Director liability for misfeasance: officers who enable wrongful transactions may be ordered to repay or contribute.

Director found liable for misfeasance, misapplication of funds and breach of trust where transfers and an illusory mortgage were arranged and a director derived benefit; the court applied the statutory principle under the Indian Companies Act, 1913 permitting repayment or contribution by officers who enable or participate in wrongful transactions, noting fraud need not be proved and civil liability may follow irrespective of criminal culpability. The appellant's facilitation and realisation of benefits supported contribution liability and the appeal was dismissed, leaving the respondent entitled to recovery from the director for the misapplied assets.

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Issues: Whether the appellant, as a director, is liable for misfeasance, misapplication of funds and breach of trust in relation to the transactions concerning Mannadiar Saw & Oil Mills Ltd., and whether he must be ordered to contribute to the company's assets; and whether the appellant's appeal against the High Court's decree should succeed.

Analysis: The High Court found on evidence that respondent No. 2 caused transfers and a dubious mortgage that were essentially illusory security and that the appellant actively assisted and derived benefit from those transactions (including arranging a fixed deposit for a relative which was realised). The transactions were held not to be mere errors of judgment but part of a designed scheme causing loss to the company. Under Section 235 of the Indian Companies Act, 1913 the court may compel repayment or contribution where there has been misapplication, misfeasance or breach of trust; proof of fraud is not essential and civil liability may be imposed irrespective of any criminal liability. The Supreme Court found no error in the High Court's factual findings and accepted that the appellant enabled the wrongful transactions and benefited thereby.

Conclusion: The appellant is liable to repay or contribute in respect of the misapplication, misfeasance and breach of trust and the appeal is dismissed (decision in favour of the respondent).

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