All HC | Company has a separate legal identity from its owners; no coercive steps to be taken for recovery of dues of Ghaziabad Development Authority

Allahabad High Court: The Division Bench of Pankaj Mithal and Vivek Agarwal, JJ. concurred that any amount already recovered by the respondents from  the petitioner shall be invested by the respondents in a fixed deposit with a Nationalised Bank in a short term deposit

Petitioner 1 had approached this Court seeking ad-interim mandamus commanding Respondent 15, Celebration City Projects Pvt. Ltd., not to take any coercive measure against him in pursuance of the recovery certificate worth Rs 150 crore.

Counsel for the petitioners, Anoop Trivedi submitted that there is no recovery neither in the name of Petitioner 1 nor Petitioner 2. Therefore, the dues of Respondent 15 cannot be recovered from the properties of petitioners.

Petitioner 1, Rakesh Jain, was legally detained and arrested so as to recover the aforesaid amount. He was forced to sign certain cheques and was released thereafter.

Counsel for Respondent 2, GDA, Vrindavan Mishra submitted that if the corporate veil is lifted the entire responsibility to discharge the liability of Respondent 15 would ultimately fall upon Petitioner 1.

After analyzing the submissions of the parties, the Court observed that petitioners are separate legal entities other than Respondent 15 and therefore, dues of Respondent 15 cannot be recovered from the properties of petitioners. [Rakesh Jain v. State of U.P., 2019 SCC OnLine All 4261, decided on 05-11-2019]

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