Legal Question in Business Law in India

mr.ABC is an individual. ABC has a HUF known as ABC HUF. ABC also is a proprietor of his firm - XYZ. for some shares sold in 1994 by ABC HUF to XYZ, as sale consideration was not recd.from XYZ, ABC HUF filed a civil suit against XYZ and obatined stay order for the shares sold. later on all the companies whose shares were sold by ABC HUF thru XYZ were impleaded as necessary parties and matter proceeded. in 2009, when the matter came for final hearing, examination-in-chief filed by ABC HUF, ld.judge observed that ABC is common in both ABC HUF and XYZ and asked to withdraw the suit, seems filed by same person for undue advantage,

ABC is common, is agreed. But ABC HUF and XYZ are two different legal entities. transactions are legally made. as XYZ was registered with a broker, ABC HUF sold their shares thru XYZ, but ld.judge is not satisfied. he does not want to have a broader view. he does not want to understand if any other person than ABC HUF would have sold the same shares thru XYZ than how this suit was to be treated, accordingly must be treated now. but he is adamant for ABC being the same person and is common in both with common address.

even the documents that ABC HUF and XYZ are seperately registered under shop and establishment act, have different income tax permanent account numbers and files seperately income tax returns have made no impact on the ld.judge.

kindly guide how to satisfy the ld.judge ?


Asked on 8/30/09, 1:54 am

1 Answer from Attorneys

Rohini Kumar Tenneti R.K.1080 LEGAL SERVICES

One can understand your anguish but legally HUF/Proprietor/Partner acted by one person are one and same as all of them are treated as individuals status wise and as you mentioned about separate legal entities the person is same but actions are different wheras a Joint stock company registered under the Companies act would be a separate legal entity irrespective of who formed the company and who are the directors or members.

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Answered on 8/30/09, 9:55 am


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