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

Rohit, a director of Kaveri Textiles Ltd, signed off a transaction after taking reasonable care and in good faith. A civil suit for negligence is filed against him, and the court finds he may be liable but acted honestly and reasonably. Under the Companies Act, 2013, what may the court do?

The court may relieve Rohit wholly or partly from liability on terms it thinks fit. Section 463(1) allows this where an officer acted honestly and reasonably and, considering all circumstances, ought fairly to be excused. No member resolution or Central Government decision is needed.

  1. ARelieve him wholly or partly from liability on such terms as it thinks fitCorrect
  2. BHold him liable in full because honesty is irrelevant to negligence
  3. CRefer the matter to the Central Government for a decision on relief
  4. DRelieve him only if the company's members pass an ordinary resolution

Explanation

Section 463(1) lets the court relieve an officer wholly or partly if he may be liable but acted honestly and reasonably and ought fairly to be excused. Honesty is therefore directly relevant. Neither the Central Government nor a members' resolution is required for this relief.

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