Section 407 - Consequences of termination or modification of certain agreements. - Companies Act, 1956

Consequences of termination or modification of certain agreements. 407. (1) Where an order [1] [* * *] made under section 397 or 398 terminates, sets aside, or modifies an agreement such as is referred to in clause (d) or (e) of section 402, ___ (a) the order shall not give rise to any claims whatever against the company by any person for damages or for compensation for loss of office or in any other respect, either in pursuance of the agreement or otherwise; (b) no managing or other director, [2] [* * *] or manager whose agreement is so terminated or set aside [3] [* * *] shall, for a period of five years from the date of [4] [the order terminating or setting aside the agreement, without the leave of the [5] [Tribunal] be appointed or act, as the managing or other director [6] [* * *] or manager of the company. [7] (2)(a) Any person who knowingly acts as a managing or other director, [8] [* * *] or manager of a company in contravention of clause (b) of sub-section (1); (b) [9] [* * *]; and (c) every other director or every director, as the case may be, of the company, who is knowingly a party to such contravention; shall be punishable with imprisonment for a term which may extend to one year, or with fine which may extend to [10] [fifty thousand rupees], or with both. (3) [11] [No leave shall be granted] under clause (b) of sub-section (1) unless notice of the intention to apply for leave has been served on the Central Government and that Government has been given an opportunity of being heard in the matter. ---------------------------------------- Notes:- [1] The word "of a Court" omitted by the Companies (Amendment) Act, 1988, section 66, w.e.f. 31-5-1991. [2] Omitted by the Companies (Amendment) Act, 2000, w.e.f.13-12-2000, as provisions relating to managing agents, secretaries and treasures had become redundant after abolition of system by Act 17 of 1969. [3] Omitted by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000, as provisions relating to managing agents, secretaries and treasures had become redundant after abolition of system by Act 17 of 1969. [4] Substituted by the Companies (Amendment) Act, 1960, Act 65 of 1960, section 154, for "the order terminating the agreement". [5] Substituted for Company Law Board by the Companies (Second Amendment) Act, 2002, w.e.f. a date yet to be notified. Earlier the quoted words were substituted for Court by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991. [6] Omitted by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000, as provisions relating to managing agents, secretaries and treasures had become redundant after abolition of system by Act 17 of 1969. [7] Fees prescribed is Rs. 2500, w.e.f. 1-4-2000. On notification of the commencement of the amendment, power will be transferred to the National Company Law Tribunal. [8] Omitted by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000, as provisions relating to managing agents, secretaries and treasures had become redundant after abolition of system by Act 17 of 1969. [9] Omitted by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000, as provisions relating to managing agents, secretaries and treasures had become redundant after abolition of system by Act 17 of 1969. [10] Substituted for "five thousand rupees" by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000. [11] Substituted by the Companies (Amendment) Act, 1988, for the words "No Court shall grant leave" w.e.f. 31-5-1991.