Mr. Ameer Ali :- The plaintiff (respondent) is a shareholder in the Bharatkhand Cotton Mills Com pany, Limited, carrying on business in the City of Ahmedabad, Bombay Presidency. He brought this suit, the nature of which will be explain ed presently, so long ago as the 5th January, 1909. The first five defendants are managing agents and directors of the Company, the sixth is a retired director; the seventh defendant is the Company itself, having been added as a party to the suit later in the course of the proceedings. The first defendant (the present appellant before the Board), Keval das Tribhovandas acted as Chair man of the Board of Directors and is the manager of the Company. The plaintiff seeks in the suit an account of the funds belonging to the Company used by the appellant for his own purposes, and for a declaration that a weaving factory erected and worked by him is the property of the Company. The Company appears to have been established sometime in the year 1896. The evidence shows that in 1905 the defendant Kevaldas Tribhovandas started the weaving factory which he claimed as his own property. The plaintiff char ges that that factory was built and erected by the defendant with money belonging to the Company, and that he has worked the same for his own benefit. He seeks an account of the profits made by the defendant therefrom and a decla ration that such profits also belong to the Company. The date for filing the defence was originally the 12th February 1909, but the appellant applied for time which was extended to the 14th April, 1909, when the written statement was filed. It is unneces sary to refer in detail to the con tentions raised by him against the plaintiffs claim. It is enough to say that on the 23rd December of the same year the Subordinate Judge delivered a judgment in which he overruled the defendant's technical objections to the suit; and that on the 26th January, 1910, he made a preliminary decree directing accounts against the de fendant and appointing a Commis sioner to take the same. The defendant preferred an ap peal from this preliminary judgment to the District Judge. While this appeal was pending he convened a meeting of the shareholders which was held on the 29th April, 1910. The defendant preferred an ap peal from this preliminary judgment to the District Judge. While this appeal was pending he convened a meeting of the shareholders which was held on the 29th April, 1910. At this meeting a resolution was adopted which the plaintiff charges was at the instance of the defendant. This resolution was subsequently on the 15th May affirmed, it is charged, under similar circumstances. It runs as follows :- " On reading the application receiv ed from some shareholders and the "scheme" which has been submitted thereupon by Pari. Kevaldas Tribho wandas (it appears that) Pari. Keval das Tribhowandas has asked for Rs. 4,00,000, in words four lacs as the price of the weaving factory erected by himself (sic). But on a considera tion of the said (matter, it appears that) as he has worked the same up to this day, depreciation had been caused and profit had been made (or) loss had been sustained. After deducting a lump sum of Rs. 49,000, in words forty-nine thousand for both the items Rs. 3,51,000, in words three lacs and fifty-one thousand in the lump be brought to account with reference to him and possession of the said weav ing-factory be taken by us and as owing to this the work of "Vahiwat" (management) (to be done) by Pari. Kevaldas Tribhowandas would in crease Rs. 8,000, in words eight thou sand be continued to be paid every year to him and his heirs and repre sentatives for his trouble after debit ing the same to the account of ex penses." It is necessary to mention here that on the 4th November, 1900, at a meeting of the shareholders a resolution had been adopted, which is extremely material in the con sideration of this case. It is as follows :- " The moneys of the Company shall not be lent to any one on personal security. And the Vahivatdar (the manager) shall not keep the account of the Company in his own shop ; so also the Vahivatdar shall not with draw by debiting in his own name, any amount whatever, except his own dues." After the institution of the present suit, several meetings were held on the defendant's motion or at his instance for the purpose of rescinding the resolution of the 4th November, 1900, which certainly clogged his free handling of the Company's funds. There is an allusion to this alleged rescission in the resolution affirmed on the 15th May, 1910, in these terms :- " As to the special resolution which we passed on the 4th November, 1900, clause 6 thereof was cancelled on the 10th April, 1909, and the whole of the special resolution besides that be can celled. Moreover, we do not consider the suit which has been filed by Sak erlal Bulakhindas in the Court of the First Class Subordinate Judge (at) Ahmedabad as a bona fide one and that on account of the said suit having been filed, the company's credit has suffered to a very great extent. This meeting is therefore of opinion that the agents should seek remedy by taking proper steps for the said loss of credit to the company. This meeting there fore resolves that if the Agents think proper, proper steps be taken against Sekarlal Bulakhidas accordingly. Shah Nagindas Girdhardas seconded the said (proposal.)" Although the resolution, which the defendant now contends was an adjustment between the Com pany and himself, was affirmed on the 15th May, 1910, no reference to it was made in the appeal to the District Judge, which was dismissed on the 8th February, 1911. The defendant appealed from the de cree of the District Judge to the High Court, which appeal was dis missed on the 18th September, 1912. No reference was made to this so called adjustment in the appeal to the High Court. No appeal was preferred from the dismissal by the High Court of the appeal from the preli minary decree of the Subordi nate Judge holding him account able for his dealings with the Company's funds and directing accounts. It is suggested before this Board by counsel