Valid resignation and accepted resignation bar enforcement against a former director for acts linked to that office.

A person who has validly resigned from a company and whose resignation has been accepted cannot be proceeded against as a continuing director for later enforcement action based on that office. The Supreme Court of India held that, where the record showed resignation had been tendered and duly accepted, the basis for fastening liability and attaching the individual's bank accounts could not be sustained. The impugned order was therefore set aside insofar as he was concerned.

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Issues: Whether the order passed against the appellant could survive after his resignation from the company had been tendered and accepted.

Analysis: Action had been initiated by the securities regulator against the company for issuance of redeemable preference shares in violation of company law, and the appellant was proceeded against on the footing that he was a director at the relevant time. The record showed that he had resigned on 10 March 2009 and the resignation had been duly accepted by the company. In view of this, the basis for fastening liability on him and attaching his bank accounts could not be sustained.

Conclusion: The appellant was not liable to be proceeded against as a continuing director, and the impugned order was set aside insofar as he was concerned.

Ratio Decidendi: A person who has validly resigned and whose resignation has been accepted cannot be proceeded against as a director for subsequent enforcement action based on that office.

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