Companies Act Section 463 — Power of court to grant relief in certain cases
CHAPTER XXIX MISCELLANEOUS
Commercial / Corporate
Summary
Sub-section (1) deals with a court case brought against an officer of a company for negligence, default, breach of duty, misfeasance, or breach of trust. If the court finds that the officer may be liable for that conduct, but also finds that the officer acted honestly and reasonably, and that considering all the circumstances of the case, including how the officer was appointed, the officer ought fairly to be excused, the court may relieve the officer from liability, either completely or partially, on whatever terms the court thinks fit. However, the proviso to this sub-section states that in a criminal proceeding, the court has no power to grant relief from any civil liability that may attach to the officer for that same conduct.
Sub-section (2) covers a situation where an officer of a company fears that a proceeding will or might be brought against them for negligence, default, breach of duty, misfeasance, or breach of trust. In such a case, the officer may apply to the High Court for relief, and the High Court has the same power to relieve the officer as it would have had if a proceeding had actually been brought against the officer under sub-section (1).
Sub-section (3) sets a condition for granting relief. No court can grant relief to any officer under sub-section (1) or sub-section (2) unless the court has first served a notice, in the manner specified by the court, requiring the Registrar and any other person the court thinks necessary to show cause why such relief should not be granted.
Official Text
(1) If in any proceeding for negligence, default, breach of duty, misfeasance or breach of trust against an officer of a company, it appears to the court hearing the case that he is or may be liable in respect of the negligence, default, breach of duty, misfeasance or breach of trust, but that he has acted honestly and reasonably, and that having regard to all the circumstances of the case, including those connected with his appointment, he ought fairly to be excused, the court may relieve him, either wholly or partly, from his liability on such term, as it may think fit:
Provided that in a criminal proceeding under this sub-section, the court shall have no power to grant relief from any civil liability which may attach to an officer in respect of such negligence, default, breach of duty, misfeasance or breach of trust.
(2) Where any such officer has reason to apprehend that any proceeding will or might be brought against him in respect of any negligence, default, breach of duty, misfeasance or breach of trust, he may apply to the High Court for relief and the High Court on such application shall have the same power to relieve him as it would have had if it had been a court before which a proceedings against that officer for negligence, default, breach of duty, misfeasance or breach of trust had been brought under sub-section (1).
(3) No court shall grant any relief to any officer under sub-section (1) or sub-section (2) unless it has, by notice served in the manner specified by it, required the Registrar and such other person, if any, as it thinks necessary, to show cause why such relief should not be granted.