Fiduciary Duty: director's breach treated as fiduciary liability allowing arrest in execution under proviso to section 51.

A director's obligation to account for sums representing loss from share brokerage, preliminary expenses and investments in unauthorized banks was held to arise from his fiduciary relationship with company members; authorities treating directors as trustees or quasi trustees for company property and the Companies Act concept of misfeasance support liability for misapplication, retainer or breach of duty, and the decree therefore falls within the proviso permitting arrest in execution where the judgment debtor is bound in a fiduciary capacity to account, resulting in dismissal of the appeal and enforcement by arrest despite the director's asserted inability to pay.

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Issues: (i) Whether a director who has been ordered to pay sums for misfeasance is a person "for a sum for which the judgment-debtor was bound in fiduciary capacity to account" within the proviso to section 51 of the Civil Procedure Code, permitting arrest in execution; and whether a director occupies a fiduciary/trustee position entitling members to hold him to account for misapplication of company property under section 235 of the Indian Companies Act.

Analysis: The decree ordered the director to pay amounts representing loss caused by share brokerage, preliminary expenses and investments in unauthorised banks arising from breach of duty. Directors, though not express trustees, occupy a fiduciary relationship with company members and have been characterised in authorities as trustees or quasi trustees in respect of company property under their control. Misfeasance as envisaged by the Companies Act includes failure to perform duties respecting company property, and a director's breach of duty resulting in loss engages liability for misapplication, retainer, misfeasance or breach of trust. Where a decree is for sums for which a judgment-debtor is bound in a fiduciary capacity to account, the proviso to section 51 applies and arrest in execution is permissible; the facts found by the court and the decree establish such fiduciary liability.

Conclusion: (i) The director was bound in a fiduciary capacity to account for the sums decreed and therefore the decree falls within the proviso to section 51 of the Civil Procedure Code permitting arrest in execution; the appellant's contention that he was unable to pay does not prevent the operation of that provision. The appeal is dismissed in favour of the respondent.

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