9911796707
TMI Blog2009 (11) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... oners were directors in M/s. Piyarey Lal Rajendra Kumar, 45, Fatehganj, Buland Shahar, a company registered under the Companies Act, 1956. They had resigned from the directorship of the company and had sold their shares. Form No. 32 have also been filed by the company in the office of the Registrar of Companies. Certain amount as well as interest thereon was raised as an outstanding demand against the company (both U.P. and Central). The respondent No. 1-Trade Tax Officer, Sector I, Bulandshahar directed the petitioner to deposit the aforesaid amount and also issued certificates against the petitioners for recovery of the said amount. The petitioners raised objection before the respondent orally but to no avail. It is alleged that the reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed reliance on the decision reported in [2008] UPTC 600 (Meekin Transmission Ltd., Kanpur Nagar v. State of Uttar Pradesh). The Division Bench of this court has held that when tax dues are to be recovered from a corporate body, directors of such corporate body, would not automatically be responsible, unless doctrine of lifting of veil was found to be applicable in the case of affairs of that company. A director or shareholder not personally responsible for dues of company except of those cases, where such a provision was made in statute, or otherwise warranted in law. As regards company, there was no fault in making recovery against company. The cardinal principle of law is that where there is a liability against a company, no recovery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er or otherwise of the company since the purpose of lifting the veil is to find out the persons who are operating behind the corporate personality for his personal gain. Such person may be individual or group of persons belonging to a family or relatives or otherwise a small group collected with a common objective of achieving some illegal, immoral or improper purpose, etc. So long as no investigation is made into various aspects, we are unable to understand as to how and what manner as director of a company can straightaway be proceeded personally for recovering dues of a company unless it is so provided by some provision of the statute. Normally when the veil is lifted it is the promoters or the shareholders who are found to be working be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny. The facts of this case are distinguishable from the case of Meekin Transmission Ltd., Kanpur Nagar v. State of Uttar Pradesh [2008] UPTC 600. In this case, the court had come to the conclusion that the assets of the company have been diverted or siphoned off by the petitioner for own benefit and has left only a shell. In case in hand, it has not been even suggested by learned counsel for the respondents that after lifting the veil of the company, the petitioners could be identified as beneficiaries. In respect to tax dues or other public revenue or in other cases, if one has to discard the corporate personality, then the initial burden would lie upon it to place on record relevant material and facts to justify invocation of doctrine o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the company has failed to pay the Government dues or public revenue, that by itself would not invite the doctrine of piercing the veil and is not sufficient to ignore the statutory corporate personality conferred upon a company and make its directors or shareholders responsible personally. In the case in hand, such pleading has not been raised from the side of the respondents. Thus, it is held in the facts and circumstances of the case that the arrears of tax dues against the company cannot be recovered from the personal assets of the petitioners who were the directors of the company. Hence, the recovery notice against the petitioner (annexure 1 to the petition) is not sustainable in law and is liable to be quashed. The writ p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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