1. ' ANWAR ZAHEER JAMALI, J.--- This High Court Appeal is directed against the order, dated 10-4-2000 passed by a learned Single Judge of this Court in execution proceedings arising out of decree passed in Suit No, 1254 of 1998, whereby he disposed of an application under Order XXI, Rule 37 read with section 151, C.P.C. (C.M.A. No, 2316/1999) moved by respondent No,1 with certain observations causing prejudice to the interest of the appellant and further directions for issuance of bailable warrant of arrest against the appellant in the sum of decretal amount.
2. ' Succinctly, the facts relevant for the purpose of this appeal are that a suit under Order XXXVII, C,P.C. For recovery of Rs,1,33,60,763 filed by respondent No, 1 against respondent No,2, which is a private limited company incorporated under the Companies Ordinance, 1984, was decreed by this Court on its original side and such decree was signed by the learned Single Judge on 8-2-1999.
3. ' Respondent No, 2 unsuccessfully challenged such decree up to level of Hon'ble Supreme Court of Pakistan and thus same attained finality.
4. ' On 4th March, 1999 the respondent No, 1 filed Execution Application No,17 of 1999 seeking execution of decree against respondent No,
2. In column 11 of such application the respondent No, 1 made two-fold prayers i.e, attachment and sale of movable properties of the judgment-debtor as provided under Order XXI, Rule 43, C.P.C. And arrest and imprisonment of judgment-debtor as provided under Order XXI, Rule 37, C.P.C. This execution application was granted by the executing Court vide order, dated 30th August, 1999.
5. ' During further proceedings of execution application on 25-11-1999 the respondent No,1 moved an application under Order XXI, Rule 37 read with section 151, C.P.C. Wherein he prayed for arrest of Managing Director of respondent No,2 viz. Muhammad Ehtesham Ghazi and his detention at Central Prison, Karachi. The application was resisted by the appellant who filed his counter- affidavit in Court on 9-3-2000, mainly contending therein that the decree passed in the suit is only against the respondent No,2 a private limited company and thus, he in his personal capacity was not liable for satisfaction of decree passed against the respondent No, 2.
6. ' Learned Single Judge in Chamber disposed of this application with the observations that the order, dated 30th August, 1999 granting execution application was not challenged in appeal by the respondent No, 2 has thus, attained finality and that fresh bailable warrant of arrest be issued through bailiff against appellant Muhammad Ehtesham Ghazi.
7. ' We have heard Mr. Salman Hamid, Advocate for appellant, Mr. Ayaz Khan, Advocate for respondent No,1 and Mr. Abdul Rauf, Advocate for respondent No,2.
8. ' Learned counsel for the appellant contended that the decree passed in Suit No,1254 of 1998 is only against the respondent No,2, a private limited company, which is a separate legal entity and thus, the same is not exactable against the appellant in his personal capacity in any manner whatsoever. In this context learned counsel placed his reliance on the cases reported as (1) R.A.I.
9. Bahadur Mohan Singh Oberoi v. R.A.I. Bahadur Jodha Mal Kuthalia (PLD 1961 SC 6); (2) Messrs Franksons & Co. v. Mian Muhammad Hussain (1983 CLC 1042); (3) A. Rehinan v. Tehsildar, Lahore and another (1993 CLC 1222) and (4) PICIC v. Frontier Ceramics Ltd. And others (2000 CLC 287). He next contended that the provisions of section 51, C.P.C. Which are mandatory in nature, were not observed by the learned Single Judge before passing an order for issuing bailable warrant against the appellant and thus the impugned order is not sustainable. To enforce this submission, he placed reliance upon (1) Raja Munsif Dad v. WAPDA through Chief Engineer, WAPDA Mangla Dam Project Mangla, Mirpur (PLD 1991 Azad J&K 8) and (2) Precision Engineering Ltd. And others v. The Grays Leasing Limited (PLD 2000 Lahore 290).
10. ' Learned counsel for respondent No,2 fully supported the above submissions of Mr. Salman Hamid, Advocate.
11. ' Controverting the above submissions Mr. Muhammad Ayaz Khan the learned counsel for respondent No,1 contended that the appellant Muhammad Ehtesham Ghazi is the Managing Director of respondent No,2 and the person who executed the documents whereby liability against respondent No,2 was created and thus, he is personally responsible for payment and satisfaction of the decretal amount. He next contended that the prayer for arrest and imprisonment of the judgement-debtor made in Column 11 (2) of the execution application stood allowed by the executing Court vide order, dated 30th August, 1999, such order was not challenged by the appellant or respondent No, 2 in appeal and thus the executing Court was justified in implementing that order by passing the impugned order for issuance of bailable warrant for arrest of appellant.
12. Learned counsel, however, did not dispute that suit for recovery was instituted only against respondent No,2 and the appellant had not executed any documents in favour of respondent No,1 accepting any personal liability either as guarantor or otherwise.
13. ' We have carefully considered the arguments advanced before us and perused the material available on case record.
