JUDGMENT
Arnold White, C.J.
1. The question raised in this appeal is whether Bakewell, J., was right in holding that the appellants, Messrs. Lovelock and Lewes, were officers of the Malabar Timber Yards and Saw Mills, Limited, now in liquidation, within the meaning of Section 214 of the Indian Companies Act, 1882. The case for the liquidator is that they are “officers” in their capacity as auditors.
2. In dealing with this case, we have derived considerable assistance from the very full affidavit which has been put in by Mr. Lewes, a partner in the firm of Messrs. Lovelock and Lewes, in answer to the affidavit of the liquidator filed in support of the summons. I have no reason to suppose that Mr. Lewes affidavit, in so far as it contains statements of facts, does not set out fully and fairly all the facts in so far as they were within his knowledge.
3. In addition to the correspondence set out in Mr. Lewes’ affidavit, we have some further letters, and the evidence of the Companies proceedings, put in by the liquidator; and we have the oral evidence of Mr. Lewes who was cross-examined on his affidavit.
4. It is scarcely necessary to observe we are not dealing with the question whether the evidence establishes misfeasance on the part of Messrs. Lovelock and Lewes. The only question which we have to consider is: Were they officers of the Company within the meaning of the misfeasance section Bakewell, J., has held that they were and I think he is right.
5. The Company was registered on November 8th, 1906.
6. In the prospectus enclosed in Mr. Brown’s letter of November 10th, 1906, to Messrs. Lovelock and Lewes, the names of Messrs. Lovelock and Lewes appear as the auditors of the Company. They replied to Mr. Brown’s letter, by a letter written on November 15th, 1906. There is a further letter dated February 18th, 1907, in which Messrs. Lovelock and Lewes stated, that their representative “will be ready to take up the audit” on certain date. These letters do not in terms constitute an express offer and an express acceptance of the appointment of auditors to the Company. But it seems to me that these letters read by the right of the fact that Messrs. Lovelock and Lewes had the prospectus before them when they wrote their letters, of November 15th, and by the light of the fact that the audit was carried out by the firm’s representative in March 1908, show that Messrs. Lovelock and Lewes were offered and that that they accepted the appointment of auditors of the Company. Mr. Lewes in fact stated in cross-examination (though I do not wish to press this unduly) that his firm had reason to assume from the letter of November 10th, that they had been appointed auditors of the Company. I also think, as Bakewell, J., points out, that the account which was enclosed in Messrs. Lovelock and Lewes’ letter, shows that they recognised their position as auditors of the Company by going into the question as to whether the vendor of the Company had performed the obligations under which he lay under his contract of sale with the Directors of the Company.
7. When Mr. Brown wrote the letter of November 10th, the power to appoint the first auditor, was, under Article 128 of the Articles of Association, in the Directors. Subsequent auditors were to be appointed by the Company at the annual general meeting. On November 19th, Mr. Brown was, under Article 72 of the Articles of Association, the manager of the Company, but at a general meeting held on November 13th, it was resolved that the affairs of the Company should be managed by a Board of Directors. Mr. Brown’s letter (I have not seen the original) apparently does not purport to be written as manager and it may be, as Mr. Lewes suggests in his affidavit, it was written in his personal capacity as the former owner of the business and as a regular client of the appellant’s firm. But the Directors certainly never suggested that Mr. Brown had, gone beyond his powers. On the other hand the Directors and the Company in effect ratified what he had done. Moreover, Messrs. Lovelock and Lewes had before them the Memorandum of Articles of Association and they carried out the audit (of March 1908) and subsequent audits. Having done the work, I do not think they can be heard to say that their appointment was invalid or irregular. See that judgment of Lindley. L.J., in In re Western Counties Steam Bakeries and Milling Co. (1897) 1 Ch. 617; 76 L.T. 239; 45 W.R. 418; 66 L.J. Ch. 354.
8. But the case does not rest here. On April 6th, 1908, it was resolved at a general meeting of the Company that Messrs. Lovelock and Lewes should be re-elected as auditors for the current year and the accounts of the Company were audited by Messrs. Lovelock and Lewes in April 1909.
9. On April 29th, 1909, it was again resolved at a general meeting that Messrs. Lovelock and Lewes should be re-elected as auditors for the current year and the accounts for 1909 were audited by them in April 1910.
10. The requirements of Article 131 that the remuneration of the first auditors should be fixed by Directors and that of subsequent auditors by the Company were not formally complied with. But Messrs. Lovelock and Lewes sent in their accounts for the work done in their three audits and it has not been stated that their accounts were not paid. This being so, I do not think that Messrs. Lovelock and Lewes can rely on any irregularity in the proceedings of the Company for the purpose of showing they were not officers of the Company.
