Resignation of director

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Querist : Anonymous

Querist : Anonymous (Querist)

28 March 2013 A Resignee Director still he is liable to action taken by him during his tenure.

Ajay Mishra

Ajay Mishra (Expert)
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30 March 2013 Hi

Yes, he/she will be liable for any activity during their tenure.

No director of a company in his individual capacity has power to act on behalf of a company in any way unless the Board of directors delegates any power to him as provided in the Articles.
In State of Haryana v Brijlal Mittal (98) (3) Scale 383 (SC), it was held that vicarious liability of a person for being prosecuted for an offence committed under the Act by a company would arise if at the material time he was in charge of and was also responsible to the company for the conduct of its business. Simply because a person was a director of the company it did not necessarily mean that he fulfilled both these requirements to make him liable. Conversely, without being a director a person could be in charge of and responsible to the company for the conduct of its business.
Any director acting individually has no power to act on behalf of the company in respect of any matter except to the extent to which any power or powers of the board have been delegated to him by the board within the limit permitted by the Companies Act or any other law. The position of the Chairman of the board of directors is not substantially different from an individual director. [Shubh Shanti Services Ltd. v Manjula S. Agarwalla (2005) 60 SCL 280 (SC)].
Where a director, who was empowered under articles of associations to enter negotiations and contracts, and rescind and vary all such contracts, executed a lease agreement for and on behalf of company, such lease agreement was binding on company even though no separate resolution was passed by Board of directors of company authorising director to execute such an agreement. [Mohta Alloy & Steel Works v Mohta Finance and Leasing Co. Ltd. (1997) 89 Comp Cas 227 (Del)].
Unless the power to institute a suit is specifically conferred on a particular director, he would have no authority to institute a suit on behalf of the company. Individual directors are vested with only such powers as are available to them either under the memorandum or articles of the company, or otherwise by the board of directors. [Floating Services Ltd. v MV 'San Fransceco Dipalola' (2004) 52 SCL 762 (Guj)].

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