2001 (10) TMI 1129 - HC - VAT and Sales Tax

Summary

Issues Involved:
The issues involved in this judgment include the execution of a Revenue Recovery Certificate (RRC) against a director's personal property, the validity of the director's resignation from a company, and the authority's obligation to provide a hearing before executing the RRC.

Execution of RRC Against Director's Personal Property:
The Revenue Recovery Certificate (RRC) was being executed against the personal property of a director, despite his resignation from the company. The authority failed to provide a due notice or hearing to the director before attaching his personal property, which was deemed legally incompetent. The court quashed the RRC and declared the authority must follow the due process established by law for future actions.

Validity of Director's Resignation:
The court deliberated on whether a director of a public or private limited company can resign unilaterally by writing a letter to the chairman or secretary, without filling in form No. 32 or giving notice to the Registrar of Companies. It was concluded that a director can resign without filling form 32, as the duty to fill forms and inform the Registrar lies with the company secretary. Once a director tenders resignation and the board accepts it, the director cannot be held liable for company liabilities post-resignation, except for share purchases.

Obligation to Provide Hearing Before Execution:
The authority executing the RRC was obligated to provide a due notice and hearing to the director before attaching his personal property. Failure to do so rendered the execution legally incompetent. The court quashed the RRC and directed the authority to follow the legal process for recovery from the company, ensuring the director's rights are respected.

Conclusion:
The court quashed the RRC and any related attachments, exonerating the executing authority from further obligations. The sales tax authority was permitted to adjudicate the director's liability through legal means. The writ petition was disposed of with no costs, and parties were instructed to act on an authenticated copy of the judgment.