Additional Directors equally responsible for Company Affairs as Regular Directors: Calcutta HC [Read Order]

In a very recent decision the Calcutta High Court observed that additional directors of a company appointed under Section 161 (1) of the Companies Act, 2013 are equally liable for the company’s affairs, just as regular directors of the company.

The petitioner in the present case is Surendra Kumar Singhi.

The company’s directors had been accused of failing to fully disclose and/ or explain certain adverse remarks made in an auditors’ report with respect to the Financial Year 2013-14. All the other directors accused had pleaded guilty and paid the fine imposed as punishment.

However, the petitioner contended that he was innocent and submitted before the Court that he was appointed as an independent director from June 2, 2014 onwards and that he was not involved in the preparation of or discussion on the relevant financials of the company ending March 2013, which were carried out prior to his appointment.

The petitioner also pointed out that even the Union Ministry of Corporate Affairs (MCA) had categorically instructed the authorities concerned that unnecessary criminal proceedings should not be filed against independent directors.

The petitioner was an additional director when the financial statements under scrutiny were signed i.e. September 5, 2014, the Court was told and his status of being an additional director/ director in an independent capacity was not reflected in the MCA portal.

Whereas the petitioner highlighted that he had only given his consent to be appointed as an independent director, it was also observed that the petitioner had not filed any complaint with the MCA about the wrong information maintained on its portal.

Referring to the relevant provisions under the Companies Act, Justice Shampa Dutt (Paul) noted that an additional director has the same powers, responsibilities and duties as other directors.

“Additional directors are on equal footing, in terms of, of power, rights, duties, and responsibilities, as other directors are. The responsibility of an Additional Director being the same as that of a director (but [different] from an independent director) they remain responsible, as the statute provides for the same,” the judgment stated.

“They are also entitled to seek appointment as a permanent director at the Annual General Meeting. The additional director must utilize his/her powers in the best interest of the company and the shareholders,” the Court added.The Court made the observations while dismissing a discharge plea preferred by the former director of a company.

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