Madras High Court

Y.Jayaprakash vs M/S.Devraj Computers (P) Ltd on 25 October, 2025

                                  IN THE HIGH COURT OF JUDICATURE AT MADRAS

                              Order reserved on : 16.10.2025                  Order pronounced on : 25.10.2025
                                                                 CORAM
                                   THE HONOURABLE MR JUSTICE P.B. BALAJI

                                                       CRP.No.2614 of 2021
                                                    & CMP.No.3522 of 2021
                     1.Y.Jayaprakash
                     2.Y.Supriya                                                             ... Petitioners
                                                                     Vs.

                     1.M/s.Devraj Computers (P) Ltd.,
                     Represented by its Director,
                     Yasapaal Jain,
                     No.42, Anna Salai,
                     Chennai – 600 002.

                     2.M/s.Dream Systems (P) Ltd.,
                     No.56/61, Kamarajar Salai,
                     Ashok Nagar, Chennai – 600 083.

                     3.Senthil Kumar
                     Director, M/s.Dreams Systems (P) Ltd.,
                     Old No.8/1-8/55, New No.10/1-15/55,
                     Flat No.34, 6th Avenue,
                     Ashok Nagar, Chennai – 600 083.                                         ... Respondents


                     Prayer: Civil Revision Petition filed under Section 115 of Code of Civil
                     Procedure, to set aside the judgment and decree dated 18.03.2019 passed in
                     I.A.No.286 of 2017 in O.S.No.4527 of 2017 on the file of the XVI


                     1/8




https://www.mhc.tn.gov.in/judis                   ( Uploaded on: 25/10/2025 08:17:26 pm )
                     Additional City Civil Court, Chennai and consequently, grant unconditional
                     leave to the petitioners/defendants 2 and 3 to defend the suit.

                                        For Petitioners        : Mr.S.R.Raghunathan

                                        For Respondents : No appearance


                                                             ORDER

The defendants 2 and 3 in O.S.No.4527 of 2017 on the file of the XVI

Additional City Civil Court, Chennai, are the revision petitioners.

2.The revision petitioners challenge the order in I.A.No.286 of 2017,

which was filed seeking unconditional leave to defend the suit in

O.S.No.4527 of 2017, which was laid for recovery of monies, allegedly due

from the 1st defendant/M/s.Dream Systems Private Limited and the other

defendants, being the Directors of the 1st defendant Company.

3.I have heard Mr.S.R.Raghunathan, learned counsel for the

petitioners. The respondents, despite service of notice, have not chosen to

appear either in person or through counsel.

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4.Mr.S.R.Raghunathan, learned counsel for the revision petitioners,

would first and foremost submit that the suit filed against the Directors of a

private limited Company is clearly not maintainable and is against the

mandate of Section 9 of the Companies Act, 2013. The sum and substance

of the argument of Mr.S.R.Raghunathan, is that when the 1 st defendant is a

separate legal entity, the Directors of the 1st defendant Company do not have

any personal liability whatsoever, to be fastened on them, for the dues of the

1st defendant Company.

5.Mr.S.R.Raghunathan, learned counsel for the petitioner would take

me through the plaint averments, where, according to the learned counsel

for the petitioner, there is absolutely no pleading as to how the Directors are

liable to pay the dues of the 1st defendant Company. He would also state that

the Company was also before the NCLT and a resolution professional was

appointed on 02.04.2018 and even prior in point of time, the defendants 2

and 3 ceased to be Directors of the Company, they having resigned on

01.06.2017 and 14.11.2016 respectively.

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6.The learned counsel for the petitioners would further state that

though by way of a memo dated 11.04.2018, the defendants had brought to

the notice of the trial Court, that the CIRP process having commenced

against the 1st defendant and under Section 14 moratorium has kicked in,

still the trial Court has proceeded to adjudicate the leave to defend petition

and has dismissed the same on erroneous grounds. He would further state

that the on 05.11.2019, the NCLT has also dissolved the 1st defendant

Company and therefore, the trial Court ought to have granted unconditional

leave to the defendants 2 and 3, to put forth their defence and contest the

suit claim.

7.At the outset, it is to be seen that the suit has been filed under Order

XXXVII of CPC as an under chapter suit. The revision petitioners, who are

defendants 2 and 3 have filed an application seeking unconditional leave to

defend the suit. They have raised triable issues, contending that they are

only Directors of the 1st defendant, limited Company and they cannot be

held personally liable to meet the suit claim made against the 1st defendant.

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8.In the plaint also, I find that excepting for stating that the defendant

Company has a running account from 2014 and it has failed to settle the

dues of the plaintiff and also the Company's Managing Director and the

Directors are liable to pay the plaintiff in their personal capacity, I do not

find any averment in the plaint as to how the Managing Directors and the

Directors can be saddled with any liability, to meet the dues of the 1 st

defendant Company.

9.Section 9 of the Companies Act is extracted hereunder for easy

reference:

“9.Effect of registration.—From the date of incorporation mentioned in the certificate of incorporation, such subscribers to the memorandum and all other persons, as may, from time to time, become members of the company, shall be a body corporate by the name contained in the memorandum, capable of exercising all the functions of an incorporated company under this Act and having perpetual succession 1 with power to acquire, hold and dispose of property, both movable and immovable, tangible and intangible, to contract and to sue and be sued, by the said name.”

10.It is settled law that the Company incorporated under the

https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 08:17:26 pm ) Companies Act enjoys separate and distinct status and unless there is a

contract to the contrary, the Directors or the Managing Director will not be

personally liable for the dues of the said Company.

11.As already discussed, the plaint does not speak about any such

personal assurance or guarantee of the defendants 2 and 3, making

themselves liable to meet the suit claim in their personal or individual

capacity. Further, the petitioners have also specifically stated in their

application seeking leave to defend that they have already retired from

Directorship, even prior to the filing of the suit itself. In such circumstances,

the trial Court ought to have granted unconditional leave to the petitioners,

who had shown that triable issues arise for consideration in the suit.

12.Strangely, the trial Court has rendered an incorrect finding that the

Directors are personally liable and that even if they had resigned from the

Directorship, any liability incurred during their Directorship tenure would

not disappear, merely because they have ceased to be Directors thereafter.

The trial Court has also erroneously held that the Directors are not exempted

https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 08:17:26 pm ) from the liability of the Company and that there is joint and several liability

for the Directors, along with the Company. The said findings are clearly

perverse and contrary to not only statute, but also well settled principles

enunciated by this Court as well as the the Apex Court. For all the above

reasons, I am inclined to set aside I.A.No.286 of 2017 and consequently, I

grant unconditional leave to the petitioners to defend the suit in

O.S.No.4527 of 2017.

13.In fine, the Civil Revision Petition is allowed. The order dated

18.03.2019 in I.A.No.286 of 2017 in O.S.No.4527 of 2017 on the file of the

XVI Additional City Civil Court, Chennai, is set aside and consequently,

the petitioners are granted unconditional leave to defend the suit in

O.S.No.4527 of 2017. There shall be no order as to costs. Connected Civil

Miscellaneous Petition is closed.