2009 (8) TMI 1141 - HC - Companies Law

Summary

Issues involved:
The judgment involves a writ petition under Article 226 of the Constitution challenging a recovery certificate issued by respondents seeking to recover an amount as arrears of land revenue.

Details of the judgment:

1. Issue of Recovery Certificate:
The petitioner, a proprietorship firm, challenged a recovery certificate issued by respondents seeking to recover an amount as arrears of land revenue. The petitioner claimed no connection with the company against whom the award in favor of the workman was passed. The Court held that the company is a separate juristic entity with limited liability, and directors cannot be held personally liable for the company's debts. The impugned order was set aside, and respondents were directed to implement the award in favor of the workman.

2. Legal Standing of the Petitioner:
The petitioner, represented by counsel, argued that the petitioner's proprietor had been removed from the directorship of the company against which the award was passed. The Court, however, focused on the legal aspect that the company is a separate entity with limited liability, and directors cannot be held personally liable for the company's financial matters. The impugned recovery certificate was deemed to be issued without proper legal consideration.

3. Implementation of Award:
The Court directed the respondents to implement the award in favor of the workman as per law, emphasizing that the petitioner, as a separate entity, should not be held responsible for the debts of the company against which the award was passed. The writ petition was disposed of in light of these findings.