CII strongly reacts on Mahindra`s sentencing in Bhopal case

Industry body CII today pleaded for immunity to non-executive directors from criminal liability for offences committed by the company, by changing law.

Last Updated: Jun 24, 2010, 00:52 AM IST

New Delhi: In a strong reaction to
sentencing of industrialist Keshub Mahindra in the Bhopal gas
case, industry body CII today pleaded for immunity to non-
executive directors from criminal liability for offences
committed by the company, by changing law.

CII President Hari Bhartia in a statement said Mahindra,
a former non-executive chairman of Union Carbide, was charged
under the same sections of IPC as the officers in default -
managing director, executive director, works manager and
others -- who are directly involved in the day-to-day
running of the company.

"CII strongly recommends that the law regarding the
potential liability of non-executive and independent directors
needs to undergo a change...It strongly recommends that a
non-obstante (providing immunity) clause be incorporated in
the Companies Bill 2009 to exclude non-executive directors
from any vicarious criminal liability for offences committed
by the company," Bhartia said.

Twenty-six years after the world`s worst industrial
disaster that had left over 15,000 people dead, a Bhopal court
on June 7 convicted former Union Carbide Chairman Keshub
Mahindra along with seven others to two years of imprisonment.

The CII said the immunity clause for non-executive
directors should have over-riding effect on all other laws.

It said that non-executive directors "cannot be made to
undergo the ordeal of a trail for offence of non-compliance
with a statuary provision unless it can be established prima
facie that they were liable for the failure on part of the
company".

Chamber President said the large companies operate in
several jurisdictions and have to comply with various legal
and regulatory requirements.

He said if non-executive directors are not given the
immunity for acts of their companies, industry would witness a
scenario where good independent directors would be reluctant
to join board of companies.

Last week, HDFC Chairman Deepak Parekh had reportedly
echoed similar concern saying that if independent directors
are held responsible for industrial accidents, they would be
unwilling to take the responsibilities on the boards.

-PTI