1975 (9) TMI 91 - HC - Companies Law

Summary

Issues Involved:
1. Validity of resignation of a director without acceptance by the board.
2. Liability for failure to submit the balance-sheet and annual return.

Summary:

1. Validity of Resignation of a Director Without Acceptance by the Board:
The petitioner, who was the managing director of Blue Valley Dairies Private Ltd., was convicted u/s 220 and 159 read with section 162 of the Companies Act for failing to submit the balance-sheet and annual return for the year 1968. The petitioner argued that he had resigned from his directorship on January 17, 1968, and thus was not liable. The court noted that the Indian Companies Act does not explicitly provide for the resignation of a director, unlike the case of a managing agent u/s 342. The articles of association of the company also did not contain any provision regarding resignation. The court referred to precedents and practices, including Halsbury's Laws of England and Palmer's Company Law, which state that a director's resignation takes effect immediately upon the intention to resign being made clear, without the need for acceptance by the board or the company. The court concluded that the petitioner's resignation took effect from January 17, 1968, and he ceased to hold office from that date.

2. Liability for Failure to Submit the Balance-Sheet and Annual Return:
The court examined whether the petitioner was liable for the company's failure to submit the balance-sheet and annual return for the year 1968. Since the petitioner had validly resigned on January 17, 1968, he was not responsible for the subsequent non-compliance by the company. The court set aside the conviction and sentence imposed on the petitioner and acquitted him, ordering that the fine amounts, if paid, be refunded.

Conclusion:
The court allowed the petitions, set aside the conviction and sentence, and acquitted the petitioner, concluding that the resignation of a director takes effect immediately upon being tendered in writing, even in the absence of specific provisions in the Act or the articles of association.