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Attachment of company property with shareholder rights

(Querist) 31 May 2016 This query is : Resolved 
Respected experts
I have to execute a decree. Judgment debtors are all shareholders Cum directors in various construction companies having shareholder stake like 10%, 50%, ETC..
none of these construction companies have filed their financial statements before the respective registrar of companies.
I as a decree holder should only attach shares of that share holder and file just garnishee proceedings.. Or do I as a decree holder have legal options to attach the immovable construction projects of those construction companies to the extent of share holder rights along with garnishee proceedings..

Pls advise since a few advocates have been stating that company is a distinct legal entity from share holders due to which company assets cannot be attached...

Thank-you
H.M.Patnaik (Expert) 31 May 2016
Pl. clarify whether the decree passed has no bearing on activities of the construction companies you are referring to?
Divya (Querist) 31 May 2016
Yes sir the decree has no bearing on activities of the construction companies
Sudhir Kumar, Advocate Online (Expert) 01 June 2016
prima-facie the given facts indicate no case on the company.

please clarify all facts.
Divya (Querist) 01 June 2016
Respected experts
Each judgment debtor is a developer in that construction company.. Each of those construction companies is a private limited company...
Each of these debtors is a shareholder in those construction companies....
I have to execute the decree....
Issue is none of these construction companies have filed their annual financial and accounting statements before respective registrar of companies... Companies and directors have violated companies act...

Problem is I hv to recover from these debtors who are also shareholders and directors In these construction companies... But I do not have any of their personal assets lists for attachment... These debtors are working cleverly..
Only asset what is visible for attachment is the project of their construction companies..
Law states that shareholder and company are distinct. Shareholder cannot attach company assets.. Hence I cannot attach even partly the construction project of these shareholders. These shareholders are taking a refuge in these laws..
How do I recover from these shareholders.. They are investing in the company and making huge gains too.. But they are getting the protection from law..
H.M.Patnaik (Expert) 01 June 2016
Yes, as you indicated an entity registered under the Indian Companies Act, 1956 as amended till date, a company is an artificial judicial person different from from its shareholders, but there is an provision in the same Act " Lifting the corporate veil" , under which courts may excercise discretion under compelling circumstance to find out the individual participation of each shareholder to realise decreed dues.
Divya (Querist) 01 June 2016
I thank the experts and even Shri Patnaik for showing me the way ahead .. In rarest of the rare cases, court exercises "lifting of the corporate veil" but my decree execution falls in that category only where company is formed by the shareholder to protect outside liabilities
Rajendra K Goyal (Expert) 09 June 2016
Without knowing full case details / related documents if any, nothing can be advised. Discuss with your lawyer.


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