Personal liability of directors of a pvt ltd company
C. P. CHUGH
(Querist) 16 December 2015
This query is : Resolved
Dear All Experts
X and Y are directors of a private limited company. A has invested some money with the Company. Company failed to pay the investment in time. A filed civil suit for recovery of investment made by him against X and Y being director of the company without impleading company as Defendants.
How far the directors are personally liable for debts owned by the company.
May suggest judicial pronouncements in favour of the directors.
An early reply shall be appreciated.
Chanchal Nag Chowdhury
(Expert) 16 December 2015
Co. must be made a party or suit fails. Directors,unless having stood as personal guarantors, are liable only to the extent of unpaid calls on Shares. This, however, is subject to whether A can make a case for lifting of the Corporate veil.
C. P. CHUGH
(Querist) 16 December 2015
Thanks Mr Chowdhury,
Would be obliged if you could some citations in favour.
C. P. CHUGH
(Querist) 16 December 2015
Is it not necessary that for lifting of corporate veil, allegations of misappropriation of funds should be clearly narrated in the suit.
Thx
Dr J C Vashista
(Expert) 16 December 2015
I agree with expert advise of Mr. Chanchal Nag Chowdhury, the libility of Directors is limited to their share, that too if the company is a defendant.
Citation is to be search by Mr. CP Chugh.
C. P. CHUGH
(Querist) 16 December 2015
Thx xperts for their valuable advice. Although i had expected a little more.
DR.VEDULA GOPINATH
(Expert) 17 December 2015
Dear Learned Friend
Greetings.
Generally Company being a distinctive legal personality, it is liable . But in exceptional cases the directors are personally liable.
Better you refer to cases of lifting the corporate veil matters in High Courts and Supreme court. You will find the answer.
The investor SHOULD HAVE named the company as main respondent and directors being co-respondents.
If full details given, I can give my expert legal opinion on this subject. I wanted details and not impersonate the name of the company or its directors.
Regards
sincerely cs Dr Vedula Gopinath
arbitrator/advocate vgnath@gmail.com
Advocate. Arunagiri
(Expert) 17 December 2015
When the amount is invested in the company, only the company is responsible for repayment.
But,if the company is unable to repay the loan / amount, you have to prove the mismanagement by the directors and can drag them to the case.
Issue a statutory notice to the company and directors under section 433 R/W Section 434 of the Companies Act 1956. The company had failed to settle the money in time, you may file a petition for winding up of the company.
SAINATH DEVALLA
(Expert) 17 December 2015
In addition to the expert analysis of the above legal experts,I would like to state that any suit or complaint either civil or criminal or for winding up of the company or liquidation,should be filed on the company represented by its Directors.The Directors are wholly and solely responsible any any kind of liability.
Rajendra K Goyal
(Expert) 19 December 2015
Agree with the expert Advocate. Arunagiri.
C. P. CHUGH
(Querist) 26 December 2015
Thanks a Lot all Xperts for their opinion and guidance. Matter now stands resolved amicably.
T. Kalaiselvan, Advocate
(Expert) 25 December 2015