11. It was stated that Messrs. Lovelock and Lewes were not aware of the resolution of the Company re-electing them as auditors. Mr. Lewes stated in his cross-examination that he had no reason to suppose his firm had not been elected. But assuming the firm did not know this, in view of the fact that they carried out the audits, it does Dot seem to me to have much bearing on the question we have to decide.
12. The learned Judge declined to admit in evidence certain letters written to third parties and the replies received from them. I will assume the Judge was wrong in rejecting these letters. (I do not say he was). They merely show that the Company (I will assume they were written on behalf of the Company) were desirous of ascertaining the terms on which they could get the auditing work done by the accountants. At the highest, they show that the Company were contemplating the election of other auditors. They are not, in my opinion, inconsistent with the case that, when the letters were written, Messrs. Lovelock and Lewes had been appointed auditors of the Company.
13. Then as to the law, the Advocate General has invited us to consider the question as res integra. We cannot do this. In considering the construction of a section in an I Indian Act which is professedly based on an English enactment, which in fact reproduces almost word for word the language of the English enactment, and which relates to a branch of the law which is entirely English Law, we are, in my opinion, in practice, if not in theory, bound by the decisions of the English Court of Appeal.
14. The question before us has been the subject of full and careful consideration of the Court of Appeal in England. I do not think any distinction can be drawn, for the purposes of the question we have to decide, between Section 214 of the Indian Companies Act and Section 10 of the English Companies (Winding-up) Act, 189C, now Section 215 of the English Companies (Consolidation) Act of 1908.
15. It is true that in Re Kingston Cotton Mill Co., (1896) 1 Ch. 6; 73 L.T. 482; 44 W.R. 210; 2 Manson 626, Lord Herschell and A.L. Smith and Rigby, L. JJ., used very guarded language in affirming the judgment of Vaughan Williams, J., holding in that case that the auditor was an officer of the Company. This judgment, no doubt, proceeded on the ground that the Court was bound by the decision in In re The London and the General Bank (1895) 2 Ch. D. 166; 72 L.T. 611; 43 W.R. 481; 12 R. 263; 2 Hanson 282, and Lord Herschell said that he desired to retain absolute liberty of action in case it should hereafter become necessary in regard to the question whether the London and General Bank case (1895) 2 Ch. D. 166; 72 L.T. 611; 43 W.R. 481; 12 R. 263; 2 Hanson 282 was rightly decided.
16. When the question again came before the Court of Appeal in In re Western Counties Steam Bakeries and Milling Co. (1897) 1 Ch. 617; 76 L.T. 239; 45 W.R. 418; 66 L.J. Ch. 354, I do not find that any of the Lord Justices expressed doubts as to whether the two cases’ to which I have referred were rightly decided, though Lindley, L.J., observed that, in his opinion, Stirling, J., whose judgment was under appeal regarded these cases as going further than they did and that they only decided (1) that auditors might be officers, (2) and that the auditors in these cases were officers. The learned Lord Justice observed: “An auditor may or may not be an officer of the Company. So may anybody else, e.g., a Barrister or Solicitor. Prima facie such persons are not officers.” But I am not sure Lindley, L.J., intended to lay down that something more than a formal appointment as auditor, was necessary in order to make an auditor an officer.’ At any rate, this does not seem to be the view of A.L. Smith, L.J. who says in so many words “where a Company, having, Articles of Association similar to those in the present case, has appointed a person to the office of auditor of the Company such person is an ‘officer’ within the meaning of Section 10 of the Companies (Winding up) Act., 1890.” The Advocate General did not suggest that the Articles of Association in the present case could be distinguished from those in the Western Counties Steam Bakeries’ case (1897) 1 Ch. 617; 76 L.T. 239; 45 W.R. 418; 66 L.J. Ch. 354.
17. I should be disposed to hold that an auditor duly appointed is not “an auditor” but the duly appointed auditor of the Company and as such an “officer.” But it is not necessary to go so far as this, since I entirely agree with the judgment of Bakewell, J., and with the grounds on which it is based.
18. I find it quite impossible to accept the Advocate-General’s contention that on the facts of this case, Messrs. Lovelock and Lewes were mere “casual auditors” or auditors ‘pro hoc vice’ so as to bring the case within the principle of the decision in Western Counties Steam Bakeries’ case (1897) 1 Ch. 617; 76 L.T. 239; 45 W.R. 418; 66 L.J. Ch. 354.
