JUDGMENT Mukerji and Young, JJ. - This is an application on behalf of Mr. Abu Ali, the Official Liquidator of the Jaunpur Sugar Factory Limited (in liquidation) purporting to have been made u/s 235 of the Indian Companies Act, calling on the Respondents, Messrs. Behari and Company, and the Hon'ble Nawab Mohammad Yusuf, to make good certain losses to the Company amounting to a very large figure on the ground that the former as the managing agents and the latter as the Director of the Company and also as one of the members of the firm of managing agents committed various acts amounting to breach of trust, misapplication of the Company's money and a retainer of the same, under he following circumstances. 2. The Jaunpur Sugar Factory Limited was incorporated on 21st November, 1919, with a nominal capital of 15 lakhs of rupees divided into shares of Rs. 10 each. It obtained permission of the Registrar of Joint Stock Companies to commence busines on 22nd December, 1920. The Company was promoted by, among others, Nawab Abdul Majid, the father of the Respondent No. 2, the Respondent No. 2 himself and two persons S.M. Bose and Brij Behari Lal. Brij Behari Lal has since died and so has Nawab Abdul Majid. S.M. Bose has left these provinces. S.M. Bose and Brij Behari Lal constituted a firm known as Behari and Company and were the managing agents of some companies. When the idea of starting the Jaunpur Sugar Factory was mooted, it was arranged that the Respondent No. 2 would join the firm of Messrs. Behari and Company as a partner and the newly constituted firm, thus formed, would manage the Jaunpur Sugar Factory, while Nawab Abdul Majid himself would be the Managing Director of the Company. The object of the Company, as the name indicates, was to manufacture sugar and certain by-products. A prospectus was issued, bearing the date 21st November, 1919, and it gave the public an expectation of large profits amounting to no less than thirty per cent, on the capital outlay. In accordance with the provisions of the Articles of Association, on 15th December, 1919, an agreement was entered into between the Company on the. one hand, and Messrs. A prospectus was issued, bearing the date 21st November, 1919, and it gave the public an expectation of large profits amounting to no less than thirty per cent, on the capital outlay. In accordance with the provisions of the Articles of Association, on 15th December, 1919, an agreement was entered into between the Company on the. one hand, and Messrs. S.M. Bose, Brij Behari Lal and the Respondent No. 2 as partners of Behari and Company, the managing agents of the Company, on the other, and certain remuneration was fixed for the said managing agents. Remuneration also was fixed for the Managing Director. It was provided by the Articles of Association that the first Board of Directors shall be elected by the share-holders as soon as possible after the registration of the company and that until this was done, any four of the signatories to the memorandum of association will be deemed to be the directors of the company and will act as such. Although the above quoted articles contemplated a meeting of the share-holders to be called for election of directors, as a matter of fact, no meeting of share-holders was ever called for the purpose. The prosepectus mentioned five people as the directors, namely Nawab Abdul Majid, Raja Saheb of Manda, Goshain Rampuri of Benares, Brij Behari Lal and S.M. Bose. Later on, on 3rd November, 1920, the Respondent No. 2 joined the Board of Directors. The Raja of Manda and Goshain Rampuri took no interest in the affairs of the Company and the result was that the three partners of Behari and Company and Nawab Abdul Majid had the sole control of the affairs of the Company. 3. The first meeting of the Directors took place on 19th December, 1919, and by a resolution of that date Messrs. Behari and Company were authorised to open an account with the Allahabad Bank Limited and they were also authorised to draw cheques up to the limit of Rs. 2,500. The managing agents started handling the money of the Company as quickly as they could and before they had obtained the sanction of the Registrar to start business. No statutory meeting was ever held and no statutory report was ever forwarded to anybody. 2,500. The managing agents started handling the money of the Company as quickly as they could and before they had obtained the sanction of the Registrar to start business. No statutory meeting was ever held and no statutory report was ever forwarded to anybody. The liquidators' suggestion is that these breaches of the Company law were committed with the idea of keeping the subscribing public in the dark as to the affairs of the Company. The directors and the managing agents themselves kept ironies in their hands, made advances to various mushroom Companies, namely Allahabad Tanneries Ltd., the Allahabad Soap Factory Ltd., the Upper India Rice Mills Ltd., and the India Allied Life Insurance Company Ltd., in the first three of which all the three members of the managing agents' firm were interested as managing agents and in the last of which S.M. Bose and Brij Behari Lal were in the same capacity, interested. The directors or the managing agents had no authority to make these advances and these advances were in no way made as investments for security of the surplus money not then required for the business. The liquidator has furnished a long list of his claims divided into several heads, explaining in his application how certain monies were misapplied or misappropriated by the directors or the managing age its. It is not necessary here to give any detailed statement of these items. It will be enough to deal with them as and when time comes for considering the correctness or otherwise of the allegations of the official liquidator. 