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TMI Blog2000 (10) TMI 904X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2 to 4 are directors of the said company who are responsible for the day-to-day conduct of the business of the company. The accused-company approached the complainant for finance for purchase of machinery and accordingly, a lease agreement was executed on 31-1-1997, between the complainant and the accused-company. The lease agreement was for Rs. 31,89,368 and the amounts were payable in 35 monthly instalments of Rs. 71,507 each as per repayment schedule to the lease agreement and the first instalment was for Rs. 6,86,623. It is the case of the complainant that the accused had issued two cheques bearing No. 106174, dated 19-11-1997, for Rs. 76,091 and cheque No. 106190, dated 19-1-1998 for Rs. 79,220. Both the cheques were drawn on Centurion Bank Ltd., Nariman Point, Mumbai. Both the cheques were dishonoured for want of sufficient funds. Thereafter, the complainant sent a notice dated 14-5-1998, intimating the factum of dishonouring the cheques and further demanding the due payment. The said notice dated 14-5-1998, was sent by registered post and it is said to have been served on 18-5-1998. When within 15 days, no payment was received from the accused, the present complaint was fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Addl. Director, on the last date when the first annual general meeting ought to have been held, i.e., on 16-3-1993, the learned counsel for the first respondent submitted that the said ground has not been raised by the petitioner in his application for recalling of process nor was the said contention advanced by the learned counsel for the petitioner before the court below and, therefore, the said contention cannot be permitted to be raised for the first time by the petitioner before this court. I have bestowed my thoughtful consideration to the rival contentions advanced by the learned counsel for the parties. 6. In the application made by the present petitioner seeking recall of the process, it is averred that the first accused-company was incorporated under the Companies Act, on 17-9-1991. The memorandum and articles of association of the said company show that at that time Mr. Sumir Nagar (accused No. 2) and Ms. Shakuntala Nagar (accused No. 4) were the directors of the first accused-company. It is also stated in the application that on 13-4-1992, the present petitioner was co-opted as one of the Addl. Directors of the accused-company. The petitioner tendered his resign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the complainant has not specifically denied in its reply the specific averment made by the petitioner in para 2 of the application that he tendered his resignation as director of the company on 2-12-1992. The complainant in their reply only stated that no documentary evidence has been produced by the petitioner proving his resignation as additional director on 2-12-1992. Form No. 32 clearly shows that the petitioner resigned as Addl. Director on 2-12-1992, and, therefore, he ceased to be director when the lease agreement was entered into between the complainant and the first accused-company and the two cheques issued by the first accused-company were dishonoured. 7. Even if it be assumed that the petitioner did not resign as Addl. Director of the first accused-company on 2-12-1992, in my view, since the petitioner was co-opted as Addl. Director on 13-4-1992, his tenure could not have exceeded beyond the last date on which the next annual general meeting should have been held which in the case of the first accused-company would be the first annual general meeting in accordance with the first proviso to section 166. In the application made by the petitioner seeking recall of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Phillips, were entitled to remuneration as directors. Article 101 of the company provided that at the ordinary meeting all the directors should retire from office. Section 49 of the Companies Act provided that the directors were bound to summon a general meeting of the company once in every calendar year. After 1905 no meeting was called but the two directors continued to act. It was held that they vacated the office on the last day on which the annual meeting should have been held, that is on December, 31, 1906, and that therefore they were not entitled to remuneration thereafter." (p. 330) The Division Bench of the Madras High Court thus held that the directors who were due to retire at the annual general meeting next to be held should be held having vacated their office on the last date on which the annual general meeting should have been held under law and in consequence such directors ceased to be directors after such date. Turning now to section 260, it would be seen that the first proviso provides that Addl. Director shall hold office only up to the date of the next annual general meeting. That means an Addl. Director of the company shall cease to be director of the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t when the identical question arose in another case in 1944 counsel appearing for the parties accepted the decision in Consolidated Nickel Mines Ltd., In re [1914] 1 Ch. D. 883. That decision was accepted in the latter case in the trial court, also before the Court of Appeal and also before the House of Lords in which the leading speech was of Lord Simonds. All those decisions and the observations there made have been considered by Venkatarama Ayyar J. in the Madras case and it is not necessary for us to rehear the same. The conclusion reached by the court was that a director who was bound to retire by rotation as well as a director who was an Addl. Director being co-opted by the other directors should be treated as having vacated their office on the last day on which the annual general meeting of the company could have been held. Incidentally, we may observe that the editors of leading text books on the subject in England have referred to the English decisions as laying down the law on the subject. We are in respectful agreement with the decision of the Madras High Court." (p. 280) In the present case, the first accused-company was initially incorporated as a private limited c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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