of the Companies Act; (iv) Quantum and apportionment of any liability and costs.

Issue (i): Whether the director is liable under section 235 of the Companies Act for the payment of sums paid after commencement of winding up.

Analysis: The Court examined factual communications between the London and Indian boards, the payment of 6000 (including 4625 as balance for purchase), and the transfer of funds from the Bombay account which enabled the London payment. The payment was made after the commencement of winding up and therefore void under section 227; applicable authorities and company law principles on directors' liability, misfeasance and ultra vires payments were analysed to determine whether such a void disposition gives rise to director liability under section 235.

Conclusion: In favour of Petitioner. The Court held that the director was liable under section 235 for the sum of 4625 (being part of the 6000) as misfeasance / breach of trust.

Issue (ii): Whether the liquidator's claim is barred by limitation.

Analysis: The Court considered competing Limitation Act articles and authorities, concluded that the directors' liability arises from breach of duty governed by the company constitution and that Articles 115 and 116 do not apply, applying Article 120 which gives a six-year period. The Court placed the claim within the limitation period.

Conclusion: In favour of Petitioner. The application is not barred by limitation under Article 120.

Issue (iii): Whether the director should be relieved under section 281 of the Companies Act by reason of acting honestly and reasonably.

Analysis: The Court reviewed authorities on statutory relief for directors who acted honestly and reasonably, distinguishing cases where directors relied on competent advice or were misled. The Court found the directors here acted deliberately and must be assumed to have known the transaction was ultra vires; no circumstances warranted relief under section 281.

Conclusion: In favour of Petitioner. Relief under section 281 is refused; the director is not excused.

Issue (iv): Quantum and apportionment of liability and costs.

Analysis: The Court found insufficient basis to hold the respondent liable for the full 6000 but established liability for 4625. Considering that only one of four directors was before the Court and exercising the Court's powers under section 281 to moderate individual liability, the Court apportioned liability to one quarter of 4625 and directed payment at the rate of one-sixth to the rupee; costs were awarded to the Official Liquidator in the sum of Rs. 500.

Conclusion: In favour of Petitioner. The respondent is ordered to pay one quarter of 4625 (payable at 1/6 to the rupee) and the Official Liquidator is awarded costs of Rs. 500.

Final Conclusion: The Court held that payments made after commencement of winding up that are void under section 227 can constitute misfeasance/ breach of trust attracting liability under section 235; limitation did not bar the claim; statutory relief under section 281 was not available on these facts; and the respondent's liability was apportioned to one quarter of 4625 with costs to the liquidator.

Ratio Decidendi: A disposition of company funds made after the commencement of winding up that is void under the statutory prohibition can amount to a breach of trust or misfeasance and thereby render directors jointly and severally liable under section 235 of the Companies Act, notwithstanding absence of dishonesty, subject to limitation and the limited scope for discretionary relief under section 281.

---