In this case, the question before the SAT was whether the AO was right in holding the Company Secretary of Deccan Chronicle Holdings Limited (DCHL) liable for being:
(a) signatory to the annual reports of the Company wherein the outstanding loans, interest and finance charges were understated; and
(b) further for being a signatory to the public announcement made by the company for buyback of its equity shares without having adequate free reserves thereby misleading investors/shareholders and violating the Companies Act?
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SAT interpreted Section 215 of the 1956 Act to indicate a fiduciary relationship upon the Board of Directors of the Company to verify the contents of the balance sheet before approving it. Once the balance sheet and the profit and loss statement are approved by the Board of Directors, then the ministerial task falls upon the company secretary and two of the directors to sign the balance sheet.
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SAT further stated that “the Company Secretary, is only there to authenticate the contents indicated in the balance sheet or in the offer document and is not required to go into the veracity of the buyback offer document and its legal compliances before authenticating the such document.” Such a duty was held as not to be a part of the responsibility of the Company Secretary.
Source: Barandbench
