Survival of statutory claim under Section 86D: company can sue director's estate; winding up remedy is not exclusive.

The High Court reviewed two issues: (1) whether the lower court correctly excused delay, set aside abatement and brought on record legal representatives of a deceased defendant; applying sufficient cause principles for delay and abatement, the HC found no misapplication of law and sustained the lower court's order. (2) whether a company's statutory right to recover money under the liability-creating provision for directors survives the director's death or is extinguished by the special winding-up remedy; the court held the directorial repayment liability is a distinct statutory cause of action that survives against legal representatives and that the limited winding-up remedy does not extinguish independent suits. Outcomes: both challenges dismissed.

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Issues: (i) Whether the lower court correctly excused delay, set aside the abatement and brought on record the legal representatives of the deceased 4th defendant; (ii) Whether the right to sue under Section 86D of the Indian Companies Act, 1913 survives against the legal representatives of a deceased director or whether such right is extinguished by Section 235 of the Indian Companies Act, 1913.

Issue (i): Whether the lower court was justified in excusing delay, setting aside abatement and bringing on record the legal representatives of the deceased 4th defendant.

Analysis: The petition to bring on record the legal representatives was filed and opposed on grounds of delay and non-survival of the cause of action. The lower court examined the facts including the vague counter-affidavit alleging the approximate time of death, the locations of the parties and the timing of filings, and applied the legal principles governing sufficient cause for delay and the setting aside of abatement. The High Court, on revision under Section 115 CPC, reviewed whether the lower court exceeded jurisdiction or misapplied the law and found no such error.

Conclusion: The lower court's order excusing delay, setting aside the abatement and bringing on record the legal representatives is sustained; the revision petition on this issue is dismissed.

Issue (ii): Whether a suit to recover money under Section 86D of the Indian Companies Act, 1913 abates on the death of a defendant director and cannot be continued against his legal representatives by reason of Section 235 of the Indian Companies Act, 1913.

Analysis: Section 86D creates a personal liability to repay unpaid loans and imposes joint and several liability on directors for defaults. Section 235 provides a special, limited remedy exercisable in winding up proceedings within specified time limits and was construed in prior decisions to be a limited right that does not survive against legal representatives in the context of proceedings under that section. The Court distinguished the statutory, limited remedy under Section 235 from the general right of a company to sue to recover money under other provisions such as Section 86D, holding that Section 235 does not extinguish independent suits founded on statutory liabilities and that the language of Section 235 does not operate to extinguish the company's general right to proceed against estates of deceased directors.

Conclusion: The right to sue to recover money under Section 86D of the Indian Companies Act, 1913 survives the death of a director and may be enforced against his legal representatives; Section 235 does not extinguish such independent rights of action.

Final Conclusion: The revision petitions fail; the lower court's orders bringing the legal representatives on record and allowing the suit to proceed are upheld and the challenge based on non-survival under Section 235 is rejected.

Ratio Decidendi: A claim to recover money founded on the liability created by Section 86D of the Indian Companies Act, 1913 does not abate on the death of a director and survives against his legal representatives; Section 235 of the Indian Companies Act, 1913 provides a limited remedy in winding up which does not extinguish the company's independent right to sue under Section 86D.

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