Liability of HUF
awin
(Querist) 09 December 2010
This query is : Resolved
Hi.
I was a director in my relatives Ltd. company. The Company has stopped operations, is into loss and cant pay back bank loans. I am married and have an HUF. My question is -
1) Can the bank create an attachment in my share in the HUF
2) Can the bank attach my share of bank balance in HUF bank a/c or Shares that i hold in my HUF a/c.
thanks, awin
A V Vishal
(Expert) 09 December 2010
Reply to both your queries are NO.
Advocate. Arunagiri
(Expert) 10 December 2010
Your liability is limited to the shares held with the company only. That is why it is called Limited company.
But, if you had exceeded your powers granted by the company and borrowed illegally from the bank, the company is not responsible for the liability. You will be held personally responsible as per the companies act. In such a situation the Bank can attach your properties.
DEFENSE ADVOCATE.-firmaction@g
(Expert) 10 December 2010
Except those who are dealing with IT dept are aware of HUF concept , no other law defines a HUF other than old customs.
So unless you have well documented evidence the threat of attachment will be there.
M V Gupta
(Expert) 10 December 2010
While I agree withthe legal position given by mr. Arunagiri, I would like add that if u have guaranteed the loans granted to the company, the bank may proceed against your personal porperty including ur share in the HUF peoperties.
awin
(Querist) 11 December 2010
Thanks. The bank has made me give personal gaurantee, as a practice by most banks to take personal gaurantee of Directors.
How many of you agree with Mr. M.V.Gupta's as below -
" I would like add that if u have guaranteed the loans granted to the company, the bank may proceed against your personal porperty including ur share in the HUF peoperties. MV Gupta"
awin
malipeddi jaggarao
(Expert) 13 December 2010
I concur with Mr.Gupta. In every case Bank do not insist personal guarantees of Directors. If the Company's financial are strong, they will not insist for personal guarantee of directors.
