l Appeals Nos 1174 of 1965 and 1935 of 1966
Appeals from the judgment and decree dated October 14 1959 of the Madras High Court in Appeal No 471 of 1955
H R Gokhale P section Padmanaban and D N Gupta for the appellant in CA No 1174 of 1965 and respondent No 1 in CA No 1935 of 1966
V P Raman Shyamala Pappu Vineet Kumar PS khera and R Nagaratnam for the appellants in CA No1935 of 1966 and respondents Nos
1 to 4 in CA No 1174of 1965
CB Agarwala and R Gopalakrishnan for respondent No 12 in CA No 1935 of 1966
206 The Judgment of the Court was delivered by Bachawat J
One James Henry Wapshare owned several estates including Naduvattam in the Nilgiris known as the Ouchterlony Valley Estates having tea coffee cardamom and cinchona plantations
He lived in Naduvattam and Ootacamund with his wife Nellie daughters Violet and Dorothy and sons James and Edward
In 1927 he formed a limited company known as the Ouchterlony Valley Estates limitedhaving a share capital of Rs 15 lakhs and conveyed the estates to the company
All the shares of this company sometimes referred to as the old company were held by him and the members of his family
The company borrowed Rs 10 12 lakhs from the Imperial Bank of India against the issue of debentures
The loan was secured by a mortgage of the estates under a debenture trust deed dated May 13 1927 and was repayable on May 15 1937
In default of payment within November 15 1937 the trustee under the debenture trust deed was authorised to enter into possession of the estates and sell them
By an agreement dated August 16 1936 Peirce Leslie  Co Ltd referred to as the appellant company was appointed as the secretary of the old company
On April 15 1937 the old company was served with a notice
that in default of payment of the loan within November 15 1937 the trustee for the debenture holders would take possession of the estates and sell them
On May 18 1937 James Henry Wapshare died leaving behind him his widow and his sons and daughters
In November 1937 after prolonged negotiations between the Wapshares and the appellant company it was settled that the company would purchase all the estates except Naduvattam for Rs 10 lakhs
On December 29 1937 formal agreements were executed providing that the old company would convey to the appellant company all the estates except Naduvattam for Rs 10 12 lakhs and the appellant company would convey Naduvattam to Mrs Nellie Wapshare for Rs 50000 and would at the same time advance Rs 50000 on the hypothecation of Naduvattam crops
By January 10 1938 the appellant company paid the entire purchase price and took possession of the estates and the entire dues of the Imperial Bank of India were liquidated
On March 30 1938 the old company passed a special resolution for its voluntary winding up and appointed Capt
F Murcutt as its liquidator
The appellant company promoted a new company known as Ouchterlony Valley Estates Ltd for the purpose of acquiring the  estates
The new company was incorporated on September 5 1938
Fifty per cent of its shares were held by the appellant company
Formal conveyances of the Naduvattam estate in favour of Mrs Nellie Wapshare and of the other estates in favour of the new company were executed by the old company between January and May 1939
On the execution of the con 207 veyances the new company entered into possession of the estates conveyed to them
 As soon as the affairs of the old company were wound
up the liquidator made up the final accounts of tile winding up and called the final meetings of the company and its creditors
On or about November 29 1939 a copy of the final accounts and the return of the holding of the meetings were filed with the registrar of joint stock companies and were registered under section 209H of the Indian Companies Act 1913
In view of section 209H4 the old company stood dissolved with effect from March 1 1940
On December 21 1950 Mrs Nellie Violet Dorothy James and Edward Wapshares instituted the present suit against the appellant company impleading the appellant company as defendant No 1 12 persons said to be its directors and officials as defendants 2 to 13 Capt
FA Murcutt as defendant No 14 the new company as defendant No 15 and the old company as defendant No 16
The plaintiffs prayed for a decree declaring that the old company had not been wound up in accordance with law and was still in existence as a corporate personality a declaration that the old company was the real owner of the aforesaid properties and the new company held them in trust for the old company a decree vesting or re transferring the properties to the old company and alternatively to the plaintiffs and accounts
The plaintiffs alleged that the appellant company as the secretary and manager of the old company was bound in a fiduciary character to protect its interest and by availing itself of this character gained pecuniary advantage by purchase of the properties from the old company in 1939 that the agreement for sale and conveyances in respect thereof were induced by fraud fraudulent concealment misrepresentation undue influence an improper means that the new company was controlled by the appellants that all the defendants were privy to the fraud that the winding up of the old company was procured by the defendants fraudulently that the plaintiffs discovered the fraud in September 1949 and the plaintiffs were the only shareholders of the old company and as such were entitled to maintain the suit