14. ' In the present case it is an admitted position that the suit for recovery ' of Rs, 1,33,60,763 filed by respondent No, 1 was instituted only against respondent No,2, a private limited company incorporated under the Companies Ordinance, 1984, which is a juristic person and a separate legal entity distinct from its shareholders and directors and the appellant was not even shown in the array of defendants either as Managing 'Director of respondent No, 2 or in his personal capacity. In the pleadings also it was not the case of respondent No, 1 that the appellant by executing any document had in his personal capacity committed for payment of decretal amount against respondent No,2. Perusal of certified true copy of Execution Application No, 17 of 1999 also goes to show that in Column 2 of the application, execution of decree has been sought only against the respondent No, 2 viz. Ghazi Associates (Pvt.) Ltd. And name of the appellant has been mentioned only as a Managing Director of the company. It is thus, evident that in the execution proceedings also execution of decree was not prayed against the appellant. In such circumstances even if the prayer for arrest and detention of the judgement-debtor made in Column 11 of the execution application was allowed by the learned Single Judge vide order, dated 30th August, 1999 before issuing bailable warrant of arrest it was to be seen that whether such a prayer was at all executable against a juristic person viz. Private Limited Company which has no physical existence or whether such bailable warrant could be directed against an individual/natural person distinct from the judgment-debtor company. It seems that learned Single Judge while passing the impugned order did not advert to these important aspects of the matter.
15. ' In the case of Abdul Rehman (supra) referring to section 2(2) of the Companies Act, 1913 the learned Single Judge of Lahore High Court observed that a company is a distinct entity separate from its shareholders and directors and liability of company cannot be passed on to its directors personally and thus the Managing Director of a company has no personal liability to make such payment.
16. ' In the case of Messrs Franksons & Co. (supra) again with reference to section 2(2) of the Companies Act, 1913 it was observed by a learned Single Judge of Lahore High Court that a company is a separate juristic person distinct and different from its shareholders and it is not a mere alias for its shareholders nor an agent for them. Any individual shareholder cannot indemnify the company against debts which it incurred except to the extent of his share in the capital, his liability is limited to that extent and he can only be called upon to contribute in the event of a winding up of the company to the extent of his own share.
17. ' In the case of PICIC (supra) learned Single Judge of this Court while dealing with an application under Order I, Rule 10, C.P.C. In a case for recovery of bank loan observed that where defendants had not undertaken any personal liability in relation to loan against a company, recovery proceedings cannot be maintained against them.
18. ' From the above discussion it is clear that there is no cavil to this legal position that a company is a separate and distinct legal entity from its shareholders and directors, thus, any liability against the company cannot be transferred or shifted to its shareholders or directors except to the extent of their individual shares in the company. Similarly Managing Director of a company who simply acts as eniployee/representative of the company, unless he had executed some documents acknowledging the liability of the company upon himself in his personal capacity as a guarantor for the company or his case is covered by section 47 or section 111 of the Companies Ordinance, 1984 cannot be held responsible for payment of any decretal amount against the company. In view of the factual and legal position discussed above the order for issuance of bailable warrant of arrest against the appellant is illegal and liable to be set aside.
19. 'Reverting to the other contention of Mr. Salman Hamid, though in view of the above, discussion on such contention is now only of academic importance nevertheless it may be observed that provisions of section 51, C.P.C. as they relate to affect the liberty of a person, are mandatory in nature and are to be strictly construed, and unless prerequisites of this section are proved to exist, any order for detention of judgment-debtor in prison would be illegal. Following observation in the case of Raja Munsif Dad (supra) may be usefully referred in this regard: "There is no denying the fact that the executing Court was empowered to enforce execution of the decree by arrest and detention in prison as prescribed under section 51, C.P.C. However, when the execution was to be enforced by arrest and detention in civil prison of the judgment-debtor, it was imperative to record reasons in compliance with the provisions of section 51 read with the provisions of Order XXI, Rules 37 and 40 of the Code. Unless the prescribed procedure was followed, any action in the shape of the impugned order was illegal."
20. ' On same point in another case of Precision Engineering Ltd. And others (supra) a Division Bench of Lahore High Court observed as under: "Deeper analysis of the rules referred to hereinabove, makes it obvious that in the first instance, notice has to be given to the judgment-debtor to explain as to why he should not be detained in prison. On his appearance the Court has to make an inquiry, record evidence, give opportunity of evidence in rebuttal and thereafter, to pass an order on the request for detention in prison, in accofdance with law. During these proceedings the judgment-debtor can be asked to furnish security for appearance, which does not mean security for the payment of decretal amount.
21. Without making any inquiry the Court cannot straightaway order detention in civil prison. Likewise, unless the prerequisites of section 51 of C.P.C. Are proved to exist, detention in prison cannot be ordered. ., The preconditions, as highlighted . Hereinabove, are that judgment-debtor should be proved to hpe made attempt to leave the limits of Court, to obstruct the decree or execution thereof or dishonestly transferred the property after the institution of the suit to avoid the decree or had the means to pay the decree and neglected to do the same. Without satisfaction of these preconditions, no mechanical order for detention in prison can be passed."
22. ' In the instant matter on perusal of case record, it is evident that while issuing bailable warrant of arrest against the appellant the learned Single Judge did not advert to this aspect of the matter and thus, for this reason also impugned order is not sustainable.
23. ' For the foregoing reasons, this appeal was allowed with the observations contained in the short order, dated 27-6-2000.