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2019 (8) TMI 372 - HC - Companies LawLifting of corporate veil - Dishonour of cheque - transactions by the directors in personal capacity or not - The averment of the plaintiff/respondent is that that, with a view to evade payment of their liability to her, the defendants/petitioners are selling their factory located in Himachal Pradesh - Deletion of names from the array of parties in the suit - suit for recovery, wherein four parties were arrayed as defendants - HELD THAT:- The order of the Trial Court is entirely unsustainable. The allegations contained in the plaint do not speak of any transaction with the defendant nos. 2 to 4 in their personal capacity. The business dealings, although claimed to be with the “defendants”, the bills and invoices enclosed with the plaint were all issued on the defendant no. 1 company. Similarly, the cheques mentioned in the plaint were drawn on the account of the defendant no. 1 – company, although they were signed by the defendant no. 2, as a director of the company. The factory which is alleged to be sold in order to evade a decree is also admittedly in the name of the company - The Trial Court has correctly noticed that a company has a distinct legal personality and its directors and shareholders cannot ordinarily be held liable for its dues. However, the cryptic observation of the Trial Court that the circumstances of the present case attract the principle of lifting the corporate veil is not supported by the pleadings before it or the reasoning in the impugned order. The doctrine of the lifting the corporate veil is not available in every case of a liability alleged against a company. To so hold would lead to the consequence that every commercial transaction involving a company will require to be defended by the directors, shareholders or other officers of the company in their personal capacity. This is anathema to the very concept of corporate legal personality. The defendant nos. 2 to 4 are deleted from the array of parties in the suit - petition allowed.
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