Appointment of firm or body corporate to office or place of profit under the company ‑ Contravention of sub‑section (1) ‑ Instance of - Companies Law - Circular : No. 19/75,

Circular : No. 19/75, dated 12 ‑ 9 ‑ 1975 Subject:- Appointment of firm or body corporate to office or place of profit under the company ‑ Contravention of sub ‑ section (1) ‑ Instance of The Company Law Board had occasion to study an instance where a body corporate had been appointed by a company to render secretarial and other services to the latter. The contract of appointment was silent on the question of the tenure of the appointment, and only mentioned that the appointment was terminable at the will of the company. On an examination of the case, it has been decided that the appointment of any firm or body corporate to an office or place of profit under a company by a contract or arrangement terminable at will and/or without the approval of the Central Government, is in contravention of section 204(1) and prosecution for the same lies under section 629A. Since the appointment is in contravention of section 204(1), it should also be treated as void under section 23 of the Indian Contract Act and the company should be asked to recover the remuneration paid, in addition to the liability to prosecution under section 629A.