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TMI Blog1976 (9) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... inayakarkoil Street, Tirunelveli-6. The petitioner, S.S. Lakshmana Pillai, is the director of the said company. The annual general meeting of the company in the year 1974 should have been held and the annual return made up to the date of the meeting should have been filed with the complainant on or before October 13, 1974. According to the provisions of section 159 of the Companies Act, 1956, the company and its directors are under a statutory obligation to file with the complainant, first respondent, an annual return in the prescribed form made up to the date of the annual general meeting. Till the date of the complaint namely, July 26, 1975, the default continued for 286 days. On the above allegations, it was prayed by the first respondent (complainant) that the petitioner has violated the provisions of the Companies Act of 1956 (hereinafter referred to as "the Act") making himself liable to be punished under the said Act. The petitioner in this petition has stated that as early as December 4, 1972, he had resigned his directorship and informed the Registrar of Companies that the company was not functioning and that the company may, therefore, be treated as a defunct company. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without an existence of the minimum number of directors on its board of directors. The said Form No. 32 was filed with the first respondent on June 28, 1973, and necessary enquiries were to be made from the company whether the resignation of the petitioner has been accepted. It is his case that the resignation does not take effect from the date when it was tendered and, therefore, the petitioner cannot take the plea that he had resigned from the directorship of the company with effect from December 4, 1972, as the company is an artificial person and it cannot function without the minimum number of directors. The company and the petitioner were advised to co-opt one more director as the company was left with a single director as per the office letter No. 2752/LC/75 dated March 1, 1975. The petitioner has not cared to comply with the directions of the office of the Registrar and the said letter was returned undelivered. The only point that arises for consideration is whether the letter of resignation sent by the petitioner dated December 4, 1972, would itself constitute a valid resignation without its acceptance by the board and absolve him of all his liabilities from the date of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f office which will expire in the normal course. Section 283 of the Act deals with the vacation of office by directors and the circumstances under which the office is vacated are mentioned therein. The provisions of section 283 which are relevant for consideration of the question that arises in this petition-are extracted below : "(1) The office of a director shall become vacant if ( a )he fails to obtain within the time specified in sub-section (1) of section 270, or at any time thereafter ceases to hold, the share qualification if any, required of him by the articles of the company ; ( b )he is found to be of unsound mind by a court of competent jurisdiction ; ( c )he applies to be adjudicated an insolvent; ( d )he is adjudged an insolvent; ( e )he is convicted by a court of any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than six mouths ; ( f )he fails to pay any call in respect of shares of the company held by him, whether alone or jointly with others, within six months from the last date fixed for the payment of the call unless the Central Government has, by notification in the Official Gazette, removed the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dents and practice on the subject. So far as the Indian Companies Act is concerned, this has followed the pattern of the British law relating to companies. If there is any provision in the articles giving right to a director to resign at any time, the resignation will take effect without any need for its acceptance by the board or the company in the general meeting. In the absence of any such provision relating to the resignation in the memorandum or articles of association, it is well settled that a resignation once made takes effect immediately when the intention to resign is made clear. In Halsbury's Laws of England, fourth edition, volume 7, at page 316, in paragraph 536 under the heading "Resignation", it is stated as follows: "Where by the articles a director has power to resign at any time, his resignation takes effect independently of acceptance by the other directors or the company. Where the articles of association of a company provide that the office of a director is to be vacated ipso facto if by notice in writing to the company a director resigns office, an oral resignation if accepted by the company is valid". Of course, it is not made clear here as to wha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hunwala AIR 1967 Patna 433 and Mohan Chandra v. Institute of Chartered Accountants AIR 1972 Delhi 91. Where a resignation states that it is to take effect on acceptance, or the articles so require, acceptance is necessary to end the tenure of office. Where, however, the resignation says that it is to take effect immediately, acceptance is not necessary unless the articles or any provision of law makes it necessary. Any form of resignation, whether oral or written, is sufficient provided the intention to resign is clear. It is, however, advisable that the resignation is in writing and also indicates the time when it is to take effect, so that it may serve as a record of reference in case of controversy. In the absence of any indication otherwise, a resignation takes effect immediately. Resignation will not, however, relieve him from any accountable or other liability which he may have incurred while in office. A resignation once made cannot be withdrawn except with the consent of the company or the board. See R. v. Mayor and Town Council of Wigan [1885] 14 QBD 908 (QB), Glossop v. Glossop [1907] 2 Ch 370 (Ch D) and Shivlal Motilal v. Tricumdas Mills Co. Ltd. [19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Government revoked his orders with a view that the enquiry ordered by the Commissioner may not be legal. But, on the same day, ordered a departmental enquiry against him and at the same time it placed him under suspension pending that enquiry. In this connection, a show-cause notice was issued to the appellant in that case on August 1, 1964. But, even before that show-cause notice was issued, on June 6, 1964, the appellant gave a notice to the Government terminating his services. The appellant in that case after the issue of the above-said notice, moved the High Court of Madhya Pradesh to quash the orders passed by the State Government on the ground that as he was no more in the service of the Government, the Government cannot take any departmental action against him. The contention of the appellant was resisted by the State. Government on the ground that notice given by the appellant on June 6, 1964 was invalid as it did not conform to the rules besides other contentions. The High Court accepted the above-said contention of the State Government and dismissed the writ petition. The appellant preferred an appeal by special leave to the Supreme Court questioning the dismissal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resignation was accepted by the employer unequivocally and consequently issued a writ of certiorari quashing the memorandum issued to him by the employer. "In Criminal Revision Case Nos. 328 and 329 of 1971 [ T. Murari v. State [1976] 46 Comp. Cas. 613 (Mad.)], wherein the same question arose, Krishna-swamy Reddy J. has held that even in the absence of a provision in respect of resignation under the Act (Central Act I of 1956) or under the articles of association of the company, the resignation tendered by a director or a managing director unequivocally in writing will take effect from the time when such resignation is tendered". Now, coming to the facts of the case, it is the admitted fact that the petitioner submitted his letter of resignation by letter dated December 4, 1972. The said letter reads as follows : "This is to inform you that the company is not functioning. Please treat it as defunct company as mentioned in the directors' report to the shareholders filed along with balance-sheet of the company as on December 31, 1971. The company has neither assets nor liabilities ; as such this request. Moreover I am also resigning my directorship, from today evening." T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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