Defendants 4 11 and 14 died during the pendency of the suit
The defunct old company impleaded as defendant No 16 did not appear but the other defendants contested the suit
The Subordinate Judge the Nilgiris Ootacamund dismissed the suit
 He held that 1 there was no fiduciary relationship between the appellant and the old company 2 the impugned agreements and conveyances were not induced by fraud fraudulent concealment undue influence or improper means and were valid and binding on the old company and the plaintiffs 3 the suit was barred by limitation 4 the old company was dissolved in accordance with law and was not in existence and 5 the plaintiffs had no locus standi to maintain the suit 
The plaintiffs filed an appeal from the decree
The Madras High Court allowed 208 the appeal in part and passed a decree asking the appellant to pay to the plaintiffs Rs 150000
The High Court held that 1 there was a fiduciary relationship between the appellant and the old company 2 the appellant by availing itself of its fiduciary character gained a pecuniary advantage of Rs 150000 and to the extent of this unjust enrichment was bound to reimburse the plaintiffs 3 the suit was not barred by limitation and 4
in spite of the dissolution of the old company the plaintiffs were entitled to maintain the suit
Aggrieved by this decree the appellant company filed CA No 1174 of 1965 and the Wap shares have filed the cross appeal CA No 1935 of 1966 on the strength of certificates granted by the High Court under Act
1331c of the Constitution
The following three questions arise in these appeals 1 was there a fiduciary relationship between the appellant and the old company and if so did the appellant company by availing themselves of this fiduciary character gain a pecuniary advantage of Rs 150000
2 is the suit barred by limitation and 3 are the plaintiffs as shareholders of the old company entitled to maintain the suit
It is a settled rule of equity that any person bound in a fiduciary character to protect the interests of another person should not put himself in a position where his interest and duty conflict
If by availing himself of his fiduciary character or by entering into any dealings under circumstances in which his interests are or may be adverse to those of such other person he gains for himself a pecuniary advantage he must hold for the benefit of such other person the advantage so gained see Trusts Acts88
But there is no rule which incapacitates a trustee from dealing with a cestui que trust
In Coles vs Trecothick1 Lord Eldon said  a trustee may buy from the cestui que trust provided there is a distinct and clear contract ascertained to be such after a jealous and scrupulous examination of all the circumstances proving that the cestui que trust intended the trustee should buy and there is no fraud no concealment no advantage taken by the trustee of information acquired by him in the character of trustee
I admit it is a difficult case to make out wherever it is contended that the exception prevails
 As stated in Kerr on Fraud and Mistake 6th Ed page 192 Thus a trustee for sale may purchase the trust estate if the cestui que trust fully and clearly understands with whom he is dealing and makes no objection to the transaction and the trustee fairly and honestly 1 9 Ves
June23424732ER592597 209 discloses all that he knows respecting the property and gives a just and fair price and does not seek to secure surreptitiously any advantage for himself
The onus however rests upon the trustee and he is bound to produce clear affirmative proof that the parties were at arms  length that the cestui que trust had the fullest information upon all material facts and that having this information he agreed to and adopted what was done
 The appellant company was the secretary of the old company was in charge of its correspondence and accounts and was actively engaged in assisting it and its shareholders in selling the estates
In course of its employment the appellant acquired intimate knowledge of the income prospects and the market value of the properties
We agree with the High Court that the appellant stood in a fiduciary relationship towards the old company and was bound to protect its interests
The appellant entered into an agreement with the old company for the purchase of the properties
It promoted the new company to which the properties were subsequently conveyed
Fifty per cent of the shares of the new company were held by the appellant company and the new company was managed and controlled by it
The onus is upon the appellant company to establish affirmatively that the transaction was righteous and that it did not gain any pecuniary advantage by availing itself of its fiduciary character
We are inclined to think that the appellant company has discharged this difficult burden of proof
Since 1931 the Wapshares were keen on selling the estates
From time to time there were offers from intending buyers but none of them materialized
In 1936 there was a slump in tea and coffee prices
There was a possibility that the tea restriction scheme would be abolished and there would be a further slump in tea prices
