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2019 (8) TMI 372

..... 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 t .....

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..... onal District Judge-02 [West], Tis Hazari Courts, Delhi in CS-119/2017 (New No.699/2017), whereby the Trial Court has dismissed the application of the petitioners herein [defendant nos. 2 to 4 in the suit] for deletion of their names from the array of parties in the suit. 2. The plaintiff/respondent filed a suit for recovery of sum of ₹37,49,000/-, wherein four parties were arrayed as defendants. Defendant no. 1 is M/s. Gurind Systems Pvt. Ltd., a company incorporated under the relevant provision of the Companies Act, 1956, and defendant nos. 2 to 4 are stated to be the directors of the said company. 3. The cause of action pleaded in the suit is that the defendants used to place orders for supply of material from the plaintiff and wer .....

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..... e any personal liability to the plaintiff in respect of the transactions and are thus neither necessary nor proper parties to the suit. 6. By the impugned order, the Trial Court has dismissed the said application, noting the submission of the plaintiff that the plaintiff has made allegations of cheating and fraud against the defendants and has also filed a criminal complaint against them. The Trial Court based its reasoning upon paragraphs 2, 4 and 12 of the plaint, and distinguished the judgment of this Court in Mukesh Hans & Anr. vs. Smt. Uma Bhasin & Ors [RFA 14/2010 decided on 16.08.2010] cited by the defendant nos. 2 to 4. The relevant observations of the Trial Court in the impugned order dated 09.08.2018, are as follows:- 8. I .....

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..... he well settled preposition of law that a Company is a separate legal entity to its Directors and share holders. In the present case in para 2 and 4 of the plaint, the plaintiff has specifically averred about the business dealings with the defendants. So liability is also pleaded against the defendants No. 2 to 4 on the basis of 7 cheques issued. The cheques have been signed by defendant No.3 Sh. Gurumeet Sat want Sing. As per para 12 of the plaint, the defendants in order to avoid the liability of suit amount, already sold the factory of defendant No.1 at Himachal Pradesh. The allegations and averments require to be tested during the trial. In my opinion in the present facts and circumstances the principle of lifting corporate veil is appl .....

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..... ed by the pleadings before it or the reasoning in the impugned order. 8. 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, as established ever since the judgment of the House of Lords in Saloman vs. A. Saloman & Co. (1897) AC 22 (HL). 9. The doctrine of lifting the corporate veil is available in limited circumstances where it is permitted by statute, or where the corporate structure has be .....

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..... Act, whether as a private limited company or a public limited company, is a juristic entity. The decisions of the Company are taken by the Board of Directors of a Company. The Company acts through its Board of Directors, and an individual Director cannot don the mantle of the Company by acting on its behalf, unless he is so authorized to act by a special resolution passed by the Board or unless the Articles of Association so warrant. It is equally well settled that a Director of a Company though he owes a fiduciary duty to the Company, he owes no contractual duty qua third parties. There are, however, two exceptions to this rule. The first is where the Director or Directors make themselves personally liable, i.e., by execution of personal .....

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