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TMI Blog2007 (3) TMI 377X X X X Extracts X X X X X X X X Extracts X X X X ..... the Applicant-Company (which is a Company other than Respondent No. 1-Company in the Company Petition) that it is the owner of the premises sought to be attached and that the 1st Respondent-Company in the Company Petition is not the owner and does not own the property and, therefore, the property of the Applicant-Company cannot be attached in execution of the order/decree of the CLB in favour of Respondent No. 1-Company in the above Company Petition. It is the case of Respondent No. 2 to the Company Petition, the life-time Director of Respondent No. 1-Company, that the order is passed only against the Company and not against him and hence, the warrant of attachment issued be set aside and the execution be stayed. 3. Certain events and dates that have transpired with regard to the flat which is attached as also with regard to the conduct of the Director of Respondent No. 1-Company in the above Petition require to be considered. 4. The attached flat is shown to have been purchased initially under an unregistered agreement for purchase of the said flat by the wife of the Respondent No. 2, from one Ramesh Shah, on 14-6-1977. The flat has since stood in the name of the wife of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 403 of 1994 showing the Annual Report of the Company of the year 1998 in which Respondent No. 2 is shown as the Chairman and Managing Director and has signed the Annual Report in such capacity. From the said document it can be seen that the registered office of Crystal Audio Ltd. is at Crystal Estate Plot No. 80, Waliv, Taluka Vashi, District Thane, Maharashtra. Consequently, the tenancy created in favour of Crystal Audio Ltd. is not for the office of the said Company but is seen to be for the residence of the Directors of the Company, including Respondent No. 2 who is the Chairman and Managing Director of that Company. 7. It can, therefore, be seen that the attached flat belongs to Respondent No. 2, who was the Director of Respondent No. 1-Company, against whom the order of the CLB has been passed. By virtue of the aforesaid documents, Respondent No. 2 has sought to show his lack of legal interest and the interest of his wife and son instead. However, that exercise has been unsuccessful inasmuch as the certified extract of Crystal Audio Ltd. shows the tenancy for residential flat of the Directors and the unmaintainable interest of the Applicant-Company under the agreement whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentially the founder of the Company. It is not disputed that Respondent No. 2 represented the Company as its director in the Company Petition. As a Private Limited Company, Respondent No. 1 is entitled, by a provision in its Articles of Association, to have a life-time Director. That would be none other than Respondent No. 2. The concept of a "Life-time Chairman" is unknown to corporate law. A Chairman is not defined in the Companies Act 1956. A reference to a Chairman is found only in section 175 of the Companies Act, which deals with a chairman of general meetings. A chairman refers to a member or a Director chairing a meeting. The Act confers no other role upon a Chairman. There can be no Chairman for life. Such nomenclature can, therefore, be used only to denote a Director as a Managing Director. As a "life-time Chairman", Respondent No. 2 would be entitled to chair all the Board Meetings during his life-time. Respondent No. 2 is, therefore, a Director "life-time Director" though called a "Chairman" "life-time Chairman". Consequently his resignation, a week after the hearing of the Company Petition and a week before the order thereunder came to be pronounced leaves much to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the Director of the Company, is personally liable also for the satisfaction of the decree, which is passed against Respondent No. 1-Company. 16. The Petitioners Advocate has relied upon a judgment in the case of Sangramsinh P. Gaekwad v. Shantadevi P. Gaekwad [2005] 57 SCL 476 (SC) in which after considering various judgments laying down the fiduciary duties of the Directors towards the minority shareholders, including a case of Needdle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd. [1981] 3 SCC 33, it has been held that the Directors owe a fiduciary duty to the shareholders in respect of transactions relating to issue of shares. It is further held that if a Director makes a pecuniary benefit for himself to the detriment of the shareholders and do not act in the interest of the Company, on a wrong principle or with an oblique motive or for a collateral purpose, the actions of the Directors are liable to be set aside as mala fide. It is contended that in this case the acts of Respondent No. 2 in causing documents of transfer of properties in fact belonging to him, but showing them in the names of his wife and son and transferring them in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the Company since the Company is only a legal body and cannot act except through its directors. Respondent No. 2 as such Director has failed to carry out those directions. He, instead, resigned from the Company. He has, therefore, failed to act as the Company s agent. He is, therefore, liable in execution on behalf of the Company, his mala fide and ulterior resignation notwithstanding. He continues during his life-time as the Chairman and consequently Director of the Company, with a further authority to even nominate his successor. In fact, such resignation has no effect in law. No director, can wash his hands off his liability as such Director, merely by resigning for acts done and liabilities incurred prior to his resignation, which may be determined and adjudicated upon after such resignation. 19. The Advocate for the Applicant-Company relied upon an unreported judgment and order dated 25-6-2002 of the learned Single Judge of this Court in Summary Suit No. 1249 of 1999 in which it is held that though the judgment-debtor has affixed his name board and resided with his mother, the flat which stood in the name of the mother, could not be attached in execution. That propos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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