AI Drafter 
TaxTMI 
TaxTMI 
1930 (10) TMI 14
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....Act. Certain breaches of duty are alleged against the directors and some other officers of the company and the summons asks, that they may be ordered to bring into Court a sum of about Rs. 42,000. An objection in limine is taken that the applicants have no locus standi. If they are creditors, as they allege themselves to be, they can apply under the section to which I have referred. The question is, are they creditors of the company and have they, as such, a locus standi? The company was started in 1878 under the name of the Madras Native Permanent Fund, Ltd., with a capital of two lakhs divided into two thousand shares of Rs. 100 each. Each shareholder was to pay one rupee per month per share and at the end of seven years, he was to rec....
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....oans being advanced on pledges of jewels. The customers of the bank included both members and strangers. This went for about forty years and it was then found that the company's affairs were not being conducted satisfactorily. Certain irregularities occurred, such as loan being advanced on jewels of insufficient value. The result was, the company having sustained a loss, the depositors were unable to get back their moneys. A liquidation petition was filed and a compulsory order was made in May, 1927. To make clear the point that has now arisen, I may briefly refer to certain previous orders made in the course of the winding up. The liquidators, Messrs. Fraser & Ross, treated in the list filed by them, certain 357 persons of the Loan Branch,....
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....he Original Side. For the contributories it was contended that the amounts which the company made itself liable to return were those deposited by its customers in the Deposit Branch and that the company, in receiving such deposits, practically converted itself into a bank. This, it was argued, was going beyond the memorandum of association, was ultra vires of the company. Mr. Justice Pandalai, relying upon Ashbury Carriage Co. v. Riche ) [1875] L.R. 7 H.L. 653; 44 L.J. Ex. 185; 33 L.T. 457; 24 W.R. 794, accepted this contention. From his judgment, I quote the two following passages:- "On the best consideration, I can give to the matter, I see no escape from the conclusion that the taking of deposits in Deposit Branch from strangers to th....
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....r the person who has paid the money is one in rent and not in personam. This is a most unequivocal declaration that ultra vires transactions do not create the relationship of debtor and creditor. The preliminary objection, therefore, must be upheld, and on this short ground the application is dismissed. From this it does not follow that the lenders can, in no circumstances, recover their deposits. The very case I have cited, Sinclair v. Brougham [1914] A.C. 399, 83 L.J. Ch.465; 111 L.T. 1 , 58 S. J. 302 , 30 T.L.R. 315, decides what their rights are and how and to what extent they can be enforced. There are no persons other than the depositors who have any claims to the moneys in the Deposit Branch; the question of priority decided in Si....
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....sp; Total 1,347-13-0 Of the sum of Rs. 436 mentioned in the affidavit of the liquidators, Rs. 375 represents the sum paid to them by the first 2 of the 3 directors named in the above table, when calls were made after the decision of the Appellate Court to which I have referred. This sum, as well as the above-mentioned sum of Rs. 1,347-13-0 together with Rs. 1,500 (vide Application No.3485 of 1929) shall, subject to the payment of all proper costs, be treated by the liquidators as available for distribution among the depositors of the Deposit Branch. Rs. 1,955-13-9 in the Loan Branch shall be distributed among the unadvanced shareholders of that branch; if any balance is left over, it shall be carried forward to the Deposit Branch. ....