The old company was indebted to the Imperial Bank of India for Rs 10 12 lakhs against the issue of debentures secured by an English mortgage over all the estates
The Bank was pressing for the payment of its dues
There was every likelihood that in default of payment by November 15 1937 the trustee for the debenture holders would enter into possession of the estates and sell hem without intervention of court
The old company was not in a position to liquidate the debt without selling the estates In April 1937 Ms Kuruvilla Bros agreed to purchase the properties
On May 18 1937 James Henry Wapshare died
In July 1937 the deal with Kuruvilla Bros fell through
The Wapshares and the old company tried their best to raise loans and for that purpose issued advertisements and contacted several banks and insurance companies but they were unable to raise any loan
In the beginning of November 1937 210 the Wapshares had before I them a firm offer from Arbuthnot Lathem  Co for purchase of the estates for Rs 14 lakhs
But the Wapshares were not willing to sell Naduvattam
The bungalow at Naduvattam was the home of the Wapshare family
Naduvattam was the highest altitudinal estate grew the best tea in the area and had a very good name in the London tea market
The appellant had previously offered to buy all the estates for Rs 1112 lakhs only
The Wapshares wanted the appellant to make an offer which would enable them to retain Naduvattam and at the same time to liquidate the Bank s dues
At the insistence of the Wapshares interviews were arranged at Calicut on November 4 and November 6 1937 between Dorothy and Robert representing the Wapshares and Mr Thorne representing the appellant
Mr Thome could not offer more than Rs 10 lakhs for all the estates excluding Naduvattam
He told the Wapshares that they should accept the offer of Arbuthnot Lathem  Co as they would get Rs 14 lakhs by selling all the estates
The Wapshares were anxious to retain Naduvattam and were inclined to accept the appellant s offer
They took some time for consideration and at the same time asked the Arbuthnots for time till November 10 for consideration of their offer
On November 10 Dorothy sent a telegram to the appellant company informing them that the family was agreeable to their new proposal
The draft agreement was sent by the appellant on November II
In the beginning of November Mrs Wapshare was ill and was in a hospital in Bangalore
But on November 10 she was well enough to discuss the appellant s proposal
On November 12 she came to Ootacamund and on November 13 she went to her lawyer Gonsalves discussed the matter with him and gave her consent
Gonsalves was approached to put the bargain in a legal form
He took exception to the draft agreement but found the formal agreements to be free from blemish
At a meeting held on November 18 1937 the shareholders of the company unanimously accepted the proposal
Mrs Wapshare Dorothy Robert and Edward were present at the meeting
The meeting was also attended by EW Simcock chairman of the company H M Small the director nominated by the Imperial Bank of India and C K Pittock
All the Wapshare s were sui juris  Dorothy was a shrewd young lady and the best business brain in the family
The Wapshares knew the value of the properties intimately
They knew that Naduvattam if sold separately would not fetch more than Rs 2 lakhs
Yet they chose to retain Naduvattam and sell their estates for Rs 10 lakhs instead of selling all the estates for Rs 14 lakhs
The reason was that there was no other buyer willing to pay more than Rs 10 lakhs for the other estates
They had decided not to sell Naduvattam and they were satisfied that ft 10 lakhs was a just and fair price for the other estates sold separately from Naduvattam
The appellant s offer enabled them 211 to keep Naduvattam and at the same time to liquidate the Bank s dues
The deal was satisfactory to them in every way
They obtained all necessary legal advice
The documents were in proper legal form
There was no fraud no concealment and no undue influence
No advantage was taken by the_ appellant of any information acquired by them in their character as secretary
The Wapshares clearly understood that they were dealing with the appellant company had the fullest information about all material facts and that having this information they agreed to sell
They made no complaint about it for 12 years
Their long acquiescence in the sale is evidence that the transaction was fair in all respects see Parks vs White1
On the whole and especially having regard to the long acquiescence we hold that the transaction was just and fair and that the appellant did not gain any pecuniary advantage by availing themselves of their fiduciary character or under circumstances in which their interests were in conflict with those of the old company
In saying so we must not be understood to say that we encourage transactions of this type
Having regard to their fiduciary character the appellant company might well have avoided entering into the transaction
The next question is with regard to limitation
The convey ances in favour of the new company were executed on January 14 1939 and May 15 1939
Simultaneously with the execution of the conveyances the new company entered into possession of the properties
Even before that date by January 10 1938 the appellant company had taken possession of the properties
