Complainant has filed the present revision petition.

          Petitioner/complainant had deposited a sum of Rs.1 Lac in Fixed Deposit on 29.11.1997 with Nagarjuna Finance Company.  The amount payable to the petitioner was Rs.2 Lacs on the date of maturity, i.e. on 29.1.2002.  Nagarjuna Finance Company stopped its business subsequently.  Petitioner approached them and requested    it to make the payment of the amount due under the deposit but

-2-

the respondent expressed its inability and postponed the matter regarding payment of the amount on one pretext or the other.  Complainant filed a complaint before the District Forum.

          District Forum allowed the complaint and directed the respondent Nagarjuna Finance Company to pay to the complainant the sum of Rs.2 Lacs being maturity value of the Fixed Deposit with interest at the rate of 12% from the date of maturity i.e. 29.1.2002 till the date of realization.  Rs. 1000/- were awarded by way of costs.

          Two earstwhile Managing Directors and two Directors of Nagarjuna Finance Company filed an appeal before the State Commission.  The State Commission came to the conclusion that the Managing Directors and the Directors were not liable to pay the amount; that the liability of Nagarjuna Finance Company had been taken over by M/s Mahalaxmi Factoring Services Limited which had undertaken the full responsibility to collect and recover the outstanding amounts from the third parties and pay the same to the depositors.  Clause C and D of Memorandum of Arrangement arrived at before the Company Law Board reads as under:

-3-

(c)             In view of the proposed substantial involvement of Mahalaxmi in the collection and disbursement mechanism, the parties agree that, in lieu of the affidavits already filed before the Company Law Board, Mr. N. Selvaraaju, Presidento of Nagarjuna Finance Limited and the nominees of Mahalaxmi shall file, suitable affidavits of under taking before Company Law Board to ensure continued compliance of the CLB order.  Copies of these affidavits shall also be filed with the Registrar of Companies, Hyderabad.

(d)             Mahalaxmi hereby agrees and undertakes the full responsibility to collect and/or recover the outstanding dues of the NFL and the monies recovered therefrom shall be principally used for the discharge of deposit obligations.  Further it is hereby covenanted and declared by Mahalxmi that it shall repay the deposit dues of the depositors of Nagarjuna Finance Limited as per deferment scheme vide the Company Law Board dated 29^th February, 2000 or any modifications thereof in the manner and form acceptable to the individual depositors and Company Law Board.”

-4-

          Relying upon these two Clauses, the State Commission came to the following conclusion:

       “We have gone through the records and the legal position arising out of this appeal.  The liabilities of the Directors of the Company are different and district from that of a partnership firm.  Under the partnership Act the partners are jointly and severally liable for discharging the liability of the firm.  But the Company incorporated under the Companies Act stands on a different footing.  It has a separate juristic personality distinct from the shareholders.  The roles of the Directors of the Company are independent from the existence of the Company.  They are appointed as directors and they cease to be directors after their term or on their resignation.  There is no provision in the Companies Act, 1956 which makes the Managing Director and Directors personally liable for the recovery of dues of the Company.  This legal position has been well settled as reported in KUNDAN SINGH V. MOGA TRANSPORT CO. (P) LTD., & ORS. VOL 62 COMPANY CASES PAGE 600 & BANK OF MAHARASHTRA VS. RACMANN AUTO PVT. LTD., reported in Vol.74 Company Cases age 752.”

-5-

          The State Commission disposed of the appeal in the following terms:

          “In the result, the order passed by the District Forum in CD No.86/2003 dtd. 17.11.2003 is modified exempting the Directors and Managing Directors from personal liability and the matter is remanded back to the District Forum for giving opportunity to the first respondent/complainant to implead M/s Mahalakxmi Factoring Services Limited, 6 Nariman House, Police Court Lane Fort, Mumbai as opposite party.  The District Forum is directed to dispose of the matter as expeditiously as possible after giving notice and opportunity to M/s Mahalaxmi Factoring Services Limited.

          The appeal is accordingly disposed of.”

          The arrangement had been arrived at before Company Law Board, according to which assets and liabilities of Nagarjuna Finance Company were taken over by M/s Mahalaxmi Factoring Services Limited which had undertaken to collect and recover the outstanding amounts from the third parties and pay the same to the depositors.  By the impugned order, the State Commission has directed the impleadment of M/s Mahalaxmi Factoring Services Limited as the

-6-

party respondent and the District Forum has been directed to dispose of the matter as expeditiously as possible after giving notice and opportunity to M/s Mahalaxmi Factoring Services Limited.

          The State Commission has remanded the case to the District Forum to proceed against M/s Mahalaxmi Factoring Services Limited which had agreed to pay the depositors after recovering the amounts from the third parties as per scheme framed by Company Law Board.  The order passed by the State Commission is in accordance with law and does not call for any interference.  Revision petition is dismissed.

          Parties through their counsel are directed to appear before the District Forum on 03.9.2009.

            Since it is an old case, we would request the District Forum to dispose of the complaint within six months of the first date of appearance after impleading M/s Mahalaxmi Factoring Services Limited as per directions given by the State Commission.