Fiduciary disability in company winding up bars committee members from buying assets without full disclosure and consent.

A member of a committee of inspection in a company winding up is treated as occupying a fiduciary position because the committee assists the liquidator in administering and realising assets. On that footing, the member is disabled by equitable principle from purchasing company property, directly or through a benamidar, unless there is full disclosure and consent. The note states that this restraint does not depend solely on express statutory prohibition and applies even where the price is fair. It further states that, without such disclosure, the official liquidator may recover the property.

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Issues: Whether a member of a committee of inspection in a company winding up stands in a fiduciary position so as to be disabled from purchasing company assets, directly or through another, without full disclosure to the liquidator.

Analysis: The committee of inspection is appointed to act with the liquidator in the administration and realisation of the company's assets. Its functions are supervisory and assistive in nature, and the office carries confidence and responsibility of a fiduciary character. The Court held that the liability of such a member does not depend only on express prohibitions in the Act or Rules, but on general equitable principles. A person standing in the position of trustee for sale cannot buy or traffic in the trust property, even if the price paid is fair, and a purchase through a benamidar does not avoid that disability where there is no disclosure.

Conclusion: A member of a committee of inspection is subject to a fiduciary disability and cannot purchase the company's assets, directly or indirectly, without full disclosure; the official liquidator was entitled to recover the property.

Ratio Decidendi: Where a statutory committee is constituted to assist in the realisation of insolvent assets, its members are treated as fiduciaries and are barred by equitable principle from purchasing the property entrusted to that administration without full disclosure and consent.

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