4. A notice against the firm of Behari and Company was served on them through the Respondent No. 2 and the notice on the Respondent No. 2 was served on him personally. His contention, besides the plea of limitation raised by him is that S.M. Bose was a man of great cunning and no money, that he represented himself to the Respondent's father, Nawab Abdul Majid, as a man having consi-derable experience of company management and induced him to become the Managing Director of the Company in question and other Companies that Bose proposed to start. S.M. Bose thus succeeded in gaining the confidence of Nawab Abdul Majid and in view of the fact that the management of the Company or companies was to be in the hands of Bose and Brij Behari Lal, Nawab Abdul Majid desired that the Defendant No. 2 should also be a partner in the firm of the managing agents, (Para 3 of the additional statements of the written statement). Accordingly, a new firm of Behari and Company, was started. The Respondent No. 2 thus he alleges, became a "sleeping partner" in the new firm, Behari and Company, and as he was a practising Barrister at Law of the Allahabad High Court, he assured the High Court that he was not going to engage in any business and therefore the High Court granted him permission to be a mere "sleeping" partner in the firm. A deed of partnership was executed on 23rd December, 1919, although the Company had already been incorporated a month earlier. According to a provision (paragraph 7) of the deed of partnership, bringing into existence the new Behari and Company, S.M. Bose was to be personally liable for all the losses attributable to him or to the new Behari and Company, and no other partner was to be so liable. The Company (Jaunpur Sugar Factory Ltd.) in engaging into an agreement of agency with the new Behari and Company, was aware of this term of the partnership agreement and is therefore estopped from claiming any loss from the Respondent No. 2. The Respondent cannot be liable for anything that may have happened before he joined the Board of Directors and whatever was done afterwards has been ratified by the Company and the Defendant is no longer liable. The Defendant acted throughout in good faith and is therefore not to be held liable. The Defendant stated certain facts in order to controvert the allegations of the liquidator in his claim for various items and these will be considered when we proceed to consider the claims separately. 5. Limitation -The plea of limitation was argued as a preliminary point and it has to be decided before the merits can be gone into. 6. The contention of Mr. 5. Limitation -The plea of limitation was argued as a preliminary point and it has to be decided before the merits can be gone into. 6. The contention of Mr. Iqbal Ahmad the Learned Counsel appearing for Nawab Mohammad Yusuf is that Article 36 of Schedule 1 of the Limitation Act applies to a claim like this and the starting point of limitation is the dates or dates when "the malfeasance, misfeasance or nonfeasance took place." The Learned Counsel further argues that if Article 36 did not apply, Article 115 or 116 of schedule 1 of the Limitation Act would apply and in either case, as more than six years have elapsed between the alleged mis-appropriation and mis-application etc. of the company's money, the application is time-barred. The contention for the official liquidator is that Article 120 of the Schedule 1 of the Limitation Act applies and that the starting point of the limitation being, under that Article, "when the right to sue accrues" such right to sue could accrue to the liquidator only on the date of his appointment. It was further urged on behalf of the official liquidator that if this contention be not right, Article 90 of the Schedule 1 would apply in so far as Behari and Company, were agents of the company and the starting point of limitation would be different dates according to the dates of the knowledge of the liquidator. 7. For the Respondent, Nawab Mohammad Yusuf it has been argued that the liquidator can recover only what the company could recover, that Section 235 of the Indian Companies Act "creates no new rights" and that it only furnishes a summary method of realising what might otherwise have been realised by means of a suit. 8. Before we proceed to examine the arguments of the Learned Counsel for the Respondent, it will be desirable to examine the language of the Act. For, it is the language of the Act and the language alone that should be our sure guide and it will not do to attempt to interpret the language employed by the Legislature by running to see what anybody has said in respect of it. 9. Section 235 of the Indian Companies Act, so far as it is material for our purpose runs as follows: 1. 9. Section 235 of the Indian Companies Act, so far as it is material for our purpose runs as follows: 1. Where, in the case of winding up a Company it appears that any person who has taken a part in the formation or promotion of the Company, or any past or present director, manager or liquidator, or any officer of the Company, has misapplied, retained or become liable or accountable for any money or property of the Company or been guilty of any misfeasnace or breach of trust in relation to the Company, the Court may, on the application of the liquidator or of any creditor or contributory, examine the conduct of the promoter, director, manager, liquidator or officer and compel him to pay and restore the money or property or any part thereof respectivley, with interest at such rate as the Court thinks fit or to contribute such sum to the assets of the Company by way of compensation in respect of the misapplication, retainer, misfeasance or breach of trust as the Court thinks just. 2.... 3. The Indian Limitation Act, 1908, shall apply to an application under this section, as if such application were a suit. 10. It will be noticed that in the particular cases mentioned in the section, the liquidator or creditor or a contributory has to make an application to the Court for investigation into the conduct of certain persons connected with the Company and the Court may, after such investigation as may be called for, compel the persons into whose conduct the Court has held an enquiry, to restore money or property misappropriated or to contribute such sum to the assets of the Company by way of compensation as the Court thinks just. It will be seen that the provision is that the money or property recovered is not to go to the pocket of any particular individual but is to go to augment the assets of the Company. The Court, naturally, has to be moved in the matter by somebody, as if on an investigation of the conduct of the person who is charged with misconduct, it turns out that the charge was false, somebody should be responsible for an unnecessary investigation. The Court, naturally, has to be moved in the matter by somebody, as if on an investigation of the conduct of the person who is charged with misconduct, it turns out that the charge was false, somebody should be responsible for an unnecessary investigation. Thus, the provision is that the Court is to examine into the conduct on being moved by any one or more of three persons, namely the liquidator or a creditor or a contributory. Or a plain reading of the section, therefore, it ought to be abundantly clear that although the legislature has directed that for the purpose of limitation the application of the liquidator or a creditor or a contributory is to be treated as a suit, the provision is an extraordinary one and permits not only the liquidator who is an officer of the Court and whose duty primarily it is to recover the assets of the Company and to distribute the same, but it also authorises a creditor and a contributory to move the Court. 