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TMI Blog1995 (2) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... two others stood charged under Section 9(1)(b) 9(1)(bb) of the Central Excises and Salt Act in 2(c) CC No. 541 of 1976 in the Court of the Additional Chief Judicial Magistrate (Special), Cuttack. The petitioner was arrayed in the said case as Managing Director of the Company. The Company was described as accused No. 1, and accused No. 3 was the Accounts Officer. The learned Chief Judicial Magistrate came to hold that the accused persons were guilty and sentenced each of them to pay a fine of Rs. 200/- in default, to undergo simple imprisonment for two months. Appeal was carried from the said order of conviction by the petitioner, but the same was not fruitful. Being unsuccessful in appeal, Criminal Revision No. 51/1985 was preferred befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not representing the company, Accused No. 1, the company, was also not represented by the Managing Director and therefore, he is not liable to pay the fine for the company. Assuming the petitioner was initially liable for the company, the company having been wound up and official-liquidator having been appointed, the petitioner can no more be held liable and the conclusion of the Court below that the official liquidator has only taken over assets is an apparent error of law; and in any case, issuance of N.B.W. and D.W. against the petitioner to realise the fine in respect of the Company is not permissible as the company has separete legal personality from that of the Directors, and the Directors cannot be made liable for the liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reated as separate legal entities from their Directors and shareholders. Relying on the said decision in case of M.P. Agarwal and another v. Union of India and others. - 1969 B.L.J.R 127 it was held :- "It is well established that a limited company has separate legal personality from that of its Directors who cannot, therefore, be made liable for the legal liability incurred by the limited company. The principle of the independent corporate existence of a company has been explained and emphasised by the House of Lords in the case of Saloman v. Saloman Co. Ltd." With regard to the corporate status or entity of a company, there never has been any dispute. It is worthwile to quote a passage from Lindley on Companies, 6th Edition at page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being different, liabilities are to be different. The indubitable conclusion is that the company stands in a distinctive footing in comparison to its Directors. 7. It is well known that the company cannot act by itself but that does not necessarily mean in absence of any finding that someone is liable for the Company the fine imposed in a proceeding is to be realised from him. There may be cases where a company is represented by its Chairman or the Managing Directors as they are the persons who normally represent the Company but in actuality, the offence has been committed by someone else who is incharge of the affairs of the Company and is directly involved in the alleged offence. It is relevant to state here that earlier under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this decision is of assistance to come to the conclusion that there are two categories of liabilities viz. liability of the company and liability of the person incharge and one can exist without the other. In view of the aforesaid principle, it is quite clear that the company has to suffer its own liability. 8. Once it is concluded the company has its own liability, the realisation of fine has to be made from the company. Mode for realisation is provided under Section 421 of the Code of Criminal Procedure, wherein it has been stipulated that the Court has the authority to issue a warrant for the levy of the amount by attachment and sale of any movable property belonging to the offender and further can issue a warrant to the Collector o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obligations, if determined in accordance with law, to meet the liabilities from the assets of the company. Once it is held that the payment of the fine by the company is its exclusive liability, steps are to be taken for realisation of the same in accordance with the provisions of the Companies Act, keeping in view that the company is now in liquidation. Under this changed circumstance, Non-Bailable Warrant or Distress Warrant cannot be issued against the Ex Managing Director in his individual capacity. 10 In view of the above analysis, I unhesitatingly conclude and held that the petitioner is not to be proceeded against and there was no justification on the part of the Court below to issue non-bailable warrant of arrests and distress war ..... X X X X Extracts X X X X X X X X Extracts X X X X
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