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May 2022

CORPORATE LAW CORNER

By Pramod Prabhudesai | Vikash Jain | Chartered Accountants
Kaushik M. Jhaveri | Company Secretary
Reading Time 7 mins
PART A | COMPANY LAW

3 Neera Saggi vs. Union of India & Ors. with Renu Chattu vs. Union of India & Ors. Supreme Court of India [2021] 164 CLA 370 (SC) Civil Appeal Nos. 2841 of 2020 & 3531 of 2020 Date of Order: 15th February, 2021

While Independent Directors have a vital role, they are intended to be independent, and where they have resigned from directorship and still impleaded in a case of fraudulent lending without hearing and considering facts relating to ex-independent directors, the order impleading them is liable to be set aside.

FACTS
The National Company Law Tribunal (‘NCLT’) and National Company Law Appellate Tribunal (‘NCLAT’), in the course of their proceedings relating to M/s IL&FS and M/s IFIN have impleaded Independent Directors (IDs) of Companies, among other Directors based on Serious Fraud Investigation Office (‘SFIO’) Report submitted before both NCLT and NCLAT.

The NCLT, while dealing with the question as to whether they should be impleaded observed that:-

a. SFIO had stated in its complaint before the Special Court at Mumbai that the IDs and CFO of the company ignored all alarming indicators and failed to save the interest of the company and its stakeholders by not raising these issues in the Board Meetings and remained mute spectators.

b. Further, it is revealed that in connivance with each other,
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