19. In the Western Steam Bakeries’ case (1897) 1 Ch. 617; 76 L.T. 239; 45 W.R. 418; 66 L.J. Ch. 354, the work done may fairly be described as a casual piece of work and the work was done by a firm of accountants under an agreement with the Chairman of the Directors. The Chairman apparently had no authority to appoint auditors and his appointment was never ratified by the Company. The case was dealt with on the footing that the accountants had not been formally appointed auditors (see page 620).
20. In the case before us, the work was done not under a special agreement, but done by Messrs Lovelock and Lewes in the course of the discharge of their duties as auditors, and, as it seems to me, in their capacity of auditors of the Company. Two of the audits were held after Messrs. Lovelock and Lewes had been duly elected auditors of the Company.
21. I notice that the liquidator in his affidavit of May 1st, 1912, refers to the audit of March 1908, but I find no reference either in the liquidators’ affidavits or in his report or in Messrs. Leslie and Hind’s letter of November 24th, 1910, to the audits of 1909 and 1910.
22. Mr. Lewes, however, refers to their later audits in his affidavit and it was not suggested that evidence as to these later audits was inadmissible. I think it is admissible for the purpose of deciding whether, when the first audit, which from the liquidators’ first affidavit would seem to be the crucial audit, was made. Messrs. Lovelock and Lewes should be regarded as having made the audit as the auditors of the Company in circumstances which make them “officers” of the Company for the purposes of the section. Even if the evidence of the later audits is excluded, my conclusion would be the same.
23. I think Bakewell, J., was right and that this appeal should be dismissed with costs.
Tyabji, J.
24. I agree.
25. I have nothing to add to the careful summary in the judgment of Mr Justice Bakewell of the evidence showing the relations between the appellants and the Company and I agree in the finding that the appellants were the auditors of the Company or at any rate that they so acted that they could not be heard to say that they were not.
26. But the auditors of a Company are not necessarily its officers and in view of the wording of Section 214 of the Indian Companies Act it is necessary to determine whether the appellants, Messrs. Lovelock and Lewes, were the officers of the Malabar Timber Yards and Saw Mills. Ltd. On this point there are three English decisions which are of great help to us in deciding how it is to be determined whether in respect of a class of questions which are involved in Section 214, the auditors of a Company are to be considered as its officers. I think it is clear, especially when the judgment of A.L. Smith, L.J., in In re Western Counties Steam Bakeries and Milling Co. (1897) 1 Ch. 617; 76 L.T. 239; 45 W.R. 418; 66 L.J. Ch. 354, is borne in mind, that this question must be decided with reference to each Company by a consideration of the particular facts and especially by a reference to the Articles of Association dealing with the duties of the auditors and fixing the relationship that they bear to the Company. “Some auditors,” says Lord Justice A.L. Smith, are officers of a Company and some are not. Those who are officers are within the sections but not those who are not officers. It is no good showing that a person performs auditor’s work, it must be shown that he is a de facto officer of the Company.”
27. The question, therefore, that is to be determined in the present case is whether under the Articles of Association and in the circumstances of this case, Messrs. Lovelock and Lewes were such auditors of Company as would make them officers of the Company. I entirely agree with what has fallen from the learned Chief Justice that in deciding this question we are to consider ourselves as practically bound by the opinions expressed by the Court of Appeal in England, especially when they consist of the pronouncement of Lord Justice Lindely or. Lord Justice A.L. Smith on the law of Companies. When I turn, therefore, to the opinions of those learned Judges, I find that they had before them Articles of Association, the terms of which are not materially different from the terras of those with which we are dealing here. And it was held in In re London and General Bank (1895) 2 Ch. D. 166; 72 L.T. 611; 43 W.R. 481; 12 R. 263; 2 Hanson 282 and In re Kingston Cotton Mill Co., (1896) 1 Ch. 6; 73 L.T. 482; 44 W.R. 210; 2 Manson 626 that the auditors in question were in each case officers of their respective Companies. I have, therefore, no hesitation in coming to the conclusion that we ought, on the authority of these cases, to give a similar decision in the present appeal.