11. The argument on behalf of the Respondent is that in its nature, the application u/s 235 is a suit and therefore, if a suit by the Company of recover money or property be barred by time, an application by the liquidator or creditor or contributory should also be deemed to be barred by time. There does not seem to be any warrant in the language of the Act to suggest that the three persons mentioned can recover only where the Company could recover and not otherwise. It goes without saying that a creditor or a contributory is not a representative of the Company. An application therefore by either of these cannot be called an application (or a suit) by a representative of the Company. On an examination of the provisions of the Indian Companies Act, it will be found to be abundantly clear that a liquidator is in no sense a representative of the Company. Section 175 of the Act says as follows: For the purpose of conducting the proceedings in winding up a company and performing such duties in reference thereto as the Court may impose, the Court may appoint a person or persons called an official liquidator or official liquidators. 12. If this rule of law defines the position of an official liquidator, it is impossible to say that he is a representative of the company. 12. If this rule of law defines the position of an official liquidator, it is impossible to say that he is a representative of the company. Primarily, an official liquidator is an officer of the Court. The object of his appointment is the conduct of the proceedings in winding up and further doing such duties with reference to the winding up as the Court may impose. Where does then the representative character of the quidator for the Company come in? The liquidator looks after the interest of the Company and it looks after the interest of the creditors of the Company. Such a person can in no sense be called a presentative of the Company. If he might be called a respresentative of the company, he might with equal truth be described as a representative of the creditors of the company. Where no liquidator is appointed (see Section 178(2)) or during any vacancies of such appointment, all the property of the Company, shall be deemed to be in the custody of the Court. It will be seen therefore that primarily, it is the Court in whose custody the property of a company under liquidation comes and it is only by virtue of his being an officer of the Court that the official liquidator is allowed to take into his custody all the property and effects etc., of the Company (Section 178 Clause (1)). It will be noticed that there is a vast contrast between the position of an official liquidator and the position of a receiver in insolvency. In the receiver in insolvency, the property of the insolvent is vested (see Section 28 of the Provincial Insolvency Act, 1920). But there is no similar provision in the Indian Companies Act by which the property of a company in liquidation may be vested into the official liquidator. It would therefore be wrong to say that the official liquidator is a representative of the company. But there is no similar provision in the Indian Companies Act by which the property of a company in liquidation may be vested into the official liquidator. It would therefore be wrong to say that the official liquidator is a representative of the company. No authority would be needed to support this view of the law, but it is interesting to find that as early as in 1890 Lord Chancellor Hatherley, speaking of the English Act from which our Indian Act has been copied said as follows with respect to the position of the official liquidator.: The official liquidator who in that capacity is bound to collect all the assets of the Company and distribute them by the direction of the Court among the creditors is in a position in which he may assert rights as against the Company and assume a position against the members of the Company which the company itself possibly might not be in a position to assert-see Water-house v. Jameson (1870) 2 L.R. S.D. App. 32. 13. It is true that at p. 38 of the said report, Lord Westbury quoted briefly a dictum of Lord Cairns in re Duckworth (1867) 2 Ch. 578: 16 L. T. 580, namely, The liquidator represents the creditors only because he represents the company and through the company the rights of the creditors are to be enforced. 14. But this statement, with all respects, is a loose one and is not supported, if we take the language strictly, by the provisions of the Companies Act, either English or Indian. A creditor's interest is vastly different from the interest of the debtor and indeed they are antagonistic. To say that the liquidator represents the creditors is to state only a partial truth. Again, to say that the official liquidator represents the company is only a partial truth. The fact of the matter is that from the very definition of an official liquidator, he is neither a representative of the company nor a representative of the creditors, He is merely an officer of the Court appointed by it for the purpose of "effectually" conducting the proceedings in winding up (Section 175, Indian Companies Act, 1913). The fact of the matter is that from the very definition of an official liquidator, he is neither a representative of the company nor a representative of the creditors, He is merely an officer of the Court appointed by it for the purpose of "effectually" conducting the proceedings in winding up (Section 175, Indian Companies Act, 1913). The official liquidator has, by the very definition, to perform such duties as the Court may impose and although he has been given some powers, he can exercise many important powers only with the sanction of the Court and not otherwise (see Section 179, Indian Companies Act). If the official liquidator were a representative of the company, surely he would not stand in need of the Court's sanction to institute suits on behalf of the company or to defend suits on behalf of the company. 15. Thus we fine that none of the three persons who has been authorised by Section 235 of the Indian Companies Act to move the Court is a representative of the company. It would follow, therefore, without further reasoning, that if a suit by the company be time-barred it should not necessarily follow that a suit by the official liquidator or a creditor or a contributory should necessarily be time-barred. 