A company under winding up cannot be sued without leave of the court; individual liability must be clearly established for claims against its directors.

ORDER :

G.Radha Rani, J.

This Civil Revision Petition is filed by the petitioner-defendant No.2 aggrieved by the order dated 13.12.2018 in I.A. No.665 of 2018 in COS No.26 of 2017 passed by the Commercial Court cum XXIV Additional Chief Judge, City Civil Court, Hyderabad.

2. The petitioner-defendant No.2 filed an application under Order VII Rule 11 read with Section 151 CPC to reject the plaint contending that the suit was filed by the respondent-plaintiff against defendant No.1 Company for recovery of amount alleged to be due by the company. No relief was sought against the petitioner. No allegation was made against the petitioner that the petitioner in his individual capacity owed any amount to the plaintiff company. The defendant No.1 Company was wound up on 21.12.2010. In pursuance of the order of the winding up, an official liquidator was appointed, who had taken up the defendant No.1 Company and its assets. The certified copy of the order of the winding up was filed along with the written statement. The petitioner in the writing statement clearly detailed about the winding up proceedings and appointment of the Liquidator. No documents were submitted by the plaintiff to show that the petitioner-defendant No.2 had executed any of them in his individual capacity. The invoices, the bills, the MOUs were transacted by defendant No.1 company. The plaintiff in his cross-examination by defendant No.2 dated 25.08.2018 admitted that no document was executed by the petitioner in his individual capacity. The plaint averments would not reveal any cause of action. The Companies Act, 1956 would prohibit entertaining any suit against the company, which was wound up and the case against the Company could not be proceeded with and prayed to reject the plaint.

3. The respondent-plaintiff filed counter contending that the suit was filed for recovery of money against the defendants for Rs.3,94,81,818/- as the defendant No.1 company purchased various products from the petitioner company from time to time under various invoices. The plaintiff was examined as PW.1 and Exs.A1 to A36 were marked. The plaintiff was cross-examined by counsel for the defendants. When the matter was posted for evidence, an application was filed seeking rejection of the plaint. The plaintiff company was not aware of winding up of defendant No.1 company on 21.12.2010 and appointment of liquidator and that the Liquidator had taken over the defendant No.1 company and its assets. The defendant No.2 being the Chairman and Managing Director could not escape the liability on the ground that no relief was sought against him. Having signed on all the cheques, which were returned for “exceeds arrangement” marked from Exs.A6 to A22 and having received all the demand notices for repayment marked from Exs.A22 to A31, the burden would shift on the defendant No.2. Both the defendant Nos.1 and 2 were jointly and severally liable to repay the amount due to the plaintiff company. Ex.A32 - Memorandum of Understanding dated 04.02.2009 was made by defendant No.2 in his personal capacity. The defendant No.2 admitted his liability and assured repayment and stated that he was ready to face the civil and criminal proceedings if he failed to repay the debt. As such, the plaint could not be rejected without proper enquiry.

4. The learned Judge, Commercial Court, City Civil Court, Hyderabad, on considering the contentions of both the learned counsel, observed that mere winding up of defendant No.1 Company was not a bar to file the suit. The Official Liquidator can represent the matter. At the same time if the plaintiff obtains a decree against the defendant