NCLAT upholds MCA's move to freeze assets of independent directors in PNB fraud case

Punjab National Bank | PNB, the second largest of the 17 public sector banks, has written off Rs 44,565.59 crore as technical write-offs in a four-year period starting FY17. As against these write-offs, the bank managed to recover just Rs 12,027.97 crore, data obtained by Velankar under the Right to Information (RTI) Act revealed. (Image: PTI)

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26 Aug, 2025 12:21

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The National Company Law Appellate Tribunal (NCLAT)Thursday upheld the Ministry of Corporate Affairs' plea to freeze assets of independent directors of companies belonging to Nirav Modi and Mehul Choksi, in connection with the Punjab National Bank fraud case.

The independent directors had earlier moved the tribunal appealing against the freeze on their assets, including bank accounts.

The directors argued in court that they were only 'independent,' and had no role in the day-to-day operations of the two companies.

The directors include Sanjay Rishi, President of American Express for South Asia and Network Partners, a former Pepsico executive Gautham Mukkavilli, and former Wipro Chief Financial Officer Suresh Senapaty. These were part of the board of Nirav Modi's firm as independent directors.

This judgement will bring the focus back on independent directors, who have been booked by Central Bureau of Investigation in various banking scams. This judgement, say, observers, may help strengthen the case of investigation agencies against independent directors.

Landmark judgment

The Ministry of Corporate Affairs (MCA) had filed a petition before the National Company Law Tribunal, which passed an interim order on February 23. In the interim order, NCLT gave directions to freeze assets and properties of about 70 respondents, including a few independent directors

The MCA also moved NCLAT to seek invocation of section 241, 246 with section 339 and 340 including section 222 of the Companies Act, 2013. Liability under sections 339 and 340 to extend to partners or directors in firms or companies.

The NCLAT has allowed independent directors and individuals to withdraw a subsistence allowance of Rs 2 lakhs per month. A source close to one of independent director told Moneycontrol, “The independent directors may move Supreme court against this order after analysing order copy”.

A source in MCA told Moneycontrol “This is a landmark judgement and shall go a long way in redefining the role of independent directors in the corporate ecosystem in our country. Any person chooses his company where he is being associated with a thorough understanding of the working and financial corporate governance level”.

The MCA has also ordered Serious Fraud Investigation Office action against 114 companies of Nirav Modi and Gitanjali group of companies. The MCA also intervened in the petition filed by Nirav Modi group in the bankruptcy court in the United States, to stall bankruptcy proceedings.