SUSHIL KUMAR MUNSHI Vs. STATE OF BIHAR

JUDGEMENT

(1.) Heard learned counsel for the petitioner and learned counsel for the State. The petitioner is stated to be one of the Directors of M/s. R.K. Solvent Private Limited, a company duly registered under the Indian Companies Act before the Registrar of Companies. On account of certain tax dues of the Commercial Taxes Department of the company, proceedings were initiated under the Bihar and Orissa Public Demands Recovery Act. The petitioner filed his objection taking the stand that the company, duly registered in law, was a separate corporate entity and that the dues under the certificate proceedings were to be recovered from the assets of the company only and not individually against the petitioner from his personal assets being a Director. He also took the objection that the company had not been impleaded as a certificate debtor by itself and which has been rejected on 28.10.1992 holding him liable. Learned counsel for the petitioner placing reliance a judgment of this Court in 1999 (1) P.L.J.R. 522 (DAMODAR PRASAD NATHANI AND ANOTHER VERSUS THE STATE OF BIHAR AND OTHERS) submits that proceedings for recovery against the personal assets of a Directors were not maintainable and the dues under the Bihar and Orissa Public Demands Recovery Act could be recovered only from the assets of the company.

(2.) Learned counsel for the State supported the impugned proceedings to urge that ultimately the petitioner was also answerable in his capacity as a Director. A Bench of this Court in the case of (DAMODAR PRASAD NATHANI) (supra) has held as follows at paragraph-4 of the judgment:- 4. Grievance of the petitioners in this case is that certificate case against them, who are directors of a Private Limited Company, cannot proceed as the sales tax dues as against the aforesaid company M/s. Shankar Glass Works (P) Ltd. Could have been realised from the assets of the company which is a juristic person. In support of his submission, learned counsel appearing on behalf of the petitioners has placed reliance upon a Bench decision of this Court in the case of Smt. Sarla Devi Agrawala Vs. The State of Bihar & Ors : 1979 Bihar Bar Council Journal 213 wherein it has been categorically laid down that Directors or shareholders of a company cannot be proceeded with for realisation of dues against the company which can be realised only from assets of the company which is a juristic person. I find that the present case is squarely covered by the aforesaid case is squarely covered by the aforesaid decision of this Court. Therefore, I have no option but to hold that certificate proceeding against the petitioners cannot proceed.

(3.) In the result this writ application has to be allowed. The certificate proceedings are quashed only insofar as the personal assets of the petitioner are concerned. It is made clear that the certificate proceedings shall continue against the company and its Directors to the extent of their shares, the company being a private limited company. The writ petition stands allowed.