Section 31 of The Export-Import Bank of India Act, 1981
Defects in appointments not to invalidate acts, etc.
- (1)No act or proceeding of the Board or of any committee of the Exim Bank shall be questioned on the ground merely of the existence of any vacancy in, or defect in the constitution of, the Board or the committee, as the case may be.
- (2)No act done by any person acting in good faith as a director shall be deemed to be invalid merely on the ground that he was disqualified to be a director or that there was any other defect in his appointment.
Summary
- Decisions made by the Board of Directors or its committees remain valid even if there is an empty seat or vacancy.
- A technical mistake in how the Board or a committee was formed cannot be used to challenge their actions.
- If a person acts as a director in a way that is honest and fair, their actions are legal even if a mistake is later found in their appointment.
- Even if a person was legally disqualified from being a director, the actions they took in good faith before the discovery remain valid.
Practical examples
FAQ
1. What happens if a director is found to be disqualified after they have already voted on several matters?
Their past acts are not deemed invalid as long as they were acting in good faith at the time.
2. Can a company refuse to pay back a loan by claiming the Exim Bank committee was not formed correctly?
No, technical defects in the constitution of a committee do not invalidate its acts under this law.
Test yourself
Q1.Under Section 31 of The Export-Import Bank of India Act, 1981, which of the following is a valid reason to legally challenge an act of the Board?
Q2.According to Section 31 of The Export-Import Bank of India Act, 1981, what is the status of an act done by a disqualified director?
Q3.Under Section 31 of The Export-Import Bank of India Act, 1981, what impact does an empty seat on a committee have on its proceedings?
Q4.If a defect is found in the constitution of the Board, what does Section 31 of The Export-Import Bank of India Act, 1981 require for its past acts to remain valid?