Back
2026 Supreme(Online)(Mad) 67875
IN THE HIGH COURT OF JUDICATURE AT MADRAS
P.B. Balaji, J
Suraj Precision Engg Works Pvt Ltd – Appellant
Versus
S.S.S Engineering Works – Respondent
CRP.Nos.1956 & 1957 of 2026 | CMP. Nos.8744 & 8745 of 2026
For the Appellants/Petitioners: ARL.Sundaresan, M.Mathan Raj
For the Respondents: M.Jaisingh
A Private Limited Company is a separate legal entity; therefore, its Directors or Managing Director cannot be held personally liable or arrested for the company's debts unless they have provided a personal guarantee or stood as surety.
Headnote:The petitioner company challenged an order of arrest issued against its Managing Director and Director in execution proceedings related to awards passed under the Micro Small and Medium Enterprises Development Act, 2006. The petitioner contended that the directors were not parties to the original proceedings in their individual capacity and had not provided any personal guarantees, while the executing court had previously been directed by the High Court to determine if the award was a nullity before proceeding with execution. The primary issue was whether the directors of a private limited company could be held personally liable and arrested for the company's debts. The court reasoned that a private limited company is a separate legal entity and, unless a director provides a personal guarantee or stands as surety, they cannot be saddled with the company's liabilities. The court found that the executing court erred by attempting to lift the corporate veil without evidence and by ignoring directions to first decide on the enforceability of the award. For all the above reasons, these Civil Revision Petitions are allowed.
COMMON PRAYER:
This Civil Revision Petition is filed under Section 115 of the Civil Procedure Code, to set aside the order dated 25.03.2026 made in E.P. Nos.4211 & 4209 of 2023 in MSEFC/CR/166/2020 & MSEFC/CR/167/2020 passed by the learned XXV Assistant Judge, City Civil Court, Chennai.
COMMON ORDER
The Judgment debtor is the revision petitioner in both these revision petitions.
I have heard Mr.ARL.Sundaresan, learned Senior Counsel for Mr.M.Mathanraj, learned counsel for the petitioner and Mr.M.Jaisingh, learned counsel for the respondent in both the revisions.
The learned Senior Counsel Mr.ARL.Sundaresan, would at the outset, state that the petitioner Company alone suffered an award and the order of arrest which is impugned in these revision petitions could not have been passed against the Managing Director and Director, who were admittedly not parties in their individual capacity to the proceedings before MSME Council or even the Executing Court. The learned Senior Counsel would also invite my attention to the order passed by the Executing Court dismissing the Section 47 CPC application and the reasoning assigned by the Executing Court for dismissing the Section 47 Petition on the ground that all contentions could be raised in the main Execution Petition.
The said order in the Section 47 CPC Application was challenged by the Petitioner Company and its Managing Director in CRP. Nos.1548 and 1553 of 2025, and this Court finding that the Managing Director not being a party to the lis cannot seek relief under Section 47 CPC and also taking note of liberty granted by the Executing Court, directed the Executing Court to decide and all legal issues involved in the case, including as to whether the award is a nullity and whether such an award is enforceable or not.
The learned Senior Counsel therefore states that in the absence of any evidence adduced by the respondent, especially in the nature of implicating the Managing Director to any liability, the Executing Court ought not to have gone to the extent of ordering arrest of the Director and Managing Director. The learned Senior Counsel would however fairly concede to the position that the Executing Court could have at best permitted the respondent/decree holder to proceed against the assets of the Company if any, after deciding the objections of the revision petitioner with regard to the award being a nullity.
The learned Senior Counsel would also state that even otherwise, for the liability of the Private Limited Company, the Executing Court ought not to have ordered arrest of the Director and Managing Director, who admittedly, had not given any personal guarantee in favour of the respondent/award holder. The learned Senior Counsel would therefore prays for the revisions being allowed.
Per contra, Mr.M.Jaisingh, learned counsel for the respondent/decree holder states that the petitioner has not challenged the award under the provisions of the Act, in a manner known to law and was therefore dis-entitled to question the executability of the award at the stage of execution. The learned counsel would further state that the Managing Director himself has represented the petitioner Company in writ proceedings and admitted liability and therefore, no error can be pointed out in the order passed by the Executing Court warranting interference in revisions. He would further state that despite being successful in obtaining the awards, the respondent is unable to realize huge monies due and payable to him.
The learned counsel has also relied on the following decisions in support of his contentions:-
(i) Maurice W. Innis Vs. Lily Kazrooni @ Lily Arif Shaikh , reported in (2026) SCC Online SC 554; and
(ii) G-Tech Stone Limited and Ors Vs. BFIL Finance Limited , reported in 2020 (4) CTC 770.
The learned counsel for the respondent therefore prays for dismissal of the revisions.
I have carefully considered the submissions advanced by the learned counsel on either side.
