AIR 2020 SUPREME COURT 1061

Supreme Court Of India

Hon'ble Judge(s): Rohinton Fali Nariman, S. Ravindra Bhat, V. Ramasubramanian , JJJ

Companies Act (18 of 2013) , S.241, S.337, S.339— Freezing of assets - Liability for fraudulent conduct of business - Power under Ss. 241, 337 and 339 can be exercised only against officers of Company in which acts of mismanagement are alleged and not against any other person - Appellant, former MD and CEO of Bank charged for not taking precaution to prevent fraud perpetuated by Company - Order freezing assets of appellant, unsustainable. Under Section 241(2), the Central Government, if it is of the opinion that the affairs of the Company are being conducted in a manner prejudicial to public interest, may apply itself to the Tribunal for orders under Chapter, which is headed 'prevention of oppression and mismanagement'. Apart from the vast powers that are given to the Tribunal under S. 242, powers under Ss. 337 and 339 are also given in aid of this power, which will apply mutatis mutandis. S. 337 refers to penalty for frauds by an officer of the company in which mis-management has taken place. Likewise, S. 339 refers to any business of the company which has been carried on with intent to defraud creditors of that company. Obviously, the persons referred to in S. 339(1) as persons who are other than the parties 'to the carrying on of the business in the manner aforesaid' which again refers to the business of the company which is being mismanaged and not to th....