Personal liability for corporate defaults requires pleaded material showing individual authorisation; personal summons set aside, proceed against company.
Whether a district magistrate could summon an individual personally under the Companies Act turned on the absence of material alleging that the individual knowingly or wilfully authorised or permitted the company's default; the court applied the principle that a company is a separate legal entity and that service and summons must follow the statutory procedure for corporate respondents, finding no record that the petitioner was summoned in a representative capacity or that personal liability was pleaded. Outcome: the magistrate's personal summons was set aside and proceedings, if appropriate, must be directed against the company following proper summons and service rules.
Issues: Whether the District Magistrate's order summoning the petitioner personally under Section 136 of the Companies Act was legally valid.
Analysis: The prosecution originated from a complaint seeking action against a registered banking company for alleged contravention of Section 136. Sub-section (4) of Section 136 provides for penalty against the company, and the company is a separate legal entity under Section 23 of the Companies Act. Service and summons procedures for a company are provided by Section 69(3) of the Criminal Procedure Code. The letter of complaint contains no material suggesting that the petitioner, as an individual, knowingly or wilfully authorised or permitted the default so as to attract personal liability under Section 136(4). The Magistrate's order and the summons do not indicate that the petitioner was summoned in a representative capacity for the company, and there is nothing on record to show proceedings initiated specifically against the petitioner personally.
Conclusion: The Magistrate's order summoning the petitioner personally is set aside; the Magistrate may proceed, if appropriate, against the company following proper procedure for summons and service on the corporate entity.
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