#Director Liability

The NCLAT upheld jurisdiction under Section 60(5) IBC to direct buyer's directors to pay Rs. 3 crore in unpaid BPA consideration, piercing the corporate veil to impose personal liability on them as controlling minds. This empowers liquidators to pursue directors personally for unpaid acquisition dues, affirming corporate structure cannot shield controlling persons from contractual obligations in insolvency.

The Gujarat HC ruled that mere shareholding in a public limited company does not attract Section 179 IT Act liability without proof of gross neglect in tax non-recovery. Directors are shielded from vicarious tax liability absent such evidence.

The Bombay High Court ruled that the interim moratorium under Section 96 of the IBC applies only to corporate debtors and does not halt criminal proceedings under Section 138 of the NI Act against company directors. This limits the moratorium’s protective reach, leaving directors exposed to prosecution during insolvency.

The Delhi High Court set aside the trial court’s summons to a former director, ruling that without explicit allegations tying him to the cheque-bounce offence, vicarious liability under Section 141 of the Negotiable Instruments Act cannot be presumed. Plaintiffs must detail the director’s personal role to sustain a summons. The decision limits blanket liability of resigned directors in NI-Act proceedings.

Delhi High Court refused to quash summons issued to the directors of Dev Bhoomi Automobiles, holding that a prima facie case under Sections 138 and 141 NI Act suffices at the pre-trial stage. The court clarified that directors can be held vicariously liable for the company’s dishonoured cheques without proving they signed the instrument. Consequently, lack of signatory status cannot shield directors from criminal summons in NI Act matters.

The Delhi High Court ruled that a petitioner's claim of having resigned before the alleged offences makes the question of his directorship a factual matter for trial, not a ground for invoking Section 482 to halt the case. Consequently, revision petitions seeking a stay were dismissed, signalling that inherent jurisdiction cannot be used to pre-empt trial on director-status questions. This impacts directors and companies facing criminal complaints under the Payment and Settlement Systems Act.

The Delhi High Court ruled that a director’s resignation is a disputed factual question that must be examined during trial, not through interlocutory revision. Resignation alone cannot shield a director from Section 138 NI Act prosecution.

The Bombay High Court has ruled that a director who resigns before the due date for filing a company’s income tax return cannot be held criminally liable under Section 276CC for the company’s subsequent non-filing. This clarifies that liability under the provision is tied to active directorship at the time of the default, not retrospective attribution, offering critical protection to exiting directors in corporate tax compliance cases.

The Karnataka High Court has ruled that mere book-value discrepancies arising from technological obsolescence cannot ground a claim of misfeasance against directors under Section 543 of the Companies Act, 1956. Liability is confined solely to unaccounted loans of Rs.24,022 with 6% interest from the winding-up date, clarifying that accounting adjustments alone do not equate to misconduct by directors in liquidation proceedings.

The Securities Appellate Tribunal ruled that a director who has properly resigned cannot be penalized for post-resignation misconduct unless they retained de facto control or actively participated in the violations. This clarifies the boundary of accountability for former directors and protects compliant exiters from retrospective liability under SEBI’s enforcement regime.

The Kerala High Court granted pre-arrest bail to a company director under BNSS Section 482, holding that mere positional role in a financial entity does not equate to criminal culpability under the BUDS Act when there is no evidence of fund receipt, control, or fraudulent intent. This clarifies that director liability requires individualized proof of active participation, not automatic imputation from corporate structure.

Karnataka High Court holds directors jointly and severally liable for unaccounted bank deposits of ₹66.14 lakh under Section 543 of the Companies Act 1956, emphasizing that failure to explain missing records triggers adverse inference. The ruling underscores directors' fiduciary duty to preserve financial records even after winding up, setting a precedent for stricter accountability in liquidation proceedings.

Delhi High Court rules that a director cannot be held criminally liable under Section 138 of the Negotiable Instruments Act for cheque dishonour after the company enters provisional liquidation, as they lose control over bank accounts. The ruling clarifies the limits of director liability in insolvency scenarios, offering critical protection for directors facing post-liquidation cheque bounce complaints.

Bombay High Court rules that former directors cannot be held liable under the MPID and BUDS Acts for company misconduct post-resignation unless personal misappropriation is proven. The judgment clarifies the limited scope of director liability in financial offences, offering critical protection for ex-directors facing criminal charges.

The Punjab & Haryana High Court ruled that directors cannot be held vicariously liable under Section 141 of the NI Act unless the complaint specifically alleges their active involvement in the company’s affairs at the time of cheque issuance. This judgment reinforces the need for precise averments to sustain prosecution against directors in cheque dishonour cases.