The suit was filed on December 21 1950 when the Indian Limitation Act 1908 was in force
The plaintiffs cannot claim relief on the ground of fraud and consequently article 95 has no application
Section 10 does not apply as the properties are not vested in the new company for the specific purpose of making them over to the old company or to the plaintiffs
Article 144 does not apply for several reasons
In the plaint there is no prayer for recovery of possession
The plaintiffs claim declaratory reliefs a decree vesting or re transferring the properties to the old company or to the plaintiffs and accounts
Such a suit is governed by article 120
The High Court passed a decree for money and not for recovery of immovable properties
A suit for such a relief would be governed by article 1 20
Even if the suit is treated as one for recovery of possession of the properties it would be governed by article 120 and not by article 144
The old company could not ask for recovery of the properties until they obtained a reconveyance from the new company 
The cause of action for this relief arose in 1939 when the properties were 11 Ves
June 209226 1074
212 conveyed to the new company
A suit for this relief was barred under article 120 on the expiry of six years
After the expiry this period the old company could not file a suit for recovery of possession
In Rani Chhatra Kumari Devi V Prince Mohan Bikram Shah1 the Privy Council held that in a case where the property was not held by the trustee for the specific purpose of making it over to the beneficiary and the trust did not fall within section 10 a suit by the beneficiary claiming recovery of possesSion from the trustee was governed by Art 120
Sir George Lowndes said The trustee is in their Lordships  opinion the owner of the trust property the right of the beneficiary being in a proper case to call upon the trustee to convey to him
The enforcement of this right would their Lordships think be barred after six years under article 120 of
the Limitation Act and if the beneficiary has allowed this period to expire without suing he cannot afterwards file a possessory suit as until conveyance he is not the owner
 It follows that the suit is barred by limitation
The third question relates to the maintainability of the suit
The plaintiffs sued to recover properties belonging to the old company
The company went into voluntary liquidation and was wound up
As already stated the company stood dissolved on March 1 1940 under section 209H of the Indian Companies Act 1913
No application was made within 2 years to declare the dissolution to be void under section 243
Apart from s243 the dissolution might possibly be set aside in a suit on the ground of fraud but the plaintiffs failed to establish any fraud affecting the dissolution
The dissolution has put an end to the existence of the company
In these circumstances the appellant contends that all the properties and the rights of the old company
if any have vested in the Government by escheat or as bona vacantia and the plaintiffs cannot sue for the recovery of its properties
The plaintiffs dispute the right of the Government to take the properties by escheat or as bona vacantia and they contend that on the dissolution of the old company its assets have now vested in its shareholders
The common law of England recognises the right of the Crown to take property by escheat or as bona vacantia
Escheat proper was the lord s right of re entry on real property held by a tenant dying intestate without lawful heirs
It was an incident of feudal tenure and was based on the want of a tenant to perform the feudal services see Halsbury s Laws of England vol
16 1 LR 58 IA 279
213 art 830 On the tenant dying intestate without leaving any lawfull heirs his estate came to an end and the lord was in by his own right and not by way of succession or inheritance from the tenant see Attorney General of Ontario vs Andrew F Mercer1
In most cases the land escheated to the Crown as the lord paramount in view of the gradual elimination of intermediate or mesne lords since 1290 The Crown takes as bona vacantia goods in which no one else can claim a property
In Dyke vs Walford2  it was said that it is the right of the Crown to bona vacantia to property which has no other owner
 The right of the Crown to take as bona vacantia extends to personal property of every kind see In re
Wells Swinburne Hanham vs Howard3
Escheat of real property of an intestate dying without heirs was abolished in 1925 and the Crown now takes all his properties as bona vacantia
On the dissolution of a company the Crown took its real property by escheat and its personal property as bona vacantia
Technical escheat of the property of a dissolved company was abolished in 1929 and now under section 354 of the English Companies Act 1948 all the property and rights of a dissolved company is deemed to be bona vacantia and accordingly belongs to the Crown
The right of the Government to take by escheat  for want of an heir or successor or as bona vacantia for want of a rightful owner has been recognised in our country for a long time
