Case: M/S. Ram Chand And Sons Sugar Mills Pvt. Ltd Vs. Kanhaya Lal Bhargava &amp; Ors

to the suit. The contension of the learned counsel for the appellant is that the director mentioned in r. 3 is the director mentioned in r. 1 thereof. To put it in other words, the director who signs and verifies the pleadings can only be required to appear personally to answer material questions relating to the suit. Though this cotention appear to be plausible, it is not sound. Rules 1, 2 and 3 of O. XXIX of the Code use the words ?any director?. Under r. 1 thereof a director who is able to depose to the facts of the case may sign and verify the pleadings; under r. 2, a summons may be served upon any director :and under r. 3, any director who may be able to answer meterial questions relating to the suit may be required to appear personally before the Court. The adjective ?any? indicates that any one of the directions with the requisite qualifications, prescribed by r. 1, 2 and 3 can perform the functions laid down in each of the rules respectively. One can visualize a situation where a director who signed and verify the pleadings may not be in a position to answer certain material questions relating to the suit. If so there is no reason why the director who may be able to answer such material questions is excluded from the scope of r. 3. Such an interpretation will defeat the purpose of the said Rule. Therefore, ?Any director? in r. 3 need not be the same director who has signed and verified a pleading or on whom summons has been served. He can be any one of the directors who will be in a position to answer material questions relating to the suit. 7. Even so, learned counsel for the appellant contended that O. XXIX, r. 3, of the Code did not provide for any penalty in case the director required to appear in Court failed to do so. By drawing analogy from other provisions where a particular default carried a definite penality it was argued that in the absence of any such provisions it must be held that the Legislature intentionally had not provided for any penalty for the said default. In this context the learned counsel had taken us through O. IX r. 12, O. X, r. 4, O. XI, r. 21, O. XVI, r. 20, and O. XVIII, rr. 2 and 3 of the Code. No doubt under these provisions particular penalties have been provided for specific defaults. For certain defaults, the relevant Orders provide for making an ex parte decree or for striking out the defence. But it does not follow from these provisions that because no such consequential provision is found in O.XXIX, the Court is helpless against recalcitrant plaintiff or defen-dant who happens to be a company. There is nothing in O. XXIX of the Code which, expressly or by necessary implication, precludes the exercise of the inherent power of the Court under s. 151 of the Code. We are, therefore, of the opinion that in a case of default made by a director who failed to appear in Court when he was so required under O. XXIX, r. 3, of the Code the Court can make a suitable consequential order under Section 151 of the Code as may be necessary for ends of justice or to prevent to abuse of the process of the Court. 8. The next question is whether the Court can, as it did in the present case, strike off the defence of the appellant for the default made by its director to appear in Court. Learned counsel for the respondent contended that both the courts in effect found that the director was guilty of a recalcitrant attitude and that he abused the process of the Court and, therefore, the Subordinate Judge had rightly exercised his inherent power in striking off the defence of the appellant. We are satisfied, as the courts below were, Jugal Kishore, the director of the appellant company, purposely for one reason or other, defied the orders of the Court on the pretext of illness and had certainly abused the process of the Court. The learned Subordinate Judge would have been well within his rights to take suitable action against him, but neither of the courts found that the appellant was responsible or instrumental for the director not attending the Court. Unless, there is a finding of collusion between the appellant and the director in that the former prevented the latter from appearing in Court, we find it difficult to make the company constructively liable for the default of one of its directors. Many situations may be visualized when one of the directors may not obey the directions of the company or its boards of directors or may be even working against its interests. 9. It cannot be disputed that a company and the directors of the company are different legal personalities. The company derives its powers from the memorandum of association. Some of powers are delegated to the directors. For certain purposes they are said to be trustees and for some others to be the agents or managers of the company. It is not necessary in this case to define the exact relationship to a director qua the company. The acts of the directors within the powers conferred on them may be binding on the company. But their acts outside the said powers will not bind the company. It is not possible to hold that the director in refusing to respond to the notice given by the Court was acting within the scope of the powers conferred on him. He is only liable for his acts and not the company. If it was established that the company was guilty of abuse of the process of the Court by preventing the director from attending the Court, the Court would have been justified in striking off the defence. But no such finding was given by the courts below.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]Having regard to the said decisions, the scope of the inherent power of a Court under Section 151 of the Code may be defined thus: The inherent power of a Court is in addition to and complementary to the powers expressly conferred under the Code. But that power will not be exercised if its exercise is insconsistent with, or comes into conflict with, any of the powers expressly or by necessary implication conferred by the other provisions of the Code. If there are express provisions exhaustively covering a particular topic, they give rise to a necessary implication than no power shall be exercised in respect of the said topic otherwise than in the manner prescribed by the said provisions. Whatever limitations are imposed by construction on the provisions of Section 151 of the Code, they do not control the undoubted power of the Court conferred under Section 151 of the Code to make a suitable order to prevent the abuse of the process of the CourtNo doubt under these provisions particular penalties have been provided for specific defaults. For certain defaults, the relevant Orders provide for making an ex parte decree or for striking out the defence. But it does not follow from these provisions that because no such consequential provision is found in O.XXIX, the Court is helpless against recalcitrant plaintiff or defen-dant who happens to be a company. There is nothing in O. XXIX of the Code which, expressly or by necessary implication, precludes the exercise of the inherent power of the Court under s. 151 of the Code. We are, therefore, of the opinion that in a case of default made by a director who failed to appear in Court when he was so required under O. XXIX, r. 3, of the Code the Court can make a suitable consequential order under Section 151 of the Code as may be necessary for ends of justice or to prevent to abuse of the process of the CourtWe are satisfied, as the courts below were, Jugal Kishore, the director of the appellant company, purposely for one reason or other, defied the orders of the Court on the pretext of illness and had certainly abused the process of the Court. The learned Subordinate Judge would have been well within his rights to take suitable action against him, but neither of the courts found that the appellant was responsible or instrumental for the director not attending the Court. Unless, there is a finding of collusion between the appellant and the director in that the former prevented the latter from appearing in Court, we find it difficult to make the company constructively liable for the default of one of its directors. Many situations may be visualized when one of the directors may not obey the directions of the company or its boards of directors or may be even working against its interests9. It cannot be disputed that a company and the directors of the company are different legal personalities. The company derives its powers from the memorandum of association. Some of powers are delegated to the directors. For certain purposes they are said to be trustees and for some others to be the agents or managers of the company. It is not necessary in this case to define the exact relationship to a director qua the company. The acts of the directors within the powers conferred on them may be binding on the company. But their acts outside the said powers will not bind the company. It is not possible to hold that the director in refusing to respond to the notice given by the Court was acting within the scope of the powers conferred on him. He is only liable for his acts and not the company. If it was established that the company was guilty of abuse of the process of the Court by preventing the director from attending the Court, the Court would have been justified in striking off the defence. But no such finding was given by the courts below.