Case against director who siphoned doff money from company bank a/c

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In the present case, it is important to first examine whether the director who siphoned off money had the authority or power to operate the company’s bank account independently. If he was an authorized signatory and misused his position for personal gain, it amounts to “criminal breach of trust” and “misappropriation of company funds” under Bhartiya nyaya sanhita (BNS). However, if he was not authorized and illegally withdrew funds, then it becomes a clear case of fraud and cheating. The company should first conduct an internal inquiry and collect all documentary evidence such as bank statements, board resolutions, and authorization letters. Based on the findings, the company can take both civil and criminal action. A civil recovery suit may be filed before the appropriate court to recover the siphoned amount, along with interest and damages. Simultaneously, a criminal complaint can be lodged with the local police or Economic Offences Wing (EOW) against the director for fraud and misappropriation of company funds. The company should also call for a Board Meeting and pass a resolution authorizing the Managing Director or another director to take legal action. It is also advisable to inform the Registrar of Companies (ROC) about the misconduct of the director. Hence, a proper factual inquiry, documentation, and dual legal approach—civil and criminal—are the most effective remedies for recovering the siphoned company funds.

Advocate Surender Jalandhra LawRato