Kanhaiya Lal v. The State Of Bihar & Ors.

1. This letters patent appeal is directed against an order of the learned Single Judge by which on the ground that the appellant has not exhausted the statutory remedy of revision available to him under section 62 of the Bihar Public Demands Recovery Act, his writ petition was dismissed.

2. The short facts of the case are that a commercial connection was granted to Satyam Roller Flour Mill Pvt. Ltd., a company incorporated under the Indian Companies Act, 1956 (hereinafter referred to as ‘the company’) on the basis of an agreement entered between the company and the Bihar State Electricity Board on 5.12.89 The company failed to pay the electric dues and, in the circumstances, Certificate case (Electric) No. 34/95-96 was initiated by the Certificate Officer, Siwan, on the requisition of the Electricity Board. In the column of the Certificate-debtors the name of the appellant was also mentioned besides that of the company i.e Satyam Roller Flour Mill Pvt. Ltd. The appellant prayed for deletion of his name on the ground that the liability in question being corporate liability, his inclusion in the certificate proceeding was unwarranted and illegal. The plea found favour with the Certificate Officer who by his order dated 20.12.95 after hearing the Board ordered for deletion of the appellant's name from the proceedings. On 27.9.96 the Board filed a petition to mention the name of the appellant in the description of company i.e Satyam Roller Flour Mill. The prayer was turned down by the Certificate Officer on 11.11.90 The Board preferred appeal before the Collector of the District who took the view that as the agreement had been executed by the appellant his presence in the proceeding was essential and accordingly by order dated 9.10.2001 directed that the appellant's name be incorporated and thus set aside the order of the Certificate Officer. The appellant preferred writ petition, giving rise to this appeal, being CWJC No. 2003/2002 which was dismissed in limine on the ground that the appellant has not exhausted the statutory remedy of revision available to him under section 62 of the Act, as indicated above. Shri Navaniti Prasad Singh, learned counsel for the appellant, submitted that the entire proceeding as regards the appellant was without jurisdiction inasmuch he cannot be fastened with the corporate liability of the company. The name of the appellant having been deleted by a reasoned order by the Certificate Officer which was passed after hearing the Board and against which the Board did not prefer any appeal or revision. The name of the appellant could not be re-included in the array of the parties in the proceeding. In support of the contention as to the nature of liability which is subject matter of the proceeding, counsel placed reliance on Damodar Prasad Nathani v. The State of Bihar, 1999 (1) PLJR 522, Smt. Sarla Devi Agrawala v. The State of Bihar, 1979 BBCJ 213, Bejai Singh Dugar v. Certificate Officer, Bhagalpur, 1965 BLJR 341, M.P Agarwalla v. Union of India, 1963 BLJR 127 and Harihar Prasad v. Bansi Missir*, AIR 1931 Patna 321. He also referred to decisions in (2001) 9 SCC 275, Filterco v. Commissioner of Sales Tax, M.P (1986) 2 SCC 103. Collector of Customs & Excise, Cochin v. A.S Bava, AIR 1968 Supreme Court 13, and Dr. (Smt.) Kuntesh Gupta v. Management of Hindu Kanya Mahavidyalay, Sitapur (U.P), (1987) 4 SCC 525 in support of the contention that existence of alternative remedy is no bar to entertaining of writ petition under Article 226 of the Constitution. He submitted that though the remedy by way of revision under section 62 of the Act is available to the appellant, in the facts and circumstances, the refusal to entertain the writ petition by the learned Single Judge was not correct, inasmuch as by reason of the proviso to section 62 of the Act the appellant will have to pay 40% of the certificate dues to the tune of over Rs. 5 lacs even though he is not personally liable to pay any amount whatsoever. Therefore, he should not be relegated to the revisional forum and thereby compelled to deposit the hefty amount of over Rs. Five lacs which is condition precedent for preferment of the revision.

3. Shri Mihir Kumar Jha, learned counsel for the Electricity Board submitted that the remedy of revision under section 62 of the Act being a complete and efficacious remedy the appellant should not be allowed to bypass the same, and so far as the argument regarding deposit of 40% amount is concerned, the point at issue stands settled by a Bench decision of this court in Sawar Mai Choudhary v. State Bank of India, 1986 PLJR 660.