Statute 16  17 Victoriae C 95 section 27 an Act to provide for the government of India asserted that all real and personal estate within the said territories escheating or lapsing for want of an heir or successor and all property within the said territories devolving as bona vacantia for want of a rightful owner shall as part of the revenues of India belong to the East India Company in trust for Her Majesty for the service of the government of India By section 54 of the Government of India Act 1858 the existing provision was continued in force and was construed as referring to the Secretary of State in Council in place of the company
Section 203 iii of the Government of India Act 1915 provided that the revenues of India received for His Majesty would include all movable or immovable property in British India escheating or lapsing for want of an heir or successor and all property in British India devolving as  bona vacantia for want of a rightful owner
 Section 174 of the Government of India Act 1935 provided  Subject as hereinafter provided any property in India accruing to His Majesty by escheat or lapse or as bona vacantia for want of a rightful owner shall if it is 1 8 AC 767 7722  49613ER557580
3 1933 1 Ch2949
214 property situate in a Province vest in His Majesty for the purposes of the government of that Province and shall in any other case vest in His Majesty for the purpose of the government of the Federation
 Article 296 of the Constitution now provides Subject as hereinafter provided any property in the territory of India which if this Constitution had not come into operation would have accrued to His Majesty or as the case may be to the Ruler of an Indian State by escheat or lapse or as bona vacantia for want of a rightful owner shall if it is property situate in a State vest in such State and shall in any other case vest in the Union
 These enactments show that in this country the Government takes by escheat immovable as well as movable property for want of an heir or successor
In this country escheat is not based on artificial rules of common law and is not an incident of feudal tenure
It is an incident of sovereignty and rests on the principle of ultimate ownership by the State of all property within its jurisdiction
Private ownership not existing the State must be owner as ultimate lord see Collector of Masulipatam vs C Vencata Narainapah1
The rules of English feudal law relating to mesne lords are not applicable and consequently the zamindar could not take by escheat the land of a tenant dying without heirs
The right of escheat belongs to the Government only see Ranee Sonet Kowar vs Mirza Himmut Bahadoor2
The Government has the right to take all property within its jurisdiction by escheat for want of an heir or successor and as bona vacantia for want a a rightful owner see  Bombay Dyeing  Manufacturing Co V State of Bombay Legal Remembrancer vs
Corporation of Calcutta 4
Consequently the property of an intestate dying without leaving lawful heirs and the property of a dissolved corporation passes to the Government by escheat or as bona vacantia
The property taken by escheat or as bona vacantia belongs to the Government subject to trusts and charges if any previously affecting it
As already stated technical escheat of the real property of a dissolved company was abolished in England in 1929 and section 354 of the Companies Act 1948 now provides that all property and rights of a dissolved company shall be deemed to be bona vacantia and shall accordingly belong to the Crown
There was no statutory provision like section 354 before 1929
In the absence of such a provision the Crown took the real property of a company dissolved before 1929 by escheat and its personal property 1 8 M I A 500 525
3  1146
2 LR 3 IA 92 101
4 215 as bona vacantia except in so far as its right was cut down by statute see  In re
Wells1
Likewise in this country the Government took by escheat or as bona vacantia all the properties of a company dissolved under the Indian Companies Act 1913 except in so far as its right was cut down by that Act
P B Mukherjee J expressed a similar opinion In re UN Mandal s Estate 2
Accordingly the shareholders or creditors of the dissolved company cannot maintain any action for recovery of its assets
No effective relief can be given in such action as the company is  not a party and the assets cannot be restored to its coffers
On this ground in Coxon vs Gorst3 an action by creditors for recovery of moneys due to the dissolved company was dismissed and in
In re
Lewis  Smart Ltd 4 it was held that a pending misfeasance summons abated on the dissolution of the company
The plaintiffs  contention that the properties of a dissolved company passed to its shareholders is based upon American law which is stated in American Jurisprudence 2d Corporations aft
1659 thus  Apart from statutory provisions which frequently embody the following rule also the general equitable rule now followed in this country is that upon the dissolution of a corporation the property and assets of the corporation constitute a trust fund for the benefit of its creditors and stockholders
This rule necessarily displaces and makes obsolete the early common law rules as to the reverter If real estate and the escheat of the personal estate of corporation in such a case and practically makes obsolete the doctrine as to the extinguishment of the debts owing by and to the corporation in such cases
