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TMI Blog1983 (3) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... an Magistrate, Calcutta. The impugned proceeding has arisen out of a complaint filed on November 14, 1967, by the Additional Registrar of Companies, West Bengal, against Ashoka Marketing Ltd., and its four directors and secretary alleging commission of an offence under section 629A read with section 635B of the Companies Act, 1956. The substance of the complaint is that the accused company and four other companies, viz ., Ashoka Cement Ltd., Jaipur Udyog Ltd., Rohtas Industries Ltd. and Sone Valley Portland Cement Co. Ltd., brought into existence a common concern named Sahu Cement Service with a view to getting various services including appointment of personnel for all the participating companies, that Sahu Cement Service on behalf of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Sri D. N. Gupta was never an employee of the accused company and his employers were Sahu Cement Service of which the accused company was merely an organiser and agent, (3) that the services of Sri D.N. Gupta were never lent and transferred to the accused company as alleged and could not be legally transferred without a tripartite agreement (between the transferor, the transferee and the employee concerned) of which there is no allegation or averment in the complaint, and (4) that section 635B of the Companies Act, 1956, does not constitute or create a criminal offence punishable under section 629A of the Act. The learned advocate for the petitioner has elaborated the aforesaid points and relied on the decision in the case of Mahaldera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sputed that the organisation named Sahu Cement Service formed by the memorandum of agreement dated June 19, 1959 (which is annexure "Z" to the petitioners' application), between the accused company as organizers and four companies which were manufacturers of cement for rendering technical services to them was a separate legal entity and that Sri D.N. Gupta was appointed regional engineer in the said organisation at Calcutta by the letter of appointment date April 16, 1960 (annexure "A" to the application), subsequently superseded by the letter dated May 16, 1960 (annexure "Y" to the application), on the terms and conditions mentioned therein. The said letters of appointment were signed by one T.P. Bhalle, director for Sahu Cement Service. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her can only be affected by a tripartite agreement between the employer, the employee and the third party the effect of which would be to terminate the original contract of service by mutual consent and to make a new contract between the employee and the third party. Therefore, when an employer orders an employee to do a certain work for another person, the employee still continues to be in his employment. The only thing that happens in such a case is that he carries out the orders of his master. The employee has the right to claim his wages from the employer and not from the third party to whom his services are lent or hired. It may be that such third party may pay his wages during the time that he has hired his services, but that is becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overall control of its day to day business. Directors are normally concerned with matters of policy of a company and not with its actual daily operations. So the allegation that accused Nos. 2 to 6 were directors of the accused company without any averment of their taking part in its day-to-day business operations does not make out a case for taking cognizance of an offence punishable under section 629A read with section 635B of the Act (See Girdharilal Gupta v. D. N. Mehta AIR 1971 SC 2162, Mahalderam Tea Estate P. Ltd. v. D.N. Prodhan [1978] CHN 336; [1979] 49 Comp. Cas. 529 (Cal.). On the point whether section 635B creates an offence punishable under section 629A of the Act, the learned advocate for the petitioners has submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that where a public company or a private company which is subsidiary of a public company, is an existing company, the re-appointment of a person as a managing or whole-time director for the first time after the commencement of the Companies (Amendment) Act, 1960, shall not have any effect unless approved by the Central Government. But, in my view, section 635B of the Companies Act, 1956, is not pair materia with section 269(2) of the Act as section 635B contains the specific direction that a company proposing to discharge an employee during the course of any investigation of the affairs and other matters relating to the company "shall send by post to the Company Law Board previous intimation in writing of the action proposed against the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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