AYAZ DURRANI and otherss vs CHAIRMAN, WAPDA and others
This matter involves writ petitions filed against WAPDA's coercive measures to recover disputed electricity dues from the Chief Executive of an incorporated company. The core legal question is whether the personal liability of a company incorporated under the Companies Ordinance for utility dues can be enforced against its Chief Executive, director, or shareholders. The Lahore High Court held that a company is a separate and distinct juristic person from its management and shareholders, and its liabilities cannot be fastened onto them personally. The Court laid down the principle that corporate personality insulates directors and chief executives from personal liability for the commercial and utility debts of the company, declaring the recovery action against the petitioner without lawful authority.
- Whether the liability of an incorporated company for utility dues can be recovered personally from its Chief Executive or directors?
- Is a company incorporated under the Companies Ordinance a separate and distinct juristic person from its shareholders and directors?
- Can coercive measures be adopted against the Chief Executive of a company for debts owed by the company itself?
- Companies Ordinance, 1984
This judgment shall dispose of Writ Petitions Nos.10467/99, 1575/99 and 1363/2000 in which common question falls for determination.
2. The petitioner is stated to be Chief Executive of the Company incorporated under the Companies Ordinance, 1984 by the name of Ayyaz Textile Mills Limited which had obtained electric connection.
The petitioner was threatened with recovery of some amount through coercive measures. He consequently filed W.P. No,10467 of 1999 which was admitted to regular hearing by this Court on 24- 9-1995 and it was directed that no coercive measures shall be taken in the meanwhile. It is a matter of regret that the respondents instead of honouring the order passed by this Court flouted it by arresting the petitioner and forcing him to pay a sum of Rs,3,38,585 as a condition for his release. In, the second petition, this action of the respondents has been assailed.
3. The learned counsel has contended that in the present case, the consumer was the incorporated Company namely, Ayyaz Textile Mills Limited and the petitioner has no personal liability even though he may be Chief Executive of the Company.
4. This contention of the learned counsel is in accord with law. It A needs no gainsaying that a Company incorporated under the Companies Ordinance, 1984 is a separate and distinct juristic person quite apart from its Chief Executive, Director or the shareholders. The liability of such a Company cannot fall upon the directors or the shareholders who have no personal responsibility for the same. This view is supported by Tariq Saeed Saigol v. The District and Taxation Officer 1982 CLC 2387; Muhammad Anwar Khan Tiwana v. Mst. Sadeeqa Begum and 4 others PLD 1984 Lah. 411 and Shamim-ud-Din v. Federal Government of Pakistan through Chairman, WAPDA, Lahore and 4 others 1995 CLC 299.
In view of what has been said above, these petitions are allowed and the action of the respondents in recovering the disputed amount from the petitioner is declared to be without any lawful authority and of no legal effect. No order as to costs.
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