Indian industry is coming out in support of Mahindra & Mahindra Chairman Keshub Mahindra, convicted in the Bhopal gas leak case. Mahindra was non-executive chairman of Union Carbide when its factory had emitted the poisonous gas in December 1984, killing and maiming thousands.
The Confederation of Indian Industry (CII) has said non-executive directors should be given immunity from criminal liability for offences committed by the company. For this, the law needs to be changed.
Last week, according to reports, HDFC Chairman Deepak Parekh, who has spent years serving as non-executive director on the boards of many companies, had echoed similar concerns, saying if independent directors were held responsible for industrial accidents, they would be unwilling to take responsibilities on boards.
In a statement, CII President Hari Bhartia has pointed out that Mahindra was charged under the same sections of the penal code as the managing director, executive director, works manager and others 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.
CII has said the immunity clause for non-executive directors should have over-riding effect on all other laws. Non-executive directors, it has said, “cannot be made to undergo the ordeal of a trial for offence of non-compliance with a statutory provision unless it can be established, prima, facie that they were liable for the failure on the part of the company.”
The chamber president said large companies operated in several jurisdictions and had to comply with various legal and regulatory requirements. He said if non-executive directors were not given immunity for acts of their companies, industry would witness a scenario where good independent directors would be reluctant to join the board of companies.