4. After hearing the counsel for the parties, we are of the view that the submissions of the counsel for the appellant are well founded and they must be accepted. The law on the point is well settled that the liability of the company cannot be enforced against its officers including Director or Managing Director. Amongst the decision cited by the counsel pointed reference may be made to two of them rendered in the context of the proceedings under the Public Demands Recovery Act, namely, those of Bejai Singh Dugar v. Certificate Officer, Bhagalpur (supra) and Damodar Prasad Nathani v. State of Bihar (supra). In the former case a Division Bench of this Court after a detailed consideration of the matter observed that execution of certificate against the Managing Director of any company or for that matter any authority of the company for the dues of the company cannot be resorted to. Any debt payable by an incorporated company can be realised only by seizing the assets of the company and not by putting in prison the Managing Director or any of the officer of the company for, no individual associated with an incorporated company can be held liable for the dues of the company, which is a legal person having its own rights and liabilities. In the latter case, a learned Single Judge of this Court following the decision in Smt. Sarla Devi Agrawala v. State of Bihar (supra) held that the Directors of Shareholders of a company cannot be proceeded with for realisation of dues against the company which can be realised only from the assets of a company which is a juristic person.

5. In the above view of the matter, there is no room for any doubt that the appellant could not be arrayed as a certificate-debtor as was initially sought to be done. It is relevant to mention here that the term certificate-debtor has been defined in section 3(1) of the Act to mean, “the person named as debtor in a certificate filed under this Act…” Thus the name of the appellant could not be included in the requisition made by the Electricity Board and in certificate signed by the Certificate Officer on its basis. The Certificate Officer, therefore, rightly deleted the name of the appellant from the records of the proceeding.

6. Shri Mihir Kumar Jha submitted that the Board does not challenge the correctness of the said order dated 20.12.95 The only anxiety of the Board in getting the name of the appellant mentioned is to complete the description of the certificate-debtor. He referred to the contents of the application filed by the Board on 27.9.90 pursuant to which eventually the Collector passed the impugned order. Paragraphs 4 and 5 of the said application are as follows:—

“That Kanhaiya Lal is in his individual capacity has been removed from the record of the case but mill is to be sued through him, it is appropriate that his name should be recorded in the record.

That it is appropriate that the certificate proceeding be shown, in the name of Satyam Roller Flour Mill Makdum Sarai, Siwan through Kanhaiya Lal Managing Director of the Mill.

7. Though, as fairly stated by the counsel for the Board, the Board merely wanted the name of the appellant to be included in the proceeding so as to complete description of the certificate-debtor i.e the company, the impugned order has been passed on the premise as if by putting the signature on the agreement the appellant had become the ‘consumer’ and made himself liable for the certificate dues. This reasoning of the Collector has to be rejected for the simple reason that signature by the appellant was merely in the capacity of Managing Director but on behalf of the company which cannot make him personally liable for the dues which is subject matter of the proceeding. In that view of the matter, all that is required to be done is to clarify the position that notwithstanding the mention of the appellant's name in the description of the Certificate-debtor he would not be held personally liable for the certificate dues which is the subject matter of the impugned proceedings. That should be treated for a limited purpose to fully describe the certificate-debtor as “through Kanhaiya Lal Managing Director of the mill” and nothing beyond.

8. Before we part with this case, in fairness to the parties. We may again consider the maintainability of writ petition on the ground of existence of alternative remedy because it is on this ground that without going into the merit of the case the learned Single Judge refused to entertain the writ petition. As a proposition of law the existence of alternative remedy cannot be treated as absolute bar to entertain a writ petition so as to amount to denudation of the power of the High Court under Articles 226/227 of the Constitution which power the High Court can always exercise in the facts and circumstances of the case, notwithstanding that some alternative remedy is available to the person aggrieved which he has not exhausted. In the case of Sawar Mal Choudhary v. State Bank of India (supra) is concerned, the provision regarding deposit of 40% of the certificate dues as a condition precedent for preferring an appeal or revision under section 60 or section 62 of the Act, as the case may be, was not considered to be onerous so as to provide a ground to the certificate-debtor to prefer writ petition by passing appellate or revisional forum. Thus, had the company i.e the certificate-debtor approached this Court without exhausting the revisional remedy, this Court would have, perhaps, asked it to exhaust the remedy before coming to this Court but as the appellant cannot be treated as a certificate debtor and he is not personally liable for the certificate dues, as already indicated above, it would be harsh to compel him to file revision tantamounting to asking him to deposit over Rs. 5 lacs without which the revision cannot be entertained. If he is not personally liable for a single paise of the certificate dues asking him to deposit sum of Rs. 5 lacs would be too onerous and arbitrary. It is for this reason that we have proceeded to examine the case of the parties on merit rather than relegated the appellant to the internal remedy under the Act.

9. In the result, the impugned order of the Collector is modified to the extent and the manner indicated above, and subject to the clarifications made hereinabove. The writ petition and the appeal are disposed of.