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

Mr. Arvind Rao, a director of Kaveri Textiles Ltd., learns that a shareholder is likely to sue him for breach of duty over an inventory write-off approved by the board. No proceeding has yet been filed. He believes he acted honestly and reasonably. Which forum can he approach for relief at this stage?

He can apply to the High Court. Section 463(2) lets an officer who reasonably apprehends a proceeding for negligence, default, breach of duty, misfeasance or breach of trust seek relief there, and the High Court has the same powers it would have if the proceeding were already before it.

  1. AThe High Court, by applying on reasonable apprehension of a proceedingCorrect
  2. BThe Registrar of Companies, by filing a representation
  3. CThe Special Court, by seeking anticipatory directions
  4. DThe Tribunal, by filing a petition under its inherent powers

Explanation

Under section 463(2), an officer who has reason to apprehend that a proceeding will or might be brought against him for negligence, default, breach of duty, misfeasance or breach of trust may apply to the High Court. The High Court has the same power to relieve him as a court hearing the proceeding under sub-section (1). The Registrar is only a person who is called to show cause, not the forum for relief.

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