SASHIKANT K GANDHI Vs. STATE OF GUJARAT

JUDGEMENT

(1.) Heard, Mr. Shalin N. Mehta, learned senior advocate, assisted by Ms. Vidhi J. Bhatt, learned advocate for the petitioners and Mr. Bharat Vyas, learned Assistant Government Pleader, for respondent Nos. 1 and 2 and Mr. J. S. Yadav, learned advocate for respondent No. 6 Official Liquidator, who was joined as respondent No. 6 so far as Special Civil Application No. 12813 of 2000 is concerned. Mr. K. M. Parikh, learned advocate for respondent No. 5, remained absent when called out. 1.1 It is pertinent to note at this juncture that the respondent Nos. 1, 2, 3 and 5 have chosen not to file the affidavit in reply. The common affidavit in reply, filed by the respondent No. 4 herein State of Tamilnadu is at page Nos. 82 to 92 in Special Civil Application No. 1931 of 2001. So far as the Special Civil Application No. 12813 of 2000 is concerned, the Official Liquidator of M/s. Motorol (India) Limited (in liquidation) has filed Report dated 16/12/2013, which is at page Nos. 92 to 96. 1.2 The issue involved in all these petitions being common, the same are heard and decided together by way of this common judgment.

(2.) Uncontroversial facts of the present petitions are that the petitioner, Sashikant K. Gandhi, was the Managing Director, initially of Rinki Industrial Oils Limited and continued to be as such of Motorol (India) Limited after the change of the name of the aforesaid company from Rinki Industrial Oils Limited to Motorol (India) Limited in August 1994. In the winding up proceedings before this Court in Company Petition No. 37 of 1996, this Court ordered on 19/08/1999 to wind up the aforesaid company and thereafter, the Official Liquidator was also appointed by this Court, who has taken the charge of the properties of the company. The Collector, Vadodara received some Certificates and/or instructions from the Collectors, Varanasi and Ghajiyabad for recovery of Sales Tax dues of the aforesaid company. In pursuance of the same, the Mamlatdar, Vadodara exercised powers of the Collector and by ex parte order dated 19/12/1998, ordered attachment of personal properties of the petitioners herein and their relatives, without holding any inquiry or without issuance of the notices to the petitioners or the concerned persons. Having come to know of the aforesaid ex parte order, the petitioners herein submitted their objections regarding attachment of their properties and also contended that their properties were not liable to be attached. Moreover, the petitioners also requested to investigate and hold proper inquiry before passing the aforesaid order, however, the Mamlatdar by his order dated 19/07/1999 included other dues of the company and thus, enlarged the order dated 19/12/1998, passed earlier, as referred herein above. The petitioners and other concerned preferred the appeals before the State Government, which came to be dismissed by common judgment and order dated 02/11/2000.

(3.) The learned senior advocate for the petitioners submitted that the Recovery Certificates issued by both the State Governments i.e. Uttar Pradesh and Tamilnadu clearly mention the name of the defaulter i.e. the company, which is a 'public limited company'. The dues pertain to Sales Tax to be paid by the said company. The learned senior advocate for the petitioners further submitted that, this being a public limited company, the liability of its directors are very limited i.e. to their share in the company only and hence, their personal properties cannot be attached, more particularly, when the dues are of the company and for default of payment, the directors can be held liable qua their shares only because the public limited company is always distinct and legal entity and different from the directors/managers and the liability for the same of the directors is limited and so the personal properties of the directors cannot be attached for the Sales Tax dues of the public limited company. The learned senior advocate for the petitioners submitted that by complete misreading and misinterpreting Section 155 of the Bombay Land Revenue Code, 1879 (for short 'the Code'), the orders dated 19/12/1998 and 19/07/1999 were passed by the Mamlatdar, Vadodara and in the revision, the State Government has also miserably failed to consider the objections raised by the petitioners and partly upheld the said orders of Mamlatdar vide order dated 02/11/2000. Under section 155 of the Code, the properties of the company only can be attached and not of the others and accordingly, the directors are wrongly roped, who are not the defaulters at all.