ASIC v Narain: Violation of Director Duties and Misleading Claims

Business and
Corporations Law
ASIC v Narain [2008] FCAFC 120

Introduction
• In ASIC v Narain case, the issues relating to
violation of directors duties was raised.
• A lawsuit was filed by ASIC against
Citrofresh International Ltd (CIL) for making
misleading claim to ASX.
• Mr Narain was also involved in the suit
since he was acting as the managing
director and CEO of the corporation.
• The case was rejected by the trial judge,
however, the Federal Court revered the
decision.

Background of the
Case
• Two letters were sent by CIL to the ASX
on 27th September 2005.
• The company claim to find the cure for
HIV and method to prevent common
cold.
• These letters were sent to the ASX by
the company secretary of the
enterprise.
• However, Mr Narain was involved in the
process of drafting of these letters.

Background of the
Case
• The ASIC alleged that the company and
Mr Narain has violated the provisions
given under section 1041H of the act
(ASIC, 2010).
• The trial judge rejected the claims
raised by ASIC.
• However, the judgement of the Federal
Court reversed the order given by the
trial judge and hold both the company
and Mr Narain liable.