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Issues: (i) Whether a director of a company can be held personally liable for electricity dues of the company in the absence of any personal guarantee or undertaking. (ii) Whether recovery from the personal assets of the director can be pursued before proceeding against the assets of the company.
Issue (i): Whether a director of a company can be held personally liable for electricity dues of the company in the absence of any personal guarantee or undertaking.
Analysis: The liability for electricity dues was examined in the context of the definition of consumer under the Electricity Act, 2003, the U.P. Government Electricity Undertaking (Recovery of Dues) Act 1958, and the contractual position of a director signing on behalf of the company. A company is a separate juristic person and a director, acting as an agent of the company, does not incur personal liability merely by signing the agreement unless there is a specific statutory provision, personal guarantee, or express undertaking creating such liability. The recovery scheme and the relevant regulations did not impose personal liability on the director in such circumstances.
Conclusion: The director was not personally liable for the company's electricity dues in the absence of a personal guarantee or other express basis for such liability.
Issue (ii): Whether recovery from the personal assets of the director can be pursued before proceeding against the assets of the company.
Analysis: The U.P. Electricity Supply Code 2005 was held to be inapplicable to the earlier recovery notice, and in any event it contemplated that outstanding dues would constitute a first charge on the company's assets. Recovery against directors could arise only after the company's assets were insufficient to satisfy the dues. As the record did not show that recovery had first been pursued against the company's assets, initiation of recovery against the petitioner's personal assets was not justified.
Conclusion: Recovery from the personal assets of the director could not be sustained before exhausting recovery against the company's assets.
Final Conclusion: The recovery citation was quashed and the respondents were restrained from recovering the company's dues from the petitioner's personal assets, while recovery against the company itself was left open in accordance with law.
Ratio Decidendi: A director is not personally liable for a company's electricity dues merely by signing on behalf of the company, and personal recovery can be pursued only when the company's assets are first proceeded against and found insufficient or when personal liability is otherwise expressly created.
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