16. The rule of 1 mutation is a rule of procedure, a branch of the Adjective Law, and does not either create or extinguish rights, except in the case of acquisition of title to immoveable property by Prescription. Thus, where the recovery of a debt is barred by lapse of time, the right to the debt is not extinguished, and if the debtor, without being aware of he bar of time pays up, he cannot sue the creditor to refund the money to him, on the ground that a claim for recovery of the debt had become time-barred. Thus, the liability to pay the debt being there, in particular cases, the legislature may think it fit to enact that what would be a bar to the company to recover a just debt would not be a bar to the liquidator, or the creditor or to the contributory, in what has been styled, for the sake of brevity, "misfeasance proceedings". Lord Halsburys in his (1937 L.E. 50) says the same thing about the character of the Rules of Limitation and says that they should be interpreted leniently. 17. Lord Halsburys in his (1937 L.E. 50) says the same thing about the character of the Rules of Limitation and says that they should be interpreted leniently. 17. It is conceded that the Indian Companies Act has provided for recovery by the liquidator of calls which could not be enforced by the company for apse of time, and that a liquidator may recover from contributories debts payable by them to the company, although if the company attempted to recover the same, it would be successfully met with a plea of limitation, (see Sections 156 and 186 of the Indian Companies Act). Thus, it cannot be said that the Indian Companies Act did not contemplate making provisions for recovery of monies which could no be recovered by the company, if it made an attempt to do so. On a plain reading, therefore, of the language of Section 235, the official liquidator's contention would seem to be fully supported by it, namely, the application (or suit) by the official liquidator or creditor or contributory is entirely independent of considerations which might affect a suit brought by the company itself. 18. This would dispose of the first two contentions of the Learned Counsel for the Respondent, namely, the liquidator is a successor in title of the company and he can recover only what the company itself could recover. 19. The next contention of the Learned Counsel for the Respondent is that Section 235 "creates no new rights". The words put into a pair of inverted commas have been quoted from several cases in which they have been used and to appreciate those words, one must look into the cases themselves in which they found expression. Three English cases in which these words occur, have been laid before us and on an examination of these cases it will be found than none of these use the words in the sense in which the Learned Counsel for the Respondent would want them to be interpreted. The Learned Counsel for the Respondent would read the words, "Section 235 creates no new rights" in the sense that the liquidator and others can enforce their claims u/s 235 only as a representative of the company and not by virtue of their being official liquidators or creditors or contributories. The Learned Counsel for the Respondent would read the words, "Section 235 creates no new rights" in the sense that the liquidator and others can enforce their claims u/s 235 only as a representative of the company and not by virtue of their being official liquidators or creditors or contributories. As I have said, an examination of these cases will amply show that the words have been used in the English cases only in this sense and this sense alone, namely, Section 235 (English Sections 165 of the Act of 1862 and 215 of the Act of 1908) dots not enable any of the applicants (official liquidator or creditor or contributory) to recover what could not be recovered under the general law. In other words, where there is an act which creates a liability in a director or a promoter or a manager and others enumerated in Section 235, under the general rule of law, there alone can the official liquidator or a creditor or a contributory recover. For example, where an act of a director is innocent and his act does not make him liable to make any compensation, that director does not become liable simply because Section 235 of the Companies Act enables a liquidator or a creditor or a contributory to make an application under that section. By way of illustration, we may give this case. Suppose a director of a company has built a house for himself. The act of the director is entirely innocent and does not make him liable for any compensation to the company or to contribute to the assets of the company. A liquidator cannot apply u/s 235 to the Court for an investigation into the director's conduct and to recover from him any compensation. The simple reason is that by the act mentioned above, the director incurred no liability and Section 235 does not create a liability where one did not exist from before. The word "create no new rights" were never meant to be used in the sense in which the Learned Counsel for the Respondent wants to utilise them for his own purposes as described above. 20. Now we proceed to examine those three English cases in which the words have been used. The first case in order of time is that of In re: Canadian Land Reclaiming and Colonising Company (1880) 14 Ch. 20. Now we proceed to examine those three English cases in which the words have been used. The first case in order of time is that of In re: Canadian Land Reclaiming and Colonising Company (1880) 14 Ch. D. 660 : 42 L T 559. In this case two gentlemen were appointed directors and although the number of qualification share for a director was 100, neither of them subscribed for any shares. The directors acted throughout honestly and it was not proved that their acts led to any loss to the company. Jessel, M.R., who tried the case in the first instance, at page 670, found that the two directors were liable to contribute 500 each, being the value of the hundred shares, to the company, because, in his opinion, they were bound to have subscribed for shares of that value. On appeal, the learned Master of the Roils was reversed. James, Lord Justice, observed: It might be very right for the Legislature to declare that where there is a qualification prescribed for the office of a director, every person acting as a director should be held to have taken the number of shares constituting his qualification, but the Legislature has not done so. 21. Having said so, the appellate Court proceeded to see whether any such liability was created by Section 165 (English Act of 1862). Then Lord Justice James remarked as follows: I am of opinion that that section does not create any new liability or any new right but only provides a summary mode of enforcing rights which must other vise have been enforced by the ordinary procedure of the Courts. 