BEHIND THE VEIL: PROMOTERS, POWER & LEGAL ACCOUNTABILITY IN CORPORATE FRAUD
THE ALCHEMY OF POWER—WHEN VISION TURNS VICIOUS AND LAW HUNTS THE INVISIBLE HAND
AUTHOR – SUSHAVAN DAS, STUDENT AT BRAINWARE UNIVERSITY, KOLKATA, WEST BENGAL
BEST CITATION – SUSHAVAN DAS, BEHIND THE VEIL: PROMOTERS, POWER & LEGAL ACCOUNTABILITY IN CORPORATE FRAUD – THE ALCHEMY OF POWER—WHEN VISION TURNS VICIOUS AND LAW HUNTS THE INVISIBLE HAND, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 5 (13) OF 2025, PG. 373-392, APIS – 3920 – 0001 & ISSN – 2583-2344
ABSTRACT
In the evolving landscape of Indian corporate governance, the promoter emerges as a paradoxical figure—both the architect of enterprise and, at times, the orchestrator of its undoing. This paper undertakes a doctrinal and analytical exploration of promoter-led corporate fraud, dissecting the legal anatomy of fiduciary breach, regulatory evasion, and judicial accountability. Anchored in the statutory framework of the Companies Act, 2013, SEBI Regulations, and the Bharatiya Nyaya Sanhita, 2023, the study interrogates whether India’s legal architecture is sufficiently robust to deter, detect, and prosecute promoter misconduct.
Through a meticulous examination of landmark cases such as Satyam Computers, DHFL, and IL&FS, the research traces patterns of fund diversion, insider trading, and shell entity creation—each revealing systemic vulnerabilities in enforcement and oversight. The paper also delves into judicial doctrines like piercing the corporate veil and promoter liability beyond incorporation, highlighting their inconsistent application and limited deterrent effect.
Comparative insights from jurisdictions like the UK, US, and Singapore offer a global lens on fiduciary standards, disclosure norms, and enforcement efficacy, underscoring India’s need for reform. The study posits that while promoters wield disproportionate control over corporate affairs, the legal system often lags in holding them accountable—creating a chasm between statutory intent and enforcement reality.
Ultimately, this research advocates for a recalibration of India’s corporate governance ethos—one that balances entrepreneurial freedom with ethical restraint, and innovation with integrity. By illuminating the legal fault lines and proposing targeted reforms, the paper contributes to the broader discourse on transparency, stakeholder protection, and the future of corporate accountability in India.
Keywords:Promoter misconduct, corporate fraud, fiduciary breach, regulatory evasion, judicial accountability, veil piercing, SEBI regulations, Companies Act 2013, insider trading, governance reform