Advocate Bal Kishan Sharma
Independent Directors are vital pillars of Corporate Governance, entrusted with ensuring fairness, transparency, and accountability in company operations. However, their ability to function independently and without fear is closely tied to the protection afforded by law and the accuracy of regulatory records. A recent case before the Delhi High Court—W.P.(C) 1382/2025, filed by Mr. Bal Kishan Sharma, a registered Independent Director and seasoned corporate professional—has brought this issue into sharp focus.
The Issue: Misclassification in MCA Records
Mr. Sharma approached the Hon’ble Delhi High Court seeking rectification of his designation in the Ministry of Corporate Affairs (MCA) records. He was erroneously reflected as a “Director” instead of a “Non-Executive Independent Director” in the company master data maintained by the Registrar of Companies (RoC). This seemingly clerical misclassification had serious repercussions. Mr. Sharma found himself unnecessarily implicated in consumer and legal proceedings before forums such as the Consumer Commissions, National Consumer Disputes Redressal Commission (NCDRC), Real Estate Regulatory Authority (RERA), and even criminal courts.
Judicial Intervention and Policy Response
On 4th February 2025, Justice Sachin Datta of the Delhi High Court took note of the grievance and directed the MCA to treat Mr. Sharma’s email dated 28.12.2024 as a formal representation. The Court further directed the RoC to decide the matter within eight weeks and issue a reasoned order if rejecting the request.
Subsequently, an internal communication from MCA dated 9 April 2025 indicated that the Ministry had resolved to introduce a “category field” in the company master data, in addition to the existing “designation” field. This change, which is based on the e-Form DIR-12, is aimed at accurately capturing the status of directors and is currently pending implementation by the service provider (LTI Mindtree).
A Call for Systemic Correction
The case of Mr. Sharma is not just a personal legal battle; it is a reflection of a systemic gap that needs urgent redressal. Accurate classification of directors in MCA records is essential not only for regulatory clarity but also for protecting professionals who serve the cause of good governance in companies.
The MCA’s decision to revise the structure of company master data by adding a “category” field is a positive and much-needed step, which now has been implemented by the MCA.
Legal Framework and Protection for Independent Directors
The misclassification of directors is not a trivial issue. It undermines established legal protections and exposes individuals to unnecessary litigation. The Supreme Court has consistently held that Independent and Non-Executive Directors should not be held liable for company actions unless there is clear evidence of direct involvement. A few notable decisions include:
- SEBI vs. Gaurav Varshney, [(2016)14 SCC 430];
- Sunil Bharti Mittal vs. Central Bureau of Investigation & Ors. [(2015) 1 S.C.R. 377];
- Municipal Corporation of Delhi v. Ram Kishan Rohtagi and Ors.” AIR 1983 Supreme Court 67;
- Ravindranatha Bajpe v. Mangalore Special Economic Zone Ltd & Ors, (2022) 15 SCC 430, decided on 27.09.2021;
- Sunita Palita & Others V. M/S Panchami Stone Quarry (2022) 14 S.C.R. 458 decided on 1.8.2022;
Moreover, MCA Circular No. 1/2020 explicitly advises authorities not to initiate proceedings against Independent or Non-Executive Directors without specific evidence of wrongdoing. Inaccurate MCA records directly contradict these judicial and policy safeguards, thereby eroding confidence in the regulatory environment.
Conclusion
Independent Directors should not be burdened with legal liabilities arising from administrative errors. As governance professionals, Company Secretaries have a critical role in ensuring that filings such as DIR-12 are accurate and compliant. The profession must also continue to engage with regulators and the judiciary to advocate for the protection of bona fide directors, who play an essential role in India’s corporate governance ecosystem.