22. These words, namely "Section 165 does not create any new liability or any new right" must be read with the facts, in connection with which they have been used and it would be fraught with the greatest danger to take the words out of the context and treat them as if they are of universal application, capable of being applied to any set of facts whatsoever. As we have already stated, the learned Judges of the appellate Court found that the fact that the directors had not subscribed to any shires did not entail on them any liability to pay for those shares. As we have already stated, the learned Judges of the appellate Court found that the fact that the directors had not subscribed to any shires did not entail on them any liability to pay for those shares. Baggalley L. J. at p. 672 said: The circumstances under which these gentlemen accepted office as and acted as directors did not involve them in any contract whatever to take shares. 23. Bramwell, L.J., at p. 673 said, "To my mind, the liquidator has failed to show any damage at all". This case, therefore, is no authority for the contention of the Learned Counsel for the Respondent. 24. The next case is Bentinck v. Thomas Fenn (1883) 2 App. Cas. 652 : 57 L T 773: 57 L T Ch. 552. This was a case in which, speaking briefly, one of the directors sold his interest in a property to the company. When the company went into liquidation, the liquidator sought to recover damages from the vendor for having sold the property without having disclosed that he was the owner thereof. On the facts it was found that it had not been proved that the Defendant (Fenn) had not disclosed that he was the owner of the property and it was also not proved that the price paid was in any way unfair. It was held that the Defendant was not liable. It was in connection with these facts that it was stated by Lord Macnaghten at p. 669 that. Section 165 of the Companies Act of 1862 (English) "gives no new rights but only provides a summary and efficient remedy in respect of the rights which apart from that section might have been vindicated either in law or equity." 25. If we read in this very case, the judgment of Lord Herschell at p. 662, we shall at once see what was the point under consideration and what was held by the House of Lords. His Lordship stated: In an action nominal damages may be recovered wherever a breach of duty is shown, but I certainly do not think that any such doctrine can be applied to 165th Section. His Lordship stated: In an action nominal damages may be recovered wherever a breach of duty is shown, but I certainly do not think that any such doctrine can be applied to 165th Section. The right which 165th Section gives is not given to the company or the representative of the company with whom there is a contract or as towards whom there is a duty or as regards whom there is a breach of duty; but the right under the 165th Section is given to any liquidator or any creditor or contributory to the company. Now there is no duty or breach of duty to the company in respect of which a creditor or contributory can maintain an action, but he has a right to this extent that if owing to a misfeasance or breach of duty, the funds of the company in which he is interested have been diminished, these funds shall again be made good and the assets of the company shall be recouped the loss which they have sustained. 26. Then His Lordship remarked: Under Section 165 such application could only succeed where it could be shown that breach of duty resulted in loss to the funds and assets of the company. 27. Throughout the judgments of the four Lord Justices who took part in the case, no suggestion has been made that a liquidator or creditor or contributory cannot recover if a suit by the company happen to be barred by time. This case also, therefore, does not support the contention of the Respondent. On the other hand the remarks of Lord Herschell at p. 662 establishes that a claim u/s (165 Eng. 1862) is different from a claim by the Company. 28. The last case on the point quoted to us is the case of In re: City Equitable Fire insurance Company, Ltd., (1925) 1 Ch D. 407: 133 L T 520 : 94 L J Ch. 445. The Learned Counsel for the Respondent quoted the following words from p. 507 in support of his argument: I desire to say, though this is not the first time that it has been said, that that Section (215 of the English Act of 1908) deals only wish procedure and does not give any new rights. 29. 445. The Learned Counsel for the Respondent quoted the following words from p. 507 in support of his argument: I desire to say, though this is not the first time that it has been said, that that Section (215 of the English Act of 1908) deals only wish procedure and does not give any new rights. 29. As in the other two cases already discussed, the sentence relied on, if taken without regard to the facts of the case in connection with which they have been spoken, any use whatsoever might be made of them. Pollock M.R., who used those words was considering whether one Mr. Lepine was acting honestly or was acting fraudulently. His Lordship says at p. 506: No such chart was available to Mr. Lepine, and we have to take the books singly which were before him and the books, be it remembered, of the City Equitable Company only. It is not right to treat the evidence which is now before us and its significance as being plain in the years 1919, 1920 and 1921 to Mr. Lepine. 30. In the result, his Lordship exhonerated Mr. Lepine from liability, on the ground of his acting honestly. By the words quoted, his Lordship meant what has been said in the earlier cases (which are quoted by his Lordship) that where there was no liability apart from Section 215 of the English Act, no liability existed if that section were applied. 31. Thus we have seen that the three cases quoted on behalf of the Learned Counsel for the Respondent do not support his contention. 32. The next contention of Mr. Iqbal Ahmad, the Learned Counsel for the Respondent was that the English cases do not support the view of this Court taken in the case of In the matter of the Union Bank of Allahabad Ltd., (1925) 47 All. 669: AIR 1925 All. 519 : 88 I C 785, a view which is supported by the Counsel for the official liquidator, that the limitation runs from the appointment of the liquidator. The point of limitation has not been discussed in any of the English cases cited before us by Mr. Iqbal Ahmad. But he produces two cases and wants to support his argument by way of inference from them. The earlier case is Leeds State Building and Investigating Company v. Shepherd (1888) 36 Ch. The point of limitation has not been discussed in any of the English cases cited before us by Mr. Iqbal Ahmad. But he produces two cases and wants to support his argument by way of inference from them. The earlier case is Leeds State Building and Investigating Company v. Shepherd (1888) 36 Ch. D. 787 : 57 L T 684: 57 L J Ch. 46. In this case, the Company under liquidation made no profits, but the directors in every year from 1870 declared dividends at 