PNB fraud may become a test case for judging roles of independent directors

The NCLAT, in its recent order, upheld the plea by the Ministry of Corporate Affairs to freeze personal assets of independent directors associated with companies being investigated in the PNB scam.

Independent directors are in a tizzy. This follows the recent National Company Law Appellate Tribunal (NCLAT) order upholding the plea by the Ministry of Corporate Affairs to freeze personal assets of independent directors associated with companies that are being investigated for their involvement in the Punjab National Bank scam. 

Legal experts say the power to freeze personal assets of directors during the course of an enquiry or investigation in the operation of the company is available under Sections 221 and 242 (1) of the Companies Act, 2013. However, the power to do so is not absolute, but based on facts