28. The learned Advocate-General contended, however, that in the present case Messrs. Lovelock and Lewes occupied a relationship to the Company which was similar to that occupied by Messrs, Parsons and Robjent in the case of In re Western Counties Steam Bakeries & Milling Co., (1897) 1 Ch. 617; 76 L.T. 239; 45 W.R. 418; 66 L.J. Ch. 354 than to that occupied by the auditors in the other cases to which I have just referred. Mr. Lewes in his affidavit takes the point that his firm were only casually employed by the Company and that they never held the office of auditors. This contention is contained at page 44 of the pleadings and was made in the course of cross-examination. I am of opinion that the points taken in order to distinguish the relationship of Messrs. Lovelock and Lewes to the present Company from the relationship of Messrs. Parsons and Robjent in In re Western Counties Steam Bakeries and Milling Co, etc. (1897) 1 Ch. 617; 76 L.T. 239; 45 W.R. 418; 66 L.J. Ch. 354, are not of substance. In that case, Messrs. Parsons and Robjent were not appointed by the Directors of the Company nor by shareholders in a general meeting of the Company to act as auditors. But they were called in by Mr. Day, one of the Directors, to do a particular piece of accounting and it was in evidence that they had difficulty in recovering fees for the work done from the Company. There was nothing to show that until the question of payment was raised, either the Directors, other than Mr. Day or the shareholders as a body had any knowledge that Messrs. Parsons and Robjent had been asked to look into the account of the Company. It also appears from the report that according to the Articles of Association it was necessary that two auditors should be appointed, and it is clear that Messrs. Parsons and Robjent alone did such work as they were asked to do. There is nothing to show that, in the case, the accountants had the contents of the Articles of Association communicated to them. It Seems to me clear, therefore, that their position was to be determined irrespectively of the Articles of Association and that they could not have been considered to be officers of the Company, unless they had accepted the office of auditors under the terms contained in the Articles of Association and the Articles were such as to make the auditors officers of the Company. The contract which was actually made between the accountants and Mr. Day (one of the Directors of the Company), could not make the former the officer of the Company. Now in the present case, it is admitted that the appellants were fully acquainted with the Articles of Association and as I have already stated, I think Mr. Justice Bakewell was fully justified in coming to the conclusion that they did the work that they did under the terms of the Articles of Association. It is contended in the paragraph of Mr. Lewes’ affidavit, to which I have referred, that the auditors were not officers of the Company, because their fees had not been fixed at the time when they are alleged to have been appointed. I do not think that the fact, that their remuneration was not fixed, can, under the circumstances of this case, alter the nature of the relationship existing between the parties,–so far, that is, as the question is whether they were officers of the Company or not. It might, no doubt, affect the determination of the question, whether a contract had been completely made between the appellants and the Company. The other point taken in the said paragraph is that the appellants were appointed to do the work from year to year. But auditors are generally appointed from year to year. It seems to me, therefore, that this case is distinguishable from In re Western Counties Steam Bakeries and Milling Co. (1897) 1 Ch. 617; 76 L.T. 239; 45 W.R. 418; 66 L.J. Ch. 354 and is of the same nature as In re London and General Bank (1895) 2 Ch. D. 166; 72 L.T. 611; 43 W.R. 481; 12 R. 263; 2 Hanson 282 and In re Kingston Cotton Mill Co. (1896) 1 Ch. 6; 73 L.T. 482; 44 W.R. 210; 2 Manson 626, respectively.
29. There is one little point that was argued by the Advocate-General on which I should like to say a few words. It was argued before us that the learned Judge was wrong in not admitting in evidence letters from the Company, dated 17th May 1907, the 12th January 1909 and 19th January 1909, and press copy letters to the Company, dated 20th May 1907, the 15th January, 1909 and the 22nd January 1909. The letters are referred to by Mr. Justice Bakewell at page 47 of the pleadings. I entirely agree with him that those letters should not have been admitted in evidence. It was argued before us that they were admissible under Section 11 of the Evidence Act. Section 11 makes the facts relevant only if they are inconsistent with a fact in issue or relevant fact, or if the facts by themselves or in connection with other facts make the existence or the non-existence of a fact in issue or relevant fact highly probable or improbable. It has recently been pointed out by the Bombay High Court, in Government of Bombay v. Merwanji Mencharji 10 Bom. L.R. 907 at p. 914 that the words “highly probable” are of great importance in considering this section. It is clear that, in regard to this section, the admissibility of the particular piece of evidence, that is offered, is closely connected with and in fact depends upon, the weight to be attached to that piece of evidence if it is taken into consideration. In other words, this section makes only those facts admissible which, assuming that they are admitted in evidence, will be of great weight in bringing the Court to a conclusion one way or the other, as regards the existence or non-existence of the facts in question. I agree with the learned Chief Justice, that if these letters were admitted in evidence, they would not be of much assistance to us in coming to the conclusion one way or the other on the facts in question. That being so, it seems to me that, under Section 11 of the Evidence Act, that cannot be admissible at all.
30. For these reasons, I agree with the learned Chief Justice that this appeal should be dismissed with costs.
31. We certify for two Counsel. The official liquidator will be at liberty in the first instance, to take his costs out of the estate.