Stated in another way the rule is that after the dissolution of a corporation its property passes to its stockholders subject to the payment of the corporate debts
The inherent jurisdiction of equity over trusts embraces the power to administer the assets of a dissolved coloration
 The subject of dissolution of corporations is discussed in articles 1628 to 1696 of the book
The corporation is dissolved by a judgment of court article 1645
For the purpose of complete winding up of its affairs statutes provide that even after dissolution the corporation shall continue to exist and may sue or be sued for a limited period see articles 1662 1668 1669 1671 1673 Statutes also provide for appointment of a trustee for the dissolved corporation and their effect is to convert its properties into a trust fund and to abrogate the common law rule of escheat articles 1676 1677
The stockholders of the dissolved corporation can accordingly maintain an action against the trustee for distribution 1 493 2 ATR  4984 216 of the surplus assets after payment of the debts
of the corporation see Bacon vs Robertson 1
The law in our country is very different
Here the winding up precedes the dissolution
There is no statutory provision vesting the properties of a dissolved company in a trustee or having the effect of abrogating the law of escheat
The shareholders or creditors of a dissolved company cannot be regarded as its heirs and successors
On dissolution of a company its properties if any vest in the government
In Coxon vs Gorst2 page 78 Chitty J summarily rejected the contention that a chose in action vested in a company passed on the dissolution to its creditors
He said  This supposed vesting in the creditors of the company s closes in action is a mere fiction with nothing in the statute to support it and is in the teeth of the provisions of the statute
follows that the plaintiffs are not entitled to maintain this suit
A question may arise whether the Government takes the pro perty of a dissolved insolvent company subject to a trust for payment of its debts see in this connection In the matter of Chandbali SS Co3 and In Re Wells4  at pages 38 and 50
But that question does not arise in the present case and we express no opinion on it
In the result CA No 1174 of 1965 is allowed the decree passed by the High Court is set aside and the decree passed by the Trial Court is restored
CA No 1935 of 1966 is dismissed
There will be no order as to costs in this Court and in the High Court
CA No 117465 allowed
vps
CA No 193566 dismissed
1 15 Law ed
2 3  284 286


Summary:
One W owned several tea coffee and other
plantations
In 1927 he formed a limited company and conveyed his estates to the company
All the shares of the company were held by him and the members of his family
The company borrowed Rs 10 12 lakhs from the Imperial Bank of India against the issue of debentures secured by an English mortgage
The loan was repayable on March 15 1937
In default of payment within November 15 1937 the trustee under the debenture trust deed was authorised to enter into possession of the estates and sell them
The appellant company was appointed as the secretary of the company
Since 1931 the family was keen on selling the estates but none of the offers materialised
In 1936 there was a slump in tea and coffee prices and there was a possibility of a further slump
The Bank was pressing for the payment of its dues and the company was not in a position to liquidate the debt without selling the estates
The family tried unsuccessfully to raise loans
In the beginning of November 1937 the family had a firm offer from AL  Co for the purchase of all the estates for Rs 14 lakhs but the family wag anxious to retain one of them
The appellant company offered Rs 10 lakhs for all the estates excluding the estate which the family wanted to retain
The family knew that this estate if sold separately would not fetch more than Rs 2 lakhs and yet they chose to retain it and to accept the appellant s offer
At a meeting all the shareholders members of the family unanimously accepted the proposal
There all sui juris and had business acumen
They knew the value of he properties and accepted Rs 10 lakhs as a just and fair price
The offer enabled them to retain the estate which they wanted to retain and at the same time enabled them to liquidate the Bank s dues
They had legal advice and the documents were in proper legal form
The meeting was also attended by the chairman of the company and the director nominated by the Imperial Bank
After the transfer the company went into voluntary liquidation and it stood dissolved on March 1 1940 under section 209 H of the Companies Act 1913
The appellant took possession of the properties on January 10 1938 and promoted a new company to which the properties were transferred by conveyances dated January 14 1939 and May 15 1939 50  of the shares of the new company were held by the appellant company which managed and controlled the new company
The members of the family made no complaint about the transaction for 12 years but on December 21 1950 they instituted a suit against the appellant and others alleging that the old company had not been wound up in accordance with law and was still in existence that the old company was the real owner of the properties and the new company held them in trust for the old 204 company that the appellant took advantage of its fiduciary capacity and gained pecuniary advantage and that the various sales and conveyances were vitiated by fraud and prayed for a decree vesting or retransferring the properties to the old company or the family