5 per cent, and upwards. The case was against the directors and the auditor, one Mr. Locking. The claim was decreed against the directors who were held to have acted with an amount of case which bad fallen short of the standard of care which they ought to have applied to the affairs of the Company. As regards the auditor, he was allowed to plead the Statute of Limitation (1888), and the claim was decreed against him in respect of two years only, viz., 1878 to 1880. It was argued by Mr. Iqbal Ahmad that it was never pleaded on behalf of the official liquidator, before the English Court that limitation began to run from the date of the appointment of the liquidator and as the liquidation had been ordered in 1885, the claim for the earlier years also was within time. We will discuss the question of limitation in England after having stated the facts of the second case relied on by the Learned Counsel for the Respondent. This case is In Re: Lands Allotment Company (1894) 1 Ch. D. 616 : 70 L T 286: 63 L J Ch. 291. In this case there was a Company by the name of Land Allotment Company, which was not allowed by its Articles to invest its money in the shares of other companies. Under certain circumstances however and in good faith, the directors accepted the shares of another Company in lieu of a debt owing to their own Company. When the Land Allotment Company went into liquidation, compensation was claimed from the directors who had allowed the investment. The directors pleaded the Statute of Limitations of 1888. It will be remembered that under that statute, a trustee who is not acting fraudulently is allowed to plead imitation. When the Land Allotment Company went into liquidation, compensation was claimed from the directors who had allowed the investment. The directors pleaded the Statute of Limitations of 1888. It will be remembered that under that statute, a trustee who is not acting fraudulently is allowed to plead imitation. It was held in this case that the directors were 'trustees' within the meaning of the statute of limitation and they would be protected by the rule of limitation if their act was not fraudulent that was found that their act was not fraudulent and therefore they were found not to be liable for the investment. In respect however of another matter, one of the directors, Mr. Brock was held liable for a certain sum of money. It was argued that if limitation began to run only after the appointment of the official liquidator, there could be no question of limitation in the case. 33. This argument leads us to consider the English law of limitation. The main Act of Limitation is that of 1623 and provides for only a few cases. Before the Statute of Limitation of 1888 was passed, trustees were not allowed to plead limitation at all. It will be noticed in passing, that in India trustees, unless they come within the provisions of Section 10 of the Indian Limitation Act, are allowed to plead limitation. In enacting the Statute of Limitation, the Parliament had to provide for a starting point of the limitation. It laid down Clause (b) of Section 8: As a bar to such action or other proceedings in the like manner and to the like extent as if the claim had been against him in an action of debt for money had and received.... 34. Thus a starting point of limitation was provided by the Act. For an action for money had and received under the general statute, the period of limitation is six years and the starting point is the date of receiving the money. It has accordingly been held in England that the date from which limitation begins to ran against a trustee is the date of the breach of the trust committed by the trustee. It has accordingly been held in England that the date from which limitation begins to ran against a trustee is the date of the breach of the trust committed by the trustee. The cases are summarised in the text-books on the subject and at p. 2(30 of the second edition of Derby and Bosanquet's " Statutes of Limitation" the result is put down as laying down the starting point to be the date of the breach of the trust, where a breach of the trust occurred, in the case of negligent investment, from the date of negligence, and not from the date when the loss occurred to the cestui qui trust. In Lord Halsbury's Laws of England Vol. XIX at p. 162 in Article 333 the state of the law is mentioned to be the same. In this state of law, the period from which limitation is to start being fixed, it mattered little who the Plaintiff was, the period of limitation remained the same as also the starting point of limitation. 35. We cannot apply the English law of limitation to cases in India which possesses a complete Act of her own. 36. It has been laid down in Quin v. Leathern (1901) A C 495 (506) : 85 L T 289 : 70 L J P. C. 76, that a case is an authority only for what it actually decides and is not an authority for the proposition which may seem to follow from the decision. On the question of limitation therefore, the two cases just quoted namely (1888) 36 Ch. D. 787 and (1894) 1 Ch. D. 616 are no authorities, inasmuch as they do not profess to deal with the point of limitation. If the point of limitation had been discussed, we would have known on what ground the decision went. It is, therefore, not permissible to draw an inference only from the fact that the argument was not pressed that the starting point of limitation was the appointment of the liquidator. 37. Before we leave this point, we may mention a case decided by their Lordships of the Privy Council. It is, therefore, not permissible to draw an inference only from the fact that the argument was not pressed that the starting point of limitation was the appointment of the liquidator. 37. Before we leave this point, we may mention a case decided by their Lordships of the Privy Council. This case is Rano Dip Singh v. Parameshwar Prasad, ILR 47 AH 165, AIR 1925 PC 33 In this case, the father made an alienation in 1893 and the 4th Plaintiff, being the youngest son of the alienor, was not born at the date of the alienation. It was held by their Lordships of the Privy Council that Article 126 of the Limitation Act was the Article that applied to the case, being meant to be applied to a suit. by a Hindu governed by the Law of Mitakshara to set aside his father's alienation of ancestral property. 38. According to the 3rd column of Article 126, the time from which the period begins to run is "when the alienee takes possession of the property." This date was taken to be the date of the alienation and their Lordships of the Privy Council said at p. 178:"The fourth Plaintiff's subsequent birth on 30th November, 1900, did not create a fresh cause of action or a new starting point from which limitation should be reckoned." 