SATISH D. SANGHAVI Vs. UNION OF INDIA

JUDGEMENT

(1.) CONSIDERING the motion and the controversy, with consent of parties, both the motion and petition are taken up for final hearing. In Writ Petition No. 2087 of 2006, the petitioner has approached this court against the demand notice made by the respondents in respect of personal assets of the petitioner who was a director of a company known as M/s. Twin City Organics P. Ltd., which is now before the BIFR, in respect of which an order has been passed by the BIFR in respect of duty owed by the said company. The respondents had issued an order of attachment. That order had been given effect to, by attaching the flat which is the subject -matter of the present petition.

(2.) WHEN the matter came up before this court for consideration, an order came to be passed on September 28, 2006, when on behalf of the Revenue learned counsel drew the attention of the court to section 9AA of the Central Excise Act, 1944. Section 9AA sets out that: "Where an offence under this Act has been committed by a company, every person who, at the time the offence was committed was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly". Section 9 pertains to offences and penalties.

(3.) THE settled position in law is that liability for duty of the company cannot be fastened upon the director of a company unless there is a statutory provision to that effect. Such an issue came up for consideration before this court in the matter of Sunil Parmeshwar Mittal v. Deputy Commissioner (Recovery Cell), Central Excise : [2005] 188 ELT 268, wherein the court took a view that liability of members is limited to the extent of face value of shares subscribed by each member and the amount remaining unpaid on them for time being former director of the company cannot be held responsible for payment of liabilities of company in the absence of any specific provision. This was reiterated in the unreported judgment delivered on May 5, 2009, in the case of Chandrakant Bhalchandra Garware v. Union of India, in Writ Petition No. 4117 of 2009. We are of the opinion that duty demand of the company cannot be recovered from the director in the absence of statutory provisions in the Central Excise Act, 1944.