The trial court dismissed the suit but the appeal to the High Court was allowed in part
In appeal to this Court on the questions  1 a Whether there was a fiduciary relationship between the appellant and the old company and b Whether the appellant gained a pecuniary advantage by availing itself of the fiduciary character 2 Whether the suit was barred by limitation and 3 Whether the members of the family as shareholders of the old company were entitled to maintain the suit HELD  1 a The appellant company was the secretary of the old company was in charge of its correspondence and accounts and was actively engaged in assisting it and its share holders in selling the estates
In the course of such employment it acquired intimate knowledge of the income prospects and market value of the properties
Therefore the appellant stood in a fiduciary relationship towards the old company and was bound to protect its interests
Having regard to its fiduciary character the appellant should have avoided entering into the transaction
209 B D 211 D b But there is no rule which incapacitates a trustee from dealing with a cestui que trust provided there was no fraud and no advantage was taken by the trustee of any information acquired by him in the character of a trustee
The onus however is upon the trustee to establish affirmatively that the transaction was righteous and that he did not gain any pecuniary advantage by availing himself of his fiduciary character
in the present case the appellant had discharged this difficult onus
The transaction was just and fair and the appellant did not gain any pecuniary advan tage by availing itself of its fiduciary character nor was there any conflict between its own interests and those of the old company
 No advantage was taken by the appellant of any information acquired by it in its character as secretary and the circumstances how that there was no fraud no concealment and no undue influence
The long acquiescence of the members of the family in the sale is also evidence that the transaction was fair in all respects
E 211 E D Coles vs Trecothick   247   597 and Parks vs White  226  1074 applied 2 The suit was barred by limitation
212 D A suit by a beneficiary claiming recovery of possession from the trustee is governed by article 120 of the Limitation Act 1908
The plaintiffs had not established fraud and consequently article 95 of the Limitation Act has no application
Section 10 of the Act also does not apply because the properties were not vested in the new company for the specific purpose of making them over to the old company or to the plaintiffs
In the plaint there was no prayer for recovery of possession
The old company could not ask for recovery of the properties until they obtained a reconveyance from the new company
The suit is not there fore governed by article 144 of the Limitation Act and since the  period under article 120 is 6 years from the date of cause of action and the cause of action in the present case arose in 1939 when the conveyances were executed the suit was barred
211 F H 205 Rani Chhatra Kumari Devi vs Prince Mohan Bikram Shah LR 58 IA 279 applied
3 The plaintiffs were not entitled to maintain the suit
216 C As the plaintiffs failed to establish any fraud affecting the dissolution of the company the dissolution has put an end to its existence
On the dissolution of the company its properties if any Vested in the Government The right of the Government to take by escheat for want of an heir or successor or as bona vacantia for want of a rightful owner has been recognised in our country
The various Government of India Acts and the Constitution show that the Government takes by escheat immovable as well as movable property for want of an heir or successor
It is an incident of sovereignty and rests on the principle of ultimate ownership by the State of all property within its jurisdiction
Unlike the law in the United States winding up under the Indian Law precedes dissolution and there is no statutory provision vesting the properties of a dissolved company in a trustee or having the effect of abrogating the law of escheat
The shareholders or creditors of a dissolved company cannot be regarded as its heirs or successors
Therefore the Government took by escheat or as bona vacantia all properties of a company dissolved under the Indian Companies Act 1913 except in so far as its right was cut down by that Act
Accordingly the shareholders or creditors of the dissolved company cannot maintain arty action for recovery of its assets As the company was not a party and the assets could not be restored to its coffers no effective relief could be given in such an action
D E 214 C D F 215 B C 216 A B Collector of Masulipatam vs C Vencata Narainapah 8 MIA 500 525 in re
Wells  49 Coxon vs
Gorst and In re
Lewis and Smart Ltd  applied
Bombay Deying and Manufacturing Co vs State of Bombay   1146 and Legal Remembrancer vs Corporation of Calcutta   204 followed
In re
U N Mandal s Estate AIR 1959 Cal
493 498 approved