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TMI Blog1965 (11) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... section 282 of the Act. The circumstances of the case are briefly the following. The petitioner, Dr. M. Ramachandra Bail, was born on February 8, 1899. He completed sixty-five years on February 8, 1964. He was elected as a director of the Mylapore Hindu Permanent Fund Limited, which is a company as defined in the Act, at a general body meeting held on 28th July, 1962. At that time, he was less than 65 years old and, therefore, he was within the age limit prescribed for the directors of companies, namely; 65 years, in section 281 of the Act. Under section 256 of the Act, which provides for the retirement of directors by rotation at one-third of the strength at every annual general meeting, his turn to retire came at the general body meeting (92nd) which was scheduled to be held, after the proper prior notice to shareholders, on April 24, 1965. Three other directors, namely Messrs. Ramaswami Iyer, Shanmugam and Balasundaram, were also due to retire on that date. But since the petitioner had completed 65 years of age on February 8, 1964, his reappointment as director had to depend upon a special resolution being passed, granting him exemption under section 281 of the Act. There was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... May 6, 1965, involved a violation of section 282(2)( b ) of the Act, one M. R. Kanniah, a shareholder, filed the complaint, which led to the conviction of the petitioner and the present revision case. Section 282(2)( b ) reads thus: "282. (2)( b ) Any person who acts as director under any appointment which is invalid, or which has terminated, by reason of his age, shall be punishable with fine which may extend to fifty rupees for every day during which the failure continues or during which he continues to act as aforesaid, as the case may be. " The lower court held that the petitioner automatically lost his directorship by the operation of the l/3rd rotation rule at the very commencement of the meeting held on April 24, 1965, and that the fact that item III of the agenda could not be taken up, or the fact that the meeting was adjourned first of all to 1st May, and then sine die for consideration of that item, did not alter this position. Section 280(2), second proviso, of the Act contained a qualification "that where a person who had been appointed as a director of a public company or of a private company which is a subsidiary of a public company, before he has attained the ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealt with the prosecution of certain directors for failure to submit returns after the period when they should have retired as directors notwithstanding the failure to hold a general body meeting in the anterior period. Sadasivam J. applied the principle laid down in the two earlier Bench decisions cited above and exonerated the directors from criminal liability, as they ceased to be directors on the expiry of the anterior period. There was also one other decision, viz ., In re Hindustan Co-operative Insurance Society Ltd. [1961] 31 Comp. Cas. 193 , which also lays down a similar proposition. In the lower court it was urged by the petitioner that as long as item III did not come up for consideration at the meeting held on April 24, 1965, and on the subsequent date, it must be held that the general body meeting had been continued indefinitely, and that the resolution was still on its agenda. To repel this argument, the lower court held that the 1/3rd rotation rule came into effect at the very commencement of the general body meeting and that, for the rule to take effect, the meeting need not proceed to its conclusion. In answer to this reasoning of the lower court, learned co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t (1) which is invalid or (2) which has terminated by reason of his age. This section is placed in the Act in the middle of a group of sections which are catalogued under the sub-heading "Retiring age of Directors." There is a comma after the word "terminated" and also after "age." Viewed grammatically this form of punctuation may indicate that the age disqualification should operate both for the purpose of invalidating the appointment as well as for terminating it. This position of the punctuation in the section itself, together with the heading " Retiring age of Directors " for the group of sections in which section 282 is found, may give support to the view that section 282(2)( b ) of the Act will apply only to cases of invalidity of the appointment of a director on account of the age disqualification enunciated in section 211 of the Act, besides applying to the termination of the appointment on account of the age disqualification. Maxwell on the Interpretation of Statutes, the eleventh edition, at pages 48 and 49, gives the nature of the importance to be attached to the headings prefixed before sections or sets of sections in some modern statutes. " They are to be regarded as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eting held on 1-5-1965 together with the office note dated 6-5-1965 for information and orders. Noted.Messrs. IT. S. Ramaswami Iyer, T. M Shanmugam and M.K. Balasundaram shall be deemed to have been reappointed under section 256(4)( b ) of the Companies Act. Dr. M. R. Bail continues as a director." The directors recorded that Messrs U.S. Ramaswami Iyer, T. M. Shanmugam and M. K. Balasundaram shall be deemed to have been reappointed under section 256(4)( b ) of the Companies Act and the petitioner continues as a director. The argument of the learned counsel is that before the board of directors could deem the three former persons as reappointed, there must be the fact of their actually having retired. What applies to the former three persons would also apply to the petitioner, and therefore in the view of the directors, the petitioner also had lost his appointment, at the general body meeting on April 24, 1965. Learned counsel urged that the recording in the minutes of the directors that Dr. Bail (the petitioner) "continues as a director" would be tantamount to an appointment, and the functioning of the petitioner as director in any event after the date of the aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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