Tikam Chand Jain vs State Government of Haryana and Another

S.P. Goyal, J.—The petitioner, a director in M/s. Swadesh Rubber Industries (P.) Ltd. filed a suit against the respondents restraining them from enforcing the liability of the company against him on account of State and Central Sales Tax. Along with the suit, he also filed an application for an ad interim injunction to the same effect. The stand taken by the respondents was that he being the director of the company during the years when the amount became due, it could be recovered from him. Both the courts below upheld the defence and declined the ad interim order.

Learned counsel for the respondents could not point out any provision of law either in the Companies Act or in the Sales Tax Act which made the director liable personally for the amount due from the company nor has been able to cite any authority.

Learned counsel for the petitioners, on the other hand, relied on the judgment of D.S. Tewatia J. in Civil Writ No. 2010 of 1976 Kundan Singh Vs. Moga Transport Co. (P.) Ltd. and Others, , wherein it was held that neither in the company law nor in the Industrial Disputes Act is there any provision making the managing director personally liable for recovery of the dues against the limited company. It is, therefore, apparent that both the courts below because of misconception of law acted illegally in exercise of their jurisdiction in declining the prayer for issue of ad interim injunction. This petition is accordingly allowed and the impugned order reversed. No costs.