39. Thus the date for the start of the period of limitation being fixed and unalterable, although the fourth son had a right to sue for setting aside the father's alienation, he had no remedy, as it was already barred to him, on the expiry of 12 years of the start; and this was the case, although the Plaintiff did not come into existence till seven years after alienation. 40. Mr. Iqbal Ahmad relied on some Indian cases also and they are two cases decided by the Lahore High Court. One is Bank of Multan Ltd., in liquidation v. Hukum Chand AIR 1923 Lah. 58 : 71 Ind. Cas. 899, and Bhim Singh v. Official Liquidator, Union Bank of India Ltd., and Ors. (1927) 3 Lah. 167 : AIR 1927 Lah. 433: 100 Ind. Cas. 907. The learned Judges of the Lahore High Court in deciding these cases relied on the English cases already discussed by me, lamely 14 Ch. D. 616 and (1925) I. Ch. Cas. 899, and Bhim Singh v. Official Liquidator, Union Bank of India Ltd., and Ors. (1927) 3 Lah. 167 : AIR 1927 Lah. 433: 100 Ind. Cas. 907. The learned Judges of the Lahore High Court in deciding these cases relied on the English cases already discussed by me, lamely 14 Ch. D. 616 and (1925) I. Ch. D. 407 at p. 507 in which the remark occurs that the Section 165 of 1862 or 215 of 1908 did not create any new rights. We have tried to show how dangerous it is to rely on a remark taken apart from the facts which led to them. Their Lordships of the Lahore High Court also relied on an Indian case namely Kumarpuram v. Pestonji (1903) 3 P. L. R. 633, There, Chief Justice Jenkins, quoted the expression that the misfeasance section (to call it shortly) did not give new rights but simply provided a summary mode of enforcing rights which must otherwise have been enforced by a suit. The observation read in connection with the facts of the cases in which it was made is unexceptionable and so it was in the Bombay case. Jenkins, C. J., quoted the expression only to see whether the application before him disclosed a case for investigation or not. In the result, the Appellant before the Court was held to be not liable and the claim against him was dismissed. 41. Having disposed of the authorities relied on on behalf of the Respondent, let us see what is the Article of the Indian Limitation Act which we can apply. 42. In order to seek the suitable Article out of the 183 Articles provided by the Indian Act we have to see which is the most applicable. Before Sub-Section 3 of Section 235 of the Indian Companies Act, 1913 was enacted, on the use of the word "application" in the first Sub-section, it appears to have been held in D. Connell v. Himalaya Bank Limited (In liquidation) (1895) 18 All. 12: 1895 AWN 136, that no rule of limitation applied. On the other hand, in Ramaswamy v. Streeramelu (1896) 19 Mad. 149, it was held that the application was one which fell under the heading of "applications" in Schedule 1 of the Indian Limitation Act and not under the heading of "suits". 12: 1895 AWN 136, that no rule of limitation applied. On the other hand, in Ramaswamy v. Streeramelu (1896) 19 Mad. 149, it was held that the application was one which fell under the heading of "applications" in Schedule 1 of the Indian Limitation Act and not under the heading of "suits". This was a Letters Patent appeal and the learned single Judge had dismissed the application on the ground that it was barred by Article 36 of the Indian Limitation Act. It was pointed out that it was an "application" that was before the Court and not a suit. It was probably owing to these decisions that the legislature declared that although what the liquidator, creditor and contributory produced before the Court was in the shape of an application, it was to be treated as a suit and not as an application. In our opinion the third Sub-section of Section 235 has no significance beyond this. Before leaving this point, we may point out that in the Allahabad case just quoted, viz. ILR 18 A.I. 12, it was held that to the special proceeding provided by Section 214 of the Companies Act of 1882, Article 36 of the Indian Limitation Act was not applicable. 43. Now, coming to consider what is the most suitable Article for what may be described as the "liquidator's suit". Article 36 of Schedule 1 of the Limitation Act cannot possibly have any application to such a suit. The reason is that the liquidator was not in existence at the date of the alleged misfeasance or malfeasance. Further it would seem that the directors and the managing agents were acting under contracts and their acts which are being complained of are in the nature of breach of trust and not in the nature of torts independent of contract. 44. Article 90 of the Limitation Act which was applied in AIR 1924 435 (Lahore) and which was explained away in the later case in ILR 8 Lahore, does not apply. The liquidator does not stand in the relation of a principal towards either the directors or the managing agents. 45. Articles 115 or 116 do not apply because from the very nature of the case, the remedy is being sought not on account of the breach of any particular contract as those Articles contemplate. The liquidator does not stand in the relation of a principal towards either the directors or the managing agents. 45. Articles 115 or 116 do not apply because from the very nature of the case, the remedy is being sought not on account of the breach of any particular contract as those Articles contemplate. We may note here that if Article 115 were applicable at all, Article 116 would have applied inasmuch as the "Articles of Association" is a "registered" document. There being no particular Article which is applicable to the facts of the present case, the residuary Article 120 is applicable. "To suits for which no period of limitation is provided elsewhere in this Schedule", the period of limitation is six years and the time from which the period begins to run is, "when the right to sue accrues." 46. The right to sue can accrue only when three things are simultaneously in existence, namely the Act which gives rise to the right of suit, the presence of a Plaintiff and the presence of a Defendant. All the three matters come together when the official liquidator is brought into ex stance. In our opinion therefore, Article 120 applies to this case as was held in re Union Bank Limited (10). 47. Merits.-Having disposed of the preliminary point of limitation, before we take up the several heads under which compensation has been demanded, it will be better to state certain facts which are either admitted or have been clearly established in evidence, bearing on the nature or the history of the concern.