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CS Professional · Compliance Management, Audit and Due Diligence · Relief and Remedies

Mr. Anand Rao, a director of Kaveri Textiles Ltd, signed a certificate relying on a faulty report from a senior executive. A civil suit alleges negligence and breach of duty. The court finds he is liable on the facts but that he acted honestly and reasonably and ought fairly to be excused. What can the court do?

The court may relieve the director wholly or partly from liability on such terms as it thinks fit, because he acted honestly and reasonably and ought fairly to be excused. The power under section 463(1) is not limited to partial relief.

  1. ARelieve him wholly or partly from liability on such terms as it thinks fitCorrect
  2. BRelieve him only if the Registrar files the suit
  3. CRelieve him only partly and never wholly
  4. DRefuse relief because honesty is not a defence to negligence

Explanation

Section 463(1) lets a court hearing a proceeding for negligence, default, breach of duty, misfeasance or breach of trust relieve an officer wholly or partly, on terms it thinks fit, if he acted honestly and reasonably and ought fairly to be excused. The option allowing only partial relief wrongly narrows the power.

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