Should former directors expect personal liability exposure years after their resignations? The Central Bureau of Investigation searched Reliance Telecom offices and the residences of former directors Satish Seth and Gautam B.D. Doshi in connection with alleged fraud worth ₹114.98 crore, based on a State Bank of India complaint.

The searches reflect how regulatory and enforcement agencies pursue individual director accountability beyond corporate structures. CBI registered the case following SBI’s allegation that the bank was defrauded and suffered wrongful losses. The investigation targets conduct that allegedly occurred during the directors’ tenure at the telecom entity.

Personal searches of former directors signal that enforcement agencies view board positions as creating continuing exposure to criminal liability. The timing gap between alleged conduct and investigation demonstrates how corporate misconduct cases can surface years later, often triggered by creditor complaints or regulatory reviews.

SBI’s complaint mechanism reveals how financial institutions increasingly use criminal enforcement channels to pursue recovery. Banks filing criminal complaints against former directors creates a pattern in which lending relationships turn into potential criminal cases when repayment disputes arise. The ₹114.98 crore figure represents substantial exposure that justified CBI intervention rather than civil recovery proceedings.

What the public record does not reveal is whether the directors received advance notice of potential criminal liability during their tenure or whether board minutes documented the decisions now under investigation. Criminal cases against former directors often depend on reconstructing board-level decision-making through documentary evidence that may no longer be readily accessible.

The Reliance Telecom investigation follows a broader enforcement trend in which agencies pursue individual directors rather than limiting action to corporate entities. Former directors face personal criminal exposure even after severing formal ties with companies, particularly in cases involving alleged financial misconduct or creditor losses.

Criminal investigations create dynamics different from those of civil enforcement. Directors cannot rely on corporate indemnification to shield them from criminal liability, and D&O insurance typically excludes coverage for criminal acts. The personal nature of criminal proceedings means former directors must engage separate legal representation and face potential personal consequences, including prosecution and the attachment of assets.

The case demonstrates how creditor complaints can trigger criminal investigations that extend beyond corporate liability. SBI’s decision to pursue criminal rather than purely civil remedies suggests the bank viewed the alleged conduct as sufficiently egregious to warrant CBI involvement. This approach creates precedent for other financial institutions facing similar recovery challenges.

Board resignation does not terminate potential criminal liability for conduct during tenure. Directors who resign may discover years later that decisions made during their board service are subject to criminal scrutiny, particularly in cases involving creditor losses or alleged financial irregularities.

My Boardroom Takeaway

Current and former directors should understand that criminal liability exposure continues indefinitely for conduct during board tenure. Directors may wish to maintain personal legal insurance coverage beyond their active service period, particularly in companies with significant creditor exposure or complex financial transactions. Board minutes documenting the rationale for decision-making become critical evidence in subsequent criminal investigations, making contemporaneous record-keeping essential for future protection.