In the High Court of Judicature at Madras Dated: 28-8-2008 Coram: The Honourable Mr.Justice S.J.Mukhopadhaya and The Honourable Mr.Justice V.Dhanapalan Writ Appeal No.811 of 2001 S & S Industries and Enterprises Ltd., Represented by its Director and Secretary, "Aarti Chambers", No.189, Anna Salai, Chennai-600 006. .. Appellant vs. 1. The Union of India, rep. by its Secretary to Government, Ministry of Law, Justice and Company Affairs, New Delhi-110 001. 2. The Union of India, rep. by its Secretary to Government, Ministry of Food and Consumer Affairs, New Delhi-110 001. 3. The Director General of Police, Chennai-600 004. 4. The Additional Director General of Police, (Economic Offences Wing-II), Admiralty House, Government Estate, Chennai-600 002. 5. Roopa Vasudev 6. R.V.Pillai 7. P.S.Kothandaraman (Respondents 5, 6 and 7 impleaded-vide Order of Court, dated 7.2.2005 in W.A.M.P.Nos.2765 of 2004 and 121 of 2005) .. Respondents Writ Appeal against the order of the single Judge of this Court, dated 27.3.2001 in Writ Petition No.20854 of 2000 praying for Writ of Declaration praying to declare that no Proceedings for the recovery https://hcservices.ecourts.gov.in/hcservices/ money or non repayment of trade or other dues and no order for payment or for enforcement of any security or guarantee against the petitioner's company and its directors and officers shall lie without the prior consent of the BIFR, New Delhi. For appellant : Mr.AL.Somayaji, Senior Counsel for Mr.B.Natarajan For respondents : Mr.M.Ravindran, Additional Solicitor General, assisted by Mr.K.K.Senthilvelan, Senior Panel Counsel for Central Government--for RR-1 & 2 Mr.D.Sreenivasan, Spl.G.P. for RR-3 & 4 Mr.A.V.Arun for RR-5 & 6 Mr.N.L.Rajah for R-7 Judgment S.J.Mukhopadhaya,J By consent of the learned counsel appearing for the parties, the Writ Appeal is taken up for hearing. 2. The appellant-S & S Industries and Enterprises Limited, preferred the Writ Petition in question, for a declaration that no proceedings for recovery of money or non-re-payment of trade or other dues and no order for payment or for enforcement of any security or guarantee against the appellant-Company and its Directors and Officers, shall lie without prior consent of the BIFR, New Delhi. 3. The aforesaid prayer was made mainly on the ground that the appellant-Company is a sick company, its revival is pending before the BIFR and no proceedings would lie against the appellant-Company and its Directors and Officers, in view of the bar under the provisions of Section 22 of the Sick Industrial Companies (Special Provisions) Act. 4. Learned Senior Counsel appearing for the appellant-Company (Writ Petitioner) accepted that Section 22 of the said Act, may apply to the property(ies) of an "industrial company", but it does not preclude the authorities from investigating into the affairs of the Company or from taking legal proceeding without touching the property(ies) of the "industrial company". 5. By order dated 27.3.2001 in Writ Petition No.20854 of 2000, the learned Single Judge, having noticed the aforesaid fact, held as follows: "7. In my view, so far as the petitioner company is concerned, the provisions of Section 22 of the SIC Act would apply only against the Industrial company or any of its properties. There is no dispute that the petitioner company has approached the BIFR and the proceedings are pending before the BIFR. Further the scope of section 22 of https://hcservices.ecourts.gov.in/hcservices/ the SIC Act is limited and the provisions of section 22 would apply to the properties of the Industrial company and the section does not preclude the authorities from investigating into the affairs of the company or from taking legal proceedings which would not in any way touch the properties of the Industrial company. Therefore the protection under section 22 of the SIC Act would only be available against the properties of the Industrial Company from distraint or otherwise and there is no bar for the authorities to investigate and conclude the proceedings against the company for the non-payment of deposit amounts to the depositors. 8. In so far as Directors and Officers of the petitioner company are concerned, I am unable to accept the submission of the learned Senior Counsel for the petitioner. Firstly, they are not the petitioners in the writ petition and the writ petition is filed by the company. Secondly, the Directors of the petitioner company, at any stretch of imagination, cannot be regarded as guarantors of the petitioner company. The officers of the company are employees, and they cannot also be regarded as guarantors. The Directors occupy a fiduciary position vis-a-vis the company and they cannot be regarded as guarantors of the company or its properties. I therefore hold that the protection available under section 22 of the SIC Act is not available to the Directors and Officers of the petitioner company. I am of the view that the legislative intent is only to protect the properties of the company from any distraint proceedings, and the protection under section 22 is not available to the Directors and Officers of the company. 9. As already observed, the Directors of the company occupy a fiduciary position and they are not guarantors of the company or its properties. It is well-settled that company is a separate legal person distinct from its shareholders who have contributed share capital in the formation of the company. The Directors may be the shareholders of the company, but the company is a separate legal person distinct from the Directors. The submission of the learned senior counsel that the company is run by and under the supervision of the Directors and hence, the Directors are also eligible to get protection under section 22 of the SIC Act is not acceptable as the company is a separate legal person distinct from the Directors and Officers and if any violation takes https://hcservices.ecourts.gov.in/hcservices/ place, it is open to the authorities to take action against the Directors and Officers of the Company in accordance with the law." 6. We have heard the learned counsel appearing for the respective parties and noticed the findings of the learned Single Judge, relevant portion of which, has been quoted above. We find no ground made out to interfere with the aforesaid impugned order passed by the learned Single Judge. 7. Learned Senior Counsel appearing for the appellant-Company submitted that the Company's authorised share capital is Rs.15 crores, divided into 1.5 crores of equity shares of Rs.10/- each and the Company has received public deposits and has been paying interest thereon. The total outstanding deposits as on 31.10.2000 was Rs.931.47 lakhs, held by nearly 6,848 depositors and out of the said sum, a sum of Rs.911.99 lakhs, held by 6,709 depositors had already been matured for payment as on 31.10.2000, but the same was not yet paid to various depositors. Orally, it was prayed to allow the appellant-Company to pay the matured amount in favour of the depositors. In this regard, we may only mention that such prayer having not been made before the Writ Court and in the absence of specific pleading with regard to the different depositors made in Writ Petition/Writ Appeal, we are not inclined to deliberate on the same, as it is always open for the appellant-Company to perform its duty in accordance with law. 8. The Writ Appeal is accordingly disposed of with the aforesaid observations. The interim order of stay is vacated. But in the facts and circumstances of the case, there shall be no order as to costs. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar cs To 1. The Secretary to Government, The Union of India, Ministry of Law, Justice and Company Affairs, New Delhi-110 001. https://hcservices.ecourts.gov.in/hcservices/ 2. The Secretary to Government, The Union of India, Ministry of Food and Consumer Affairs, New Delhi-110 001. 3. The Director General of Police, Chennai-600 004. 4. The Additional Director General of Police, (Economic Offences Wing-II), Admiralty House, Government Estate, Chennai-600 002. 1 cc To Mr.A.V.Arun, Advocate, SR.48620. 1 cc To Mr.K.K.Senthilvelan, Advocate, SR.48775. Writ Appeal No.811 of 2001 KA(CO) RVL 05.09.2008 https://hcservices.ecourts.gov.in/hcservices/