A Delhi court has sentenced Naftogaz India's Managing Director, Mahdoom Bava, to one year and 10 months in prison for failing to deposit ₹17.69 crore in TDS during FY 2009-10. The court rejected the defense that the company's liquidation protects directors from criminal liability, setting a clear precedent for tax compliance. The MD has been granted temporary relief to appeal the ruling.
A Delhi court has convicted Naftogaz India Private Limited and its Managing Director, Mahdoom Bava, for failing to deposit Tax Deducted at Source (TDS) amounting to approximately ₹17.69 crore during the 2009-10 fiscal year. This ruling reinforces the legal stance that corporate liquidation does not shield company directors from criminal accountability for tax defaults.
The court rejected the argument that the winding-up of the company, which started in 2012, should absolve the directors of their past responsibilities under the Income Tax Act. The judgment clarifies that an offense committed during the company's operations remains valid and punishable, even if the business is no longer a going concern.
Regarding the sentencing, the court awarded Mahdoom Bava one year and 10 months of rigorous imprisonment. He was also fined ₹10 lakh, with an additional three months of simple imprisonment if the fine remains unpaid. The company, Naftogaz India, was also ordered to pay a fine of ₹10 lakh, to be recovered from its available assets by the official liquidator.
Following the conviction, the court granted bail to the Managing Director and suspended the sentence for 30 days, providing him time to appeal the verdict in a higher court. The matter is currently scheduled for the next hearing on September 25, 2026.
This case highlights the serious nature of statutory tax obligations in India. For corporate leadership, it serves as a strict reminder that the failure to deposit money deducted from salaries or payments as tax is a criminal offense. The court’s decision establishes that legal or insolvency proceedings cannot be used as an exit strategy to avoid personal criminal liability for such fiscal non-compliance.