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Issues involved: Application for execution of arbitration award against judgment debtor company, liability of company directors in execution of decree, lifting of corporate veil.
Execution of arbitration award: The decree holder sought execution of an arbitration award against the judgment debtor company, claiming a specific sum along with costs and interest. The execution proceedings were initiated solely against the company, M/s Akshay International Pvt. Ltd. Involvement of company directors: The court directed the appearance of the company's directors, who stated the company had ceased operations with limited assets. The decree holder requested the remaining decretal amount from the directors, alleging a closely held company structure necessitated lifting the corporate veil for justice. Lifting of corporate veil: The decree holder argued for lifting the corporate veil to hold the directors personally liable. However, the court emphasized the legal distinction between a company and its directors, citing the principle from Solomon v. Solomon & Co. Ltd. The court noted the absence of impleading the directors in the execution petition. Legal analysis and precedents: The court analyzed relevant judgments cited by the decree holder, finding no precedent where a money decree against a company was executed against its directors. The court highlighted the limited liability concept and the necessity to establish cases of fraud or improper conduct to pierce the corporate veil. Dismissal of application: The court dismissed the application, stating that voluntary payment by one director does not extend liability to other directors. The decree holder failed to demonstrate fraud or improper conduct, essential for disregarding the corporate veil. Insufficient evidence was presented to justify attaching the properties of the directors in execution of the decree.
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