9911796707
TMI Blog2001 (3) TMI 929X X X X Extracts X X X X X X X X Extracts X X X X ..... e against the petitioner s company and its directors and officers shall lie without the prior consent of the Board for Industrial and Financial Reconstruction (BIFR), New Delhi. 3. The case of the petitioner is that the petitioner-company was incorporated under the provisions of the Companies Act, 1956 ( the Companies Act ) on 12-10-1990. The company s authorised share capital is Rs. 15 crores divided into 1.5 crore equity shares of Rs. 10 each. There is no dispute that the company has received public deposits and has been paying interest thereon. It is fairly stated that the total outstanding deposit as on 31-10-2000 was Rs. 931.47 lakhs held by nearly 6,848 depositors, and out of the said sum, a sum of Rs. 911.99 lakhs held by 6,709 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, the bar under section 22, would be available not only to the petitioner-company, but also to its directors and officers. The learned senior counsel submitted that the directors of the petitioner-company are guarantors of the company and when the principal, viz., the company is protected under section 22 , there is no reason for denying the protection under section 22 to its directors and officers, and, according to the learned senior counsel, the directors and officers should also be protected under section 22. The learned senior counsel relied upon the decision of the Supreme Court in Patheja Bros. Forgings Stamping v. ICICI Ltd. [2000] 102 Comp. Cas. 21 1 , and submitted that considering the legislative intent of section 22, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors occupy a fiduciary position vis-a-vis the company and they cannot be regarded as guarantors of the company or its properties. I, therefore, hold that the protection available under section 22, is not available to the directors and officers of the petitioner-company. I am of the view that the legislative intent is only to protect the properties of the company from any distraint proceedings, and the protection under section 22 is not available to the directors and officers of the company. 9. As already observed, the directors of the company occupy a fiduciary position and they are not guarantors of the company or its properties. It is well settled that the company is a separate legal person distinct from its shareholders who have c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 22 and it cannot be extended further. I, therefore, hold that it is not open to them to contend that there should not be any investigation or proceedings taken against them for the failure to repay the deposit money to the depositors. 11. I also reject the submission of Mr. M. Venkatachalapathy, the learned senior counsel, that the intent of the Legislature is to offer protection to the directors and officers of the company also. The intent of the Legislature, as observed by the Supreme Court in Patheja Bros. Forgings Stamping s case ( supra ), is to protect the interest of the company and its properties and also guarantors from the proceedings for execution, distress, etc. Further, the wording of section 22 is clear and there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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