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December 4, 2012

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[Decided on 08/10/2012]

Companies Act,1956 - Winding up - directors personal properties - director gives undertaking to court that his personal properties can be attached - Later denied - whether tenable - On facts Held, No.

Brief facts

The respondent company was under liquidation. One of the directors of the company Mr.Mukhinder Singh (who died during the pendency of these proceedings and the four applications which are being disposed of by this common order had been moved by his legal heirs) gave an undertaking to the court to the effect that his personal properties could be attached if the company fails to discharge the debt. As the company could not clear the debt the assets are sought to be attached. In these circumstances, Mr. Mukhinder Singh appealed against the attachment order which was later dismissed for non prosecution. Upon his death his legal heirs moved the court seeking the recall of the attachment on the ground that personal properties of the director cannot be attached for the debt of the company.

Decision: Application dismissed Reason

No reason was found to revive the review application as the review petitioner himself during his life time had never pursued that application and the reason for that appears to be that he had also filed an appeal before the filing of the review application to challenge the correctness of the order, whereby the Official Liquidator had been directed to take the custody of the land in question belonging to him. There is another reason also for not entertaining the present four applications for setting aside the abatement of the review application. As noticed already, before filing the review application late Shri Mukhinder Singh had filed an appeal against the order, of which review was also being sought, on the ground that his personal properties could not be attached and sold to pay off the debts of the Company in liquidation since he was a non-functional Director. That appeal was disposed of as having abated and when the legal heirs of late Shri Mukhinder Singh moved similar applications before the Division Bench for setting aside of the abatement of the appeal the same were not pressed and the Division Bench had accordingly dismissed the same. With the dismissal of the applications moved by the present applicants for setting aside of the abatement of the appeal the order, of which review was being sought by late Shri Mukhinder Singh, attained finality and so there is now no justification for entertaining the present applications for setting aside of the abatement of review application and is being taken up for hearing on merits. From the aforesaid narration of the background of this case it also appears that late Shri Mukhinder Singh’s attempt was only to wriggle out of his undertaking which he had given to this Court that he shall be personally liable to clear the dues of the Company in liquidation in case the Company itself failed to do that and now after his death his legal heirs also want that somehow or the other this Court does proceed further to have his undertaking and assurance given to this Court enforced by selling the land which he had placed at the disposal of the Court. For the aforesaid reasons, all the four applications filed by the legal heirs of late Shri Mukhinder Singh are dismissed.

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