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Issues Involved:
1. Validity of resignation of a director without acceptance by the board. 2. Obligations of the director post-resignation. 3. Requirement for co-option of another director before resignation. Detailed Analysis: 1. Validity of Resignation of a Director Without Acceptance by the Board: The core issue was whether the resignation letter dated December 4, 1972, by the petitioner constituted a valid resignation without its acceptance by the board, thereby absolving him of all liabilities from the date of resignation. The court noted that the Indian Companies Act, 1956, does not explicitly provide for the resignation of a director, unlike the provisions for managing agents under section 342. The court referred to various authoritative texts and precedents, including Halsbury's Laws of England, Palmer's Company Precedents, and Buckley on the Companies Acts, which collectively suggest that a director's resignation takes effect immediately upon the clear expression of intent to resign, irrespective of acceptance by the board or company. The court emphasized that the true position of directors is akin to agents of the company, and an agent can terminate his agency by notice. The court cited several cases, including Abdul Huq v. Katpadi Industries Ltd. and State of Bihar v. Sitaram Jhunjhunwala, which support the principle that a resignation takes effect immediately upon tendering, without the necessity of acceptance. Consequently, the court held that the petitioner's resignation took effect from December 4, 1972, when his intention to resign was unequivocally expressed in his letter. 2. Obligations of the Director Post-Resignation: The petitioner argued that after his resignation, he had no connection with the company and ceased to be an officer under the Act. The court agreed, noting that once a resignation is effective, the director is no longer liable for subsequent obligations or defaults of the company. The court referenced the Supreme Court's decision in Gindroniya v. State of Madhya Pradesh, which held that once a resignation notice is given and received, the individual is no longer in service and cannot be subjected to subsequent disciplinary proceedings. 3. Requirement for Co-option of Another Director Before Resignation: The first respondent contended that the petitioner should have co-opted another director before resigning, as the company was left with a single director. The court found no obligation under the Companies Act requiring a director to co-opt another before resigning. The power of co-option is an enabling provision to ensure quorum for meetings, not a mandatory precondition for resignation. The court concluded that there is no statutory or articles of association requirement for co-opting another director before resignation, thus rejecting this contention. Conclusion: The court invoked its inherent jurisdiction under section 482 of the Criminal Procedure Code to quash the proceedings against the petitioner. It held that the petitioner's resignation was effective from December 4, 1972, and he ceased to be a director from that date. The court found no legal obligation for the petitioner to co-opt another director before resigning. Therefore, the petition was allowed, and the criminal proceedings against the petitioner were quashed.
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