**** 48. There was a general argument on the part of the Counsel for the official liquidator and we can notice it in connection with this Schedule I of the claim, because this portion of the claim in our opinion, fails. The Learned Counsel argued that a liability to make good the loss arose on the part of the directors and the managing agents from the very fact that they commenced business in the shape of handling the money of the company even before they had obtained the necessary sanction to commence business from the Registrar. 49. We do not think that this argument carries much weight. Suppose the unauthorised use of the money had brought any profits and the company bad become richer for such unauthorised business. 49. We do not think that this argument carries much weight. Suppose the unauthorised use of the money had brought any profits and the company bad become richer for such unauthorised business. It could not then be said that the directors and managing agents were liable to pay anything under the provisions of Section 235 of the Indian Companies Act. In order to hold the directors and the managing agents liable to make good loss or compensation or to restore any money, we have to be satisfied that the money used by the directors and managing agents has caused a loss to the company. The use of the money and the loss have to be connected as the cause and effect. We could not therefore agree with the general proposition that unauthorised use of money would by itself render the user liable to make good the loss. 50. In the result, the liquidator's claim succeeds substantially and he is entitled to the entire costs. If we have reduced a portion of the claim and if we have reduced the rate of interest to be charged, there is no reason for us to say that these decisions of ours could have been in any way foreseen by the official liquidator. 51. As agreed at the bar, the office will go over the figures and prepare a statement of account as indicated in this judgment and put the statement to the Counsel for the parties for their examination. When the figures have been examined by the parties and passed by us, a decree will be made for the amount thus found against the two Respondents with further interest at 6 per cent, per annum from this date till recovery. 52. We cannot leave this judgment without expressing our views concerning the position of companies in liquidation as disclosed in this case. We have liquidators before us in the case of four companies and in each case, the liquidators have admitted that they knew little or nothing of company law and that they never considered the possibility of misfeasance proceedings to compel the directors or officers of those companies to refund monies lost to those companies. Indeed, some of them did not know that there was such a provision in the Indian Companies Act as Section 235. Indeed, some of them did not know that there was such a provision in the Indian Companies Act as Section 235. It is a matter of great regret that the public should lose money owing to the inefficiency of official liquidators. Some of the money lost through the mismanagement of the managing agents and directors should have been recovered by the official liquidators if they had been efficient. 53. In this case under review, the misfeasance summons was only issued within three weeks of the limitation period, as laid down by this Court, expiring. It was only because an application by a shareholder happened to be made that the attention of the Company Judge was drawn to the apparent misconduct of the officers of the company. The liquidator of the Jaunpur Sugar Factory undoubtedly ought to have drawn the attention of the then Company Judge to this serious condition of affairs in 1924 or 1925. 54. While some blame must be attached to the liquidators of this company and of the other sister companies, in our opinion, the real blame must be attached to the system under which companies are wound up by this Court. It is to be noted that in Allahabad there are no reliable firms of chartered accountants who would, normally, be appointed liquidators of companies. The Court is forced to appoint members of the bar to undertake the duties of liquidators. It is obvious that senior members of the bar in good practice could not find time to carry out these duties. The Court is forced therefore to appoint to positions of trust and responsibility in matters in which lakhs of rupees are concerned, juniors of the bar who are totally inexperienced and incapable of carrying out these duties. The result is obvious. Liquidations are unnecessarily prolonged; in some cases ten years or more elapsing between the date of the preliminary order and the final winding up. Large sums of money are lost to the public and temptations are unfairly put upon young and inexperienced liquidators which it is not right should be imposed. 55. We are satisfied from the information that has come to our knowledge during the course of this case that this condition of affairs should no longer be allowed to continue. Large sums of money are lost to the public and temptations are unfairly put upon young and inexperienced liquidators which it is not right should be imposed. 55. We are satisfied from the information that has come to our knowledge during the course of this case that this condition of affairs should no longer be allowed to continue. We consider that in such a matter which concerns the administration of justice it is of the utmost importance that the public should have confidence in the High Court, and a certainty that the liquidation of companies should be carried out efficiently. It is in our view necessary that a winding up department of the High Court should be established, in charge of a competent full time liquidator. Instead of having numerous liquidators, many of whom are incompetent, there would then be one competent official with the necessary staff and large sums of money would be saved to the public in administration. Tie expenses of such a department could well be met out of the fees chargeable in liquidation. But even though such a department was carried on at a loss the necessity of such a department ought to override any financial consideration. We direct that a copy of this judgment be laid before the Hon. Chief Justice. 56. We direct that the Company Clerk with the assistance of Mr. Lahiri the accountant employed by the Official Liquidator, for the purposes of this case, go over the accounts and prepare fresh account adding interest at 6% P.A., as indicated in our judgment. We allow 2 weeks for this purpose. When the account is prepared, one week will be allowed to the parties to check the same and to file objections (if any) to the same. We suggest that as the account is being prepared, some body on behalf of the parties should go on checking the same, so that the mistake (if any) may at once be discovered and corrected. When the accounts have been ready and checked, they would be put up before us for final orders in the case.