ADESH KUMAR JAIN Vs. URS E B

JUDGEMENT

(1.) PALOK Basu, J. This couple of writ petitions practically raises only one question. When M/s Kavita Steels Pvt. Ltd. , Meerut entered into an agreement with U. P. State Electricity Board (for short the Board) through one of its Directors as "consumer" and defaulted in making payment of the electricity bills, can realisation from the personal assets of the Directors of that Company be made?

(2.) THE petitioners Chandra Bhan Khanna and Madan Lal Bhatia admittedly resigned from the Directorship of the Company and therefore the respondents' Counsel has made a statement that the Board would not proceed against them. THEir petitions therefore has to succeed on this ground alone.

(3.) UNDER the Indian Companies Act a Company is an independent legal entity and can enter into transactions independently of the Directors. While it is true that the decisions regulating the working of the company may be taken by the Directors but as the law stands today the liability or responsibility of a contract entered into by the company shall have to be honoured and borne by the company itself. In this connection it has to be mentioned that while there cannot be any doubt that the Director of a company may be an agent of the company the Director's asset will not automatically become assets of the company unless provisions are made to exist in the Act to that effect. It is true that the word consumer would include its executors and successors etc. there is no provision in the Company's Act which will make it permissible to call a Director at point of time of the company to be executor or successor of the Company. The very basis on which the Board has decided not to proceed against retired Directors will render it impossible for the Board to proceed against some of the existing Directors. It is just possible that due to passage of time and exigencies which may arise a Director today may cease tomorrow and therefore on the same logic proceedings against a Director who ceases to be so tomorrow, shall have to be abandoned.