A decree for recovery of money of Rs. 10 Lakhs is passed against a company ABC limited. The decree…
Their application should be allowed because the decree is against the company, which is legally distinct from its directors. Being a promoter or director does not itself…
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A decree for recovery of money of Rs. 10 Lakhs is passed against a company ABC limited. The decree holder files an execution petition and impleads Mr. A and Mrs. A as Respondent Nos. 2 and 3 since they are the promoter directors of the company. Respondent Nos. 2 and 3 seek their deletion. Is this application liable to be allowed or disallowed?
Answer and explanation
Correct answer B
Their application should be allowed because the decree is against the company, which is legally distinct from its directors. Being a promoter or director does not itself create personal liability for the company's decretal debt. The facts give no personal decree, guarantee or established ground for disregarding the company's separate identity, so execution cannot add them merely on account of their offices.
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