Supreme Court: Director Cannot Use Company Funds to Secure Personal Bail

The Supreme Court held that a director cannot use company funds, directly or indirectly, to secure personal bail, as it violates Section 185 of the Companies Act, 2013.

In this case, bail was granted subject to a substantial deposit, which was arranged through company-linked funds under the guise of a “loan.”

The Court rejected this justification, noting the absence of statutory compliance such as board approvals and lack of any legitimate business purpose.

It emphasised that company funds cannot be diverted for personal liabilities and warned against disguising such transactions to bypass legal restrictions.

[Satinder Singh Bhasin v. Government of NCT of Delhi & Ors.]