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Allahabad High Court · body

2019 DIGILAW 1165 (ALL)

Sanjay Bansal v. State of U. P.

2019-05-02

SUDHIR AGARWAL

body2019
JUDGMENT : Sudhir Agarwal, J. 1. Heard Sri Amrendra Nath Tripathi, Advocate, for petitioner and learned Standing Counsel for respondents. 2. Adjudication Case No. 108 of 2015 was decided by Presiding Officer, Industrial Tribunal-2, U.P. Lucknow vide award dated 26.04.2016. The parties in the said case were M/s. Total Presentation Devices Private Limited, Manager, H.R. of above Company and Branch Manager of above Company being employer and Sri Anoop Kumar Srivastava, was the Workman. The operative part of award reads as under:- ^^mi;qZDr ds vk/kkj ij eSa ,di{kh; :i ls ,okMZ nsrk gaw fd lsok;kstdksa }kjk vius Jfed Jh vuqi dqekj JhokLro iq= LoŒ egjkt JhokLro inuke lhfu;j dLVej liksVZ bathfu;j dks vkns'k fnukad 01-12-2012 ds }kjk fnukad 31-12-2012 ls lsok ls i`Fkd@oafpr fd;k tkuk mfpr ,oa oS/kkfud ugha gS vkSj oknh Jfed lEiw.kZ fiNys osru ,oa vU; fgrykHk lfgr iqjkuh lsok v[k.Mrk ds lkFk lsok esa iquZLFkkfir fd;s tkus dk vf/kdkjh gSA** "On the basis of above, I made ex-parte award that depriving/removing the Workman Sri Anoop Kumar Srivastava son of Late Mahraj Bahadur Srivastava, posted as Senior Customer Supports Engineer by the employers vide order dated 01.12.2012 with effect from 31.12.2012 is not valid and legal and applicant-workman is entitled to be reinstated in continuous service without any break with full back wages and other benefits." (English Translation by Court) 3. Since the aforesaid dues of Workman were not paid, he moved an application under Section 6(H)(1) of U.P. Industrial Disputes Act, 1947 (hereinafter referred to as ‘Act 1947’) whereafter recovery certificate has been issued by Additional Labour Commissioner, Lucknow Region, Lucknow and petitioner is one of three persons against whom recovery certificate has been issued. 4. It is stated that M/s. Total Presentation Devices Private Limited is a company registered under Companies Act, 1956 (hereinafter referred to as ‘Act 1956’) and an independent entity. Petitioner was also not party in Adjudication Case, therefore, recovery certificate cannot be issued against Directors/Managing Directors or Share holders of Company. It is further contended that petitioner has already resigned from Managing Directorship and even otherwise he is not liable. 5. Learned Standing Counsel, however, submitted that principle of "lifting of veil" may be applied in such a case and that is how even Directors can be held personally responsible and recovery proceedings could have been initiated against them. 6. It is further contended that petitioner has already resigned from Managing Directorship and even otherwise he is not liable. 5. Learned Standing Counsel, however, submitted that principle of "lifting of veil" may be applied in such a case and that is how even Directors can be held personally responsible and recovery proceedings could have been initiated against them. 6. In my view, submission of learned counsel for petitioner deserves to be upheld and, therefore, objection raised by learned Standing Counsel is rejected. 7. So far as the first aspect is concerned that the Company was in default while recovery has been initiated against the Directors, I find that industrial dispute was between the Workman and M/s. Total Presentation Devices Private Limited, hence, recovery could have been initiated against Company and Director has no personal liability and, therefore, mention of name of petitioner in recovery certificate in individual capacity of Managing Director is patently illegal and violative of law. Issue with regard to liability of Company vis-à-vis Directors as also applicability of principle of "lifting of veil" has been considered in detail by this Court in Meekin Transmission Ltd. and Others vs. State of U.P. and Others, 2008 (4) ADJ 360 wherein it was held as under: "The legal position....is that in a case where the corporate personality has been obtained by certain individuals as a cloak or a mask to prevent tax liability or to divert the public funds or to defraud public at large or for some illegal purposes etc. to find out as to who are those beneficiaries who have proceeded to prevent such liability or to achieve an impermissible objective by taking recourse to corporate personality, the veil of the corporate personality shall be lifted so that those persons who are so identified are made responsible. However, this doctrine is not to be applied as a matter of course, in a routine manner and as a day to day affair so as to recover the dues of a company, whenever and for whatever reason they are unrecoverable, from the personal assets of the Directors. If such a course is permitted, it would lead to not only disastrous results but would also destroy completely the concept of juristic personality conferred by various statutes...and would make several enactments and their effect to be redundant and illusory." (Emphasis added) 8. If such a course is permitted, it would lead to not only disastrous results but would also destroy completely the concept of juristic personality conferred by various statutes...and would make several enactments and their effect to be redundant and illusory." (Emphasis added) 8. This decision has been followed in R.K. Chaddha vs. State of U.P. (2014) 76 VST 87 observing as under: "In Meekin Transmission Ltd. Kanpur Nagar vs. State of Uttar Pradesh, 2008 UPTC 600, a Division Bench of this court held that the mere fact that the company had failed to pay the Government dues or public revenue by itself would not invite the doctrine of lifting the corporate veil and was not sufficient to ignore the statutory corporate body conferred upon a company and make it directors or shareholders personally responsible." 9. A Division Bench of this Court in Kanwar Hasan vs. State of U.P. 2014 (3) ALJ 501 following Meekin Transmission Ltd. and Others vs. State of U.P. and Others (supra) held that a Company has a separate juristic personality and the dues of the dealer Company could not be recovered from the personal assets of a Director. 10. Earlier, in Niranjan Lal Agarwal vs. Deputy Commissioner (Assessment) (2009) 41 NTN 132, a Division Bench of this Court held that if the dues are to be recovered from a corporate body, directors of such corporate body would not be automatically responsible unless the doctrine of lifting the veil was found to be applicable in the facts and circumstances of the affairs of the company. 11. In the case in hand nothing has been pleaded or demonstrated to show that there existed any condition precedent for application of doctrine of "lifting for veil of corporate personality" i.e. the corporate personality has been obtained by certain individuals as a cloak or a mask to prevent tax liability or to divert the public funds or to defraud public at large or for some illegal purposes etc. The dues payable in the case in hand are the back wages and other consequential benefits of the employee concerned on his reinstatement and relates to day to day affair of Company and, therefore, does not attract application of said doctrine. The impugned recovery from the petitioner, therefore, cannot be sustained. 12. In the result, the writ petition is allowed. The dues payable in the case in hand are the back wages and other consequential benefits of the employee concerned on his reinstatement and relates to day to day affair of Company and, therefore, does not attract application of said doctrine. The impugned recovery from the petitioner, therefore, cannot be sustained. 12. In the result, the writ petition is allowed. Impugned recovery certificate (Annexure-1 to writ petition), insofar as petitioner's name has been mentioned, is quashed and it is made clear that the aforesaid recovery certificate shall be treated to be valid with respect to the persons other than petitioner.