Legal Heirs Of Company Director Cannot Maintain Suit Over Company's Property, Only Shareholders Or Directors Can: J&K&L High Court

The High Court of Jammu & Kashmir and Ladakh has reiterated that a company, being a distinct legal entity, alone has the right to sue in respect of its property, and such action can only be initiated through its shareholders or directors, not by the legal heirs of its founder in their personal capacity.

A bench of Justice Javed Iqbal Wani was dealing with a plea seeking rejection of a suit filed by heirs of the founder of M/s Hamid Oil Mills Pvt. Ltd., who claimed rights over 18 kanals of leased land at Industrial Complex, Khonmoh.

The Court noted that the lease deed of 04.05.1985 clearly showed the lessee as the company, represented by its Managing Director, and not the plaintiffs personally.

Relying on the Supreme Court ruling in S.S. Dhanoa v. Municipal Corporation, Delhi, the Court observed “Since the land admittedly stands leased out to M/s Hamid Oil Mills Pvt. Ltd., and the factory/unit also stands in its name, the plaintiffs could not, by any sense of imagination, be said to possess a right to sue.”

Consequently, the trial court's order was set aside, the plaint was rejected for non-disclosure of cause of action, and the petition was allowed.

Background

The plaintiffs had filed a civil suit claiming that they were lessees in possession of 18 kanals of land at the Industrial Complex, Khonmoh, leased by SIDCO to M/s Hamid Oil Mills Pvt. Ltd. through a deed dated 04.05.1985. They alleged that the defendant had encroached upon the unit/factory and caused damage.

The defendant, however, contended that the land and the unit were indisputably leased to the company, a separate legal entity, and therefore the plaintiffs in their individual capacity had no right to sue.

APPEARANCE:

Case-Law: MIR MOUZAM. vs FARHANA DILSHAD AND ORS, 2025

Shariq J. Reyaz, Advocate. Mr. Taha Khalil, Advocate for petitioners

Fayaz Ahmad Mir, Advocate for Respondents.

Click Here To Read/Download Order