9911796707
TMI Blog1981 (4) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... section 309(1), provision ( b ) of the companies Act, 1956 (for short "the Act"), that is to be obtained or is it the previous approval of the Central Govt., under section 310 of the Act that is to be applied for and got. The 1st petitioner is a public limited company with its registered office at Golf Links Road, Kowdiar, Trivandrum, and the 2nd petitioner is a director and shareholder of the 1st petitioner. The 2nd petitioner, who is a solicitor and advocate practising at Bombay, was appointed as a director of the 1st petitioner in 1974. The 2nd petitioner began to render professional services to the 1st petitioner from September, 1976, onwards. The 1st petitioner, through its advocates, by Ex. P-1( c ) application, requested the 2nd re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the director within the meaning of section 310 of the Act arose. On May 31, 1979, Ex. P-2 reminder was also sent to the 3rd respondent. The 2nd petitioner is a director of two other companies and he has been rendering legal services to those companies from 1968 onwards. Exhibits P-3 and P-4 are certificates issued by the Central Govt. under section 309(1) of the Act to the said companies. In spite of Ex. P-2 reminder, no sanction was forthcoming from the respondents. It was under the above circumstances that the petitioners approached this court with this original petition. The reliefs prayed for in the original petition are: (1) for a writ in the nature of mandamus or any other writ, direction or order to the respondents to issue a ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (1) The remuneration payable to the directors of a company, including any managing or whole-time director, shall be determined, in accordance with and subject to the provisions of section 198 and this section, either by the articles of the company, or by a resolution or, if the articles so require, by a special resolution, passed by the company in general meeting, and the remuneration payable to any such director determined as aforesaid shall be inclusive of the remuneration payable to such director for services rendered by him in any other capacity : Provided that any remuneration for services rendered by any such director in any other capacity shall not be so included if ( a )the services rendered are of a professional nature, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vey that meaning, proper language has been used." In this decision, the Bombay High Court also considered the effect of section 198(1) and held (p. 110): "What was sought to be controlled was the cost of management, and if what was sought to be controlled was the cost of management, then what had to be considered was managerial remuneration and not remuneration paid for any other purpose." It was by the 1965 amendment that the words "and the remuneration payable to any such director determined as aforesaid shall be inclusive of the remuneration payable to such director for services rendered by him in any other capacity" were inserted in section 309(1). Section 198 of the Act fixes a ceiling for managerial remuneration. Section 309 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and the payment of which is to be limited to the ceiling fixed by section 198. The net result is that the remuneration for professional service rendered by a director will not be a remuneration to be determined under section 309 in accordance with section 198. Then the further question is whether section 310 which provides for increase of remuneration has anything to do with the payment of remuneration for professional services. The increase can only be an increase of remuneration. As per section 309, the remuneration payable to a director takes in only managerial remuneration and remuneration for services of a non-professional nature rendered by him in any other capacity, and remuneration the increase for which permission is required und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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