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SANJAY KISHAN KAUL
SAURABH EXPORTS – Appellant
Versus
BLAZE FINLEASE AND CREDITS PVT. LTD. – Respondent
Key Points: - The court lifts the corporate veil to hold defendant No. 2 personally liable in a case where the company was used as a front for fraud/undue advantage. (!) - Defendant No. 3 (Director-shareholder) is not held personally liable based on piercing the corporate veil due to limited involvement and family/household context. (!) - Defendant No. 4 (husband of Director No. 3) not held personally liable due to lack of direct involvement or signature in personal capacity. (!) - The suit involves recovery of Rs. 21,00,650/- with principal Rs. 15 lakhs deposited; court determines liability of defendants No. 1 and 2 (company and its director) and issues a decree with specific interest rates (pendente lite 15%, future 12%). (!) (!) (!) - Interest and decree terms: simple interest at 15% p.a. from 22-11-1996 to decree; 12% p.a. from decree to realization; against defendants No. 1 and 2 jointly and/or severally. (!) - The court finds the corporate entity was used as a cloak for fraud to recover Rs. 15 lakhs; veil lifting justified. (!)
( 1 ) THE plaintiff has filed a suit for recovery of Rs. 21,00,650/- against the defendants jointly and severally. The plaintiff is the proprietorship concern of Smt. Prabha Uppal and claims to be engaged in the business of exports. Defendant No. 1 is the private limited company stated to be engaged in the business of leasing and financing having been incorporated on 17. 08. 1995. Defendants No. 2 and 3 are the Directors of defendant No. 1 company while defendant No. 4 is the husband of defendant No. 3 and the brother of defendant no. 2. It is stated in the plaint that the subscribed capital is held by defendants No. 2 and 3 being 10 equity shares each amounting to the total amount of Rs. 100/- for each of the defendants.
( 2 ) IN November, 1996, defendant No. 4 is stated to have approached Mr. Virendra uppal, Authorised Representative of the plaintiff firm and the brother-in-law of smt. Prabha Uppal stating that defendant No. 1 company was inviting short-term deposits at good interest rates. Defendant No. 4 is stated to have represented that his brother and wife are also the Directors of defendant No. 1 company. The plaintiff made a deposit of Rs. 15 lakhs i
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