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answer this plz
21. XYZ Co. Ltd. was in the process of incorporation. Promoters of the company signed an
agreement for the purchase of certain furniture for the company and payment was to be
made to the suppliers of furniture by the company after incorporation. The company was
incorporated and the furniture was used by it. Shortly after incorporation, the company
went into liquidation and the debt could not be paid by the company for the purchase of
above furniture. As a result suppliers sued the promoters of the company for the recovery
of money.
Examine whether promoters can be held liable for payment under the following
situations:
(i) When the company has already adopted the contract after incorporation?
(ii) When the company makes a fresh contract with the suppliers in terms of
preincorporation contract?
Replies (4)
Hye Mr. Kundan,
IN MY OPINION, in both the above cases, it will be deemed that the contract has been accepted by the COMPANY.
In this case, as supplier has sued the company, the Court may order to realize some assets of company to settle of the dues or may order to utilize available capital to settle it off.
Promoters will not be liable.
Agree with Mr. Yogesh Shah
i also think that but the revision paper issued by the icai answered the (i) answer that promotor will be liable pls check the answer no 21 of this file
Going by what has been stated in the file attached, it seems that the Promoters will be liable unless the original contracted stated that upon adoption of this contract by the company, post incorporation, all the liabilities of the promoters would end.
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