Wednesday, October 15, 2014

Gujarat High Court strikes down part of RBI Default Note

The Gujarat High Court has struck down a part of the Reserve Bank of India (RBI) circular that allows banks to declare all directors of a defaulting company wilful defaulters and bar them from banking services or other business ventures for five years. The circular shatters the concept of the identity of a company different and distinct from its directors without providing any safeguards. It does not distinguish between a director who is involved in the day-to-day functioning of a company as against those who are not. The circular paints all directors with the same brush.

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