for the defen dant that on the appeal from the final decree by the High Court, he is entitled at this stage to question the preliminary decree. The certificate granted by the High Court to enable the defendant to come to His Majesty in Council does not cover any appeal from the preliminary decree. The certificate granted by the High Court to enable the defendant to come to His Majesty in Council does not cover any appeal from the preliminary decree. But even if it was open to the defendant to ques tion in the present appeal the findings arrived at by the three Courts in India on the accountabi lity of the defendant relative to his dealings with the Company's funds, their Lordships do not find any material on which his contention may be said to be legitimately based. To proceed with the history of the case, on the dismissal of the appeal by the High Court on the 18th September, 1912, the Com missioner proceeded with the taking of the accounts. It was only on the 21st October, 1912, after the dismissal of his appeal, from the preliminary decree, by the High Court, that the defendant first applied to the Subordinate Judge stating that :- "during the pendency of our ap peals, the Company settled this suit with us and the Company has taken from us the possession of the weaving shed, which we had built with our own money, agreeing to pay us Rs. 3,51,000 as price of the said weaving shed, after taking into consideration the wear and tear (i.e., depreciation) on account of the conducting of the work of the said weaving shed till this day and the profit and loss which had occurred ; and a registered sale-deed has also been taken from us in the matter" and he then proceeded to urge :- "The Company having agreed with us - the defendant - in this way, with regard to this suit, this suit cannot now proceed further. Therefore a note should be taken of this settle ment, and after holding that this suit has been settled, this suit should be dismissed." On the 1st November, 1912, the plaintiff filed an affidavit in contra diction of the defendant's state ment as set forth in his petition of the 21st October, 1912, charging the defendant with having mani pulated the shareholders' meetings ever since he was called upon to answer the charges made in the suit. He also alleged that the meetings of the 29th April, 1910, or the 15th May, 1910, were equally worked by Kevaldas for the purpose of getting the resolu tion affirmed. He also alleged that the meetings of the 29th April, 1910, or the 15th May, 1910, were equally worked by Kevaldas for the purpose of getting the resolu tion affirmed. The plaintiff further stated in his affidavit that on the 23rd December, 1911, whilst the appeal from the preliminary decree was still pending in the High Court, certain arbitrators had been appointed with the object of sett ling the matter in dispute after examining the Company's account books and the defendant's private books of account, but the defen dant having failed to produce the necessary books, the reference to arbitration proved ineffectual and the arbitration failed. There appears to have been no mention in the application to refer the matter in dispute to arbitrators of the alleged settlement arrived at on the 15th May, 1910. The Com pany were added as defendants, apparently soon after the settlement of the issues, and new agents had been appointed for carrying on the work of the Company. These agents, on the 21st November, 1912, filed an affidavit in answer to the defendant's allegations, in which they stated as follows :- " Defendant Kevaldas ' allegation in his application that the (defendant) Company had effected settlement with him in connection with the suit is entirely untrue. It appears from the records of the Company that no settle ment has at all been effected in connection with the present suit. Sub sequent to a "preliminary decree" for taking accounts being passed by the Court of first instance in this suit the defendant Kevaldas filed an ap peal, being Appeal No. 85 of 1910 in the District Court. It appears that prior to the hearing of the appeal Mr. Kevaldas, as Chairman of the Board of Directors, called an extraordinary meeting of the Company on an appli cation of some shareholders and got some resolutions passed improperly at the said meeting. One of the resolu tions got passed is to the effect that the weaving shed Karkhana (factory) should be purchased from Mr. Keval das for Rs. 3,51,000, in words three lacs and fifty-one thousand, and that as he would be required to take more trouble for its Vahivet (management) he should be paid every year Rs. 8,000, in words, eight thousand, for that trouble. Keval das for Rs. 3,51,000, in words three lacs and fifty-one thousand, and that as he would be required to take more trouble for its Vahivet (management) he should be paid every year Rs. 8,000, in words, eight thousand, for that trouble. Before this resolution was got passed valuation of the machinery and premises of the weaving shed was not got made by any experienced man .... As a resolution to the above effect has been got passed simply on the strength of Mr. Keval das holding a large number of shares, a great fraud has been committed on the defendant Company, and the Company has thereby sustained a very great loss." It is clear that after this affidavit, which challenged the validity and bona-fides of the resolutions adopted after the institution of the suit, the defendant abandoned, so far as the records show, proceedings with his contention that there had been a settlement on the 15th May, 1910. No order, however, appears to have been recorded in the order-sheet in respect of the defendant's petition of the 21st October, 1912. The Commissioner submitted his report on the 11th July, 1913, and on the 24th April, 1914, the Subor dinate Judge made his final decree in which he held that the Company was not entitled to recover anything from the defendant. The judgment also contains no reference to the question of settlement. The final order of the Subordinate Judge is in these terms :- "Defendant I is thus entitled to Rs. 1,08,703-10-8. At this rate