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TMI Blog2020 (2) TMI 1417X X X X Extracts X X X X X X X X Extracts X X X X ..... securities market for a period of 4 years - THAT:- Misfeasance committed by the company -HELD THAT:- An independent director shall be held liable only in respect of such acts of omission or commission by a Company which had occurred with his knowledge, attributable through a Board processes, and with his consent or connivance or where he had not acted diligently. In the instance case, there is no finding by the WTM that the acts of the Company in the collection of the funds had occurred with the appellant's knowledge or that the appellant was part of the decision making processes through Board's resolution or that the funds and the activities of the Company was being done with his consent or connivance. Further, we find that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollected and further restrained the appellant and others from accessing the securities market and prohibited them from buying, selling or otherwise dealing in securities market for a period of 4 years. The appellant being one of the directors and being aggrieved by the impugned order has filed the present appeal. 2. The facts leading to the filing of the appeal is, that the appellant was appointed on February 26, 2015 as an independent director and within a few months resigned on July 21, 2015, which resignation was accepted by the company on August 31, 2015 and intimated to the Registrar of Companies on October 05, 2015. 3. The contention of the appellant before the WTM and before us was that he was appointed as an independent direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spute of the fact that the appellant was appointed as an independent director by the company in order to comply with the eligibility criteria for CIS application under the relevant Regulations. We also find that a specific assertion was made that he did not attend any Board meeting which fact has not been disputed by the respondent. We also find that the appellant was not directly associated with the persons having control over the affairs of the company nor was involved in the running of the company and this fact has been stated by the company itself. We also find that the appellant was not holding any shares in the company. 7. In the light of the aforesaid admitted facts, the mere fact that the company had mobilized certain funds under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his consent or connivance. Further, we find that there is no finding that the appellant had not acted diligently. In fact, the record indicates the appellant was only appointed for a period of 5 months and had not attended any meeting of the Board. 9. We are also of the opinion that Madras High Court (supra) in its decision in fact exonerates the ex-officio chairman of the company on the ground that there was no negligence committed by the said ex-officio chairman. The said decision is clearly not applicable to the facts and circumstances in the instant case. 10. In the light of the aforesaid, the impugned order in so far as the appellant is concerned cannot be sustained and is quashed. The appeal is allowed to that extent. - - Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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