Independent directors are rarely held liable in cases of corporate frauds. In one such case, the National Company Law Appellate Tribunal (NCLAT) on Thursday dismissed an appeal by the former independent directors on the board of companies of billionaire jewellery designer Nirav Modi against freezing of assets by the government. Modi is facing trial for defrauding Punjab National Bank of over Rs 14,000 crore.

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The independent directors on the Modi firms included India Inc’s high profile executives- American Express president Sanjay Rishi, former PepsiCo executive Gautham Mukkavilli and former Wipro CFO Suresh Senapathy. Most of them resigned after the fraud came to light.

These former independent directors had approached the appellate tribunal against an April order of National Company Law Tribunal (NCLT) Mumbai.

Personal assets of these top executives will continue to remain frozen during inquiry and investigation of fraud, as per the latest order of the NCLAT. However, the persons will be allowed to withdraw Rs 1 lakh per month from their accounts for their subsistence and of their families.

All of them are, however, barred from transferring or disposing off funds and properties belonging to them.

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In its order, the NCLAT said, “Apart from ‘freezing of assets of company on inquiry and investigation’, it is also open to the tribunal to freeze the assets of any person, including other companies and individuals even during inquiry and investigation of fraud under section 212 of the Companies Act, 2013.”

The Ministry of Corporate Affairs (MCA) in its petition had earlier sought a restraint order.

Source: DNA