plaintiff or the Company is entitled to recover nothing as profit. The plaintiff has brought suit No. 408 of 1910 against the, defendant and the Company for getting the resolution under which the Company agreed to purchase the factory from plaintiff set aside on the ground that the said resolution is ille gally passed. That suit has been all along kept with this suit after settling issues. Under the resolution the sale has taken place and the defendant Company is actually in possession and enjoyment of the factory since May, 1910. The profit and loss of the sale transaction has been considered in this suit as shown above. So practically speaking that suit has been disposed of by itself. "For the above reasons, I dismiss this suit. Plaintiff has succeeded in the preliminary decree but the final result is in defendant's favour. The profit and loss of the sale transaction has been considered in this suit as shown above. So practically speaking that suit has been disposed of by itself. "For the above reasons, I dismiss this suit. Plaintiff has succeeded in the preliminary decree but the final result is in defendant's favour. Under these circumstances, I order that each party should bear his or their own costs of this suit." The plaintiff and the Company appealed from this decree of the Subordinate Judge to the High Court of Bombay, and the learned Judges disposed of the appeal on the 22nd August, 1916. They criticised, not without reason, the view of the Subordinate Judge absolving the defendant from all liability in connection with his dealings with the Company's funds and with the profits made by him from the weaving factory with the funds of the Company. They held, in fact, that the defendant Kevaldas Tribhovandas had misappropriated the money of the appellant Com pany to his own use and then, being called upon to account and restore what he had appropriated, claimed a very large salary for " the time and skill " he had spent on the employment of that money ; and they justly ridiculed the idea of the Subordinate Judge giving him remuneration for his work. In the result they made a decree against the defendant for a considerable sum of money. There was an application for review of judgment on the question of the alleged settlement of the 15th May, 1910, which was rejected. The present appeal to His Majesty in Council is from this decree of the High Court and the order on review. The main contention on which the appeal is based relates to the orders of the High Court with regard to the alleged adjustment. In their main judgment the learned Judges had said as follows :- " When the dispute arose, negotia tions appear to have been entered into, and on the 29th of April, 1910, upon a representation by the defendant that he had spent some three lacs and 66 thousand rupees upon building and stocking the factory, the appellant-company agreed by a majority resolu tion, which was confirmed on the I5th of May, to take over this factory at a price of Rs. 3,51,000 in part payment of the defendant's total indebtedness to them." After stating that :- " There was a clear misrepresenta tion by one who was under a very special obligation to make full and true disclosure, and that being so, it follows without the need of pursuing the argument through the somewhat nice and difficult case law of England that the appellant-company was en titled to a refund of so much of this money as has been overpaid." and dealing with the specific plea of adjustment, they state their views in the following terms :- "On the 29th of April, 1910, after the preliminary decree had been pass ed, a resolution was passed, which was confirmed on the I5th of May at a General Extraordinary Meeting, and it was contended on behalf of the respondent that that was a lawful adjustment of the suit which put an end to all further proceeding. This matter appears to have been brought before the Lower Court and issues were raised upon it on the 21st Novem ber, 1912, but the respondent or who ever was taking sides with him at the time pressed the matter no further. We cannot discover that any evidence whatever was offered to the Court in substantiation of this contention. The onus clearly lay upon the defendant respondent and inasmuch as he failed to discharge it or even to attempt to discharge it, we are not now in a position to express any opinion upon this last contention and to afford relief no that ground." On the review application they deal with the contention more fully. Their Lordships entirely concur with the views of the High Court on this point. They consider in the first place that there is absolu tely no reality in the plea of adjustment ; that it was not a real adjustment after an examination of the accounts or ascertainment of the facts ; that it was never brought to the notice of the District Judge or of the High Court when the preliminary decree was under appeal ; that it was never mentioned before the arbitrators and that soon after the defendant Company filed its affidavit the allegation was dropped. Besides, on a reference to Rule 3 of Order 23 of the Civil Procedure Code, it is abundantly clear that whatever might have taken place at the shareholders' meeting it was not an adjustment within the provisions of the Code Rule 3 provides as follows :- Where it is proved to the satisfac tion of the Court that a suit has been adjusted wholly or in part by any law ful agreement or compromise, or where the defendant satisfies the plaintiff in respect of the whole or any part of the subject-matter of the suit, the Court shall order such agreement, compro mise or satisfaction to be recorded, and shall pass a decree in accordance therewith so far as it relates to the suit." In this case there is not the smallest proof of a bona fide adjust ment, nor did the defendant ever ask the Court to record satisfaction and pass a decree made in accor dance with the alleged adjustment. On the whole their Lordships are of opinion that the judgment of the High Court is correct and that this appeal should be dismissed with costs. They will, therefore, humbly advise His Majesty accordingly. Appeal dismissed.