Director misfeasance requires specific proof of blameworthy conduct and direct loss; unsupported allegations were rejected.

Misfeasance liability against directors requires specific pleading and proof of dishonest, negligent, or otherwise blameworthy conduct causing identifiable loss. On the facts, the investment in Ryam Sugar Company was treated as a business investment, and the later loss on resale did not itself establish breach of trust. Claims concerning the Mirrless Watson transaction, crushing season loss, advances to related concerns, and alleged non-accounting of cash and sale proceeds lacked reliable primary evidence, while some surviving directors had no active role or joined after the relevant decisions. The official liquidator therefore failed to prove personal liability, and the claim was rejected.

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Issues: Whether the official liquidator proved that the surviving opposite parties were liable for misfeasance, breach of trust or misconduct in relation to the purchase and sale of shares, advances to related concerns, alleged failure to account for cash and sale proceeds, and the alleged losses in the Warsaliganj scheme and the 1949-50 crushing season.

Analysis: The application rested on serious allegations of misfeasance and breach of trust, which had to be pleaded and proved with specificity against each director, along with proof of direct loss attributable to identifiable acts or omissions. The material showed that the Ryam Sugar Company investment was made as a business investment when funds were available and the Warsaliganj project had been delayed for reasons beyond the directors' control; the subsequent loss on resale was treated as an investment loss and not proof of dishonesty. The claims relating to the Mirrless Watson transaction, the alleged loss in the crushing season, the advances to Bhadani Brothers Limited and J. R. Commercial Corporation, and the alleged failure to account for cash and sale proceeds were not supported by reliable primary evidence. The surviving directors were found to have joined after some transactions had already been decided, or to have had no active role in the relevant dealings, and the committee of directors and accounts material did not establish personal liability. The governing principle applied was that a director is not liable for a mere error of judgment or an honest act done in the supposed interests of the company, and liability for misfeasance requires proof of negligent, dishonest, or directly blameworthy conduct causing recoverable loss.

Conclusion: The official liquidator failed to establish misfeasance, breach of trust or personal liability against the surviving opposite parties, and the claim was rejected.

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