Civil Procedure Code (CPC)

Money decree against a pvt ltd co.


We have a execution decree against a pvt .ltd firm , the directors have incorporated new 

pvt ltd companies to siphon profits and reroute sale to evade the decree, and reduce financial

 strength of the parent company, the new firms are inter trading to siphon funds, can we appeal

 in high court  for directors and other firms to be judgment debtors along with the parent company/

 its urgent , please guide.

 
Reply   
 
Advocate

The directors of other firms cannot be held liable for the debts of this company, but individually they can be held for the debts. If the funds of the debtor company is being utilised by the other company, then that company may be brought on records for further course of legal action in this regard.

 
Reply   
 



You can recover the  decreetal amount from   the property of directors of judjment debtor company  they are   jointly and personally liable with company to pay the decreetal amount.It is immetarial that they have incorporated another new company.  

 
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Sir , Thats the problem one of our esteemed lawyers has said we can recover from directors , the other has said no we cant  ,, that is my problem ,,,,,one of the sister concerns are inter trading up to 80 % of sales within themselves.. and directors have same office and residence offices and are relatives

 
Reply   
 

sorry in fact  to add ,  one of directors of the JD firm are also directors of sister concerns  same in all the firms , 

 
Reply   
 
Legal Advisor

dear friend,

you can move to high court for seeking relief on the basis of piercing of corporate veil. the amount can't be recovered from individual directors unless the doctrine of corporate veil applied by the high court.  

 
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