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Interpretation of section 263 of the Companies Act regarding the appointment of directors through a single resolution and its consequences under section 629A. Analysis: The judgment by the High Court of Allahabad involved an appeal by the complainant against the appellate order of the Sessions Judge of Saharanpur. The case revolved around the contravention of section 263 of the Companies Act, specifically regarding the appointment of directors through a single resolution and the subsequent application of section 629A for penalties. The relevant provisions of the Act were considered, emphasizing the requirements for appointing directors and the consequences of contravening such provisions. The court highlighted the importance of section 263(1) of the Act, which prohibits the appointment of two or more directors through a single resolution without prior agreement at a general meeting. The judgment cited the specific language of the Act to illustrate the legal framework governing such appointments. Additionally, section 629A was discussed as a penal provision for breaches of the Act where specific remedies are not outlined elsewhere. The case involved shareholders of a Co-operative Company Ltd. in Saharanpur and a general meeting held for the appointment of directors. The complainant alleged a violation of section 263(1) due to the simultaneous proposal of four director names under a single resolution. The City Magistrate initially convicted the respondents, but the Sessions Judge overturned the decision, leading to the current appeal. The court deliberated on the interpretation of the provisions of section 263 in conjunction with section 629A. It noted that while the simultaneous proposal of multiple director names could constitute a contravention, the existence of sub-section (a) of section 263 rendered such resolutions void ab initio. As a result, the resolution itself would be deemed non-existent in the eyes of the law, absolving the accused of punishable offenses under section 629A. Ultimately, the court upheld the decision of the Sessions Judge, emphasizing that in cases of controversial breaches of the Act, the benefit of doubt must favor the accused. The judgment concluded that the acquittal was reasonable and legal, warranting no interference in the appeal against the acquittal. Consequently, the appeal by the complainant was dismissed, affirming the decision of the Sessions Judge.
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