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TMI Blog2015 (8) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... intment Managing Director was below age of 70 years but crossed that age during his tenure – Word 'continue', therefore, must be read contextually – Decision in the case of P. Suseela & Ors. v. University Grants Commission & Ors. [2015 (8) TMI 69 - SUPREME COURT] followed - Decided against Appellant. - NOTICE OF MOTION (L) NO. 434 OF 2015, SUIT (L) NO. 146 OF 2015 - - - Dated:- 16-7-2015 - G.S. PATEL, J. For The Plaintiff : Mylsamy, Abhijeet C. Mahadeokar and Manal Dhanani For The Defendant : Ms. Prembhari Thakkar, Navroz Seervai,Sr. Adv., Ms. Sneha Sheth and Ms. Aashni Dalal JUDGMENT 1. The Notice of Motion seeks an order against the 2nd Defendant from functioning or continuing to exercise his powers as Chairman and Managing Director of the 1st Defendant-Company. I have heard Mr. Mylsami, learned Counsel for the Plaintiff, Mr. Seervai, learned Senior Counsel for Defendant No. 2 and Ms. Thakkar, learned Counsel for the 1st Defendant. I have considered the material before me. With their assistance, I have also considered the statutory provisions applicable and the precedents cited. 2. A few facts are necessary. The 1st Defendant is a public limited listed C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his creditors or makes, or has at any time made, a composition with them; or (d) has at any time been convicted by a court of an offence and sentenced for a period of more than six months. (4) Subject to the provisions of section 197 and Schedule V, a managing director, whole-time director or manager shall be appointed and the terms and conditions of such appointment and remuneration payable be approved by the Board of Directors at a meeting which shall be subject to approval by a resolution at the next general meeting of the company and by the Central Government in case such appointment is at variance to the conditions specified in that Schedule: Provided that a notice convening Board or general meeting for considering such appointment shall include the terms and conditions of such appointment, remuneration payable and such other matters including interest, of a director or directors in such appointments, if any: Provided further that a return in the prescribed form shall be filed within sixty days of such appointment with the Registrar. (5) Subject to the provisions of this Act, where an appointment of a managing director, whole-time director or manager is not appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e legislative provision. 7. Mr. Seervai's response to this is, firstly, that the 2013 Act cannot possibly be retrospective. For it to be so, it would necessarily have to explicitly say as much in so many words. Ordinarily, no statute is construed to have retrospective operation. The section, Mr. Seervai, submits can, therefore, only apply to the appointments done after the 2013 Act came into force, i.e. only to all the appointments of Managing Directors effected after 1st April 2014. Statutory retrospectivity can never be left to a matter of presumption; it must be clearly stated. Gulab Chand v. Kudilal Anr., AIR 1958 SC 554. In the Affidavit in Reply, he also submits that a bar, such as the one Mr Mylsamy's commends, can never be presumed where there are vested rights in place. 8. In the context of the latter, a recent decision of the Supreme Court in P. Suseela Ors. v. University Grants Commission Ors. 2015 (3) SCALE 726 : 2015 (3) ALL MR (SC) 981; per R.F. Nariman, J. is most instructive. The Court drew a distinction between the impact of a statute on existing rights as against its impact on vested rights. Citing the five-judge bench decision of the Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision to the contrary, be deemed to be subject to a proviso to the effect that no fine or sum of money in the nature of a fine shall be payable for or in respect of such licence or consent. It was held that the provisions of the said section applied to all leases whether executed before or after the commencement of the Act; and, according to Buckley, L.J., this construction did not make the Act retrospective in operation; it merely affected in future existing rights under all leases whether executed before or after the date of the Act. The position in regard to the operation of Section 5(1) of the amending Act with which we are concerned appears to us to be substantially similar. A similar question had been raised for the decision of this Court in Jivabhai Purshottam v. Chhagan Karson [Civil Appeal No. 153 of 1958 decided on 27-3-1961] in regard to the retrospective operation of Section 34(2)(a) of the said amending Act 33 of 1952 and this Court has approved of the decision of the Full Bench of the Bombay High Court on that point in Durlabbhai Fakirbhai v. Jhaverbhai Bhikabhai [(1956) 58 BLR 85]. It was held in Durlabbhai case [(1956) 58 BLR 85] that the relevant provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reply, the 2nd Defendant provides an illustration: a situation where a person is appointed on 2nd April 2014 at a time when he is 68 years old. Mr. Seervai submits that in that situation, two years later, the person in question would cease to be the Managing Director on account of the provisions of Section 196(3)(a) of the 2013 Act. 11. On a closer reading of Section, I am unable to agree with this formulation. It seems to me that the matter turns on an interpretation of the word 'continue' in Section 196(3) of the 2013 Act. This word seems to have been carried over from the earlier Section 267 of the 1956 Act, as have sub-sections 3(b), 3(c) and 3(d), equivalent to Section 267(a), (b) and (c). The 2013 Act also use the identical expression 'continue'. What is it that the proviso tells us? Is the age of 70 an absolute bar? That is not even Mr. Mylsamy's suggestion. A public limited company may well appoint a person of 80 years of age as a Managing Director; all that is needed is a special resolution. That is what the proviso plainly says. 12. In fact, it is the proviso that perhaps yields a clue to how the word 'continue' should be interpreted in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issible; it actually defeats the avowed statutory intent. After all, the proviso only adds a further check or balance: it demands a justification in the form of a special resolution for the appointment of a person over 70. It is hardly plausible to suggest that on turning 70 - surely an occasion for celebration and, barring the unfortunate, a physiological inevitability - a Managing Director, only for that reason, should find himself keeping the company of insolvents, fraudsters and the morally discombobulated. All this apart from the sheer incongruity represented by the irresistible comparison with prominent persons, past and present, in public life in this country. If a person even a decade older can be entrusted with the collective national destiny of over a billion people. 14. Finally: the age bar is in itself not new. Section 269 of the 1956 contained a parallel provision, though it seems to have operated somewhat differently. The relevant part, Section 269(2) said: Appointment of managing or whole-time director or manager to require Government approval only in certain cases. (1) ... (2) On and from the commencement of the Companies (Amendment) Act, 1988, no appoin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bus. 17. Indeed, Mr. Mylsamy himself agrees that the age limit is not a disqualification in and of itself. It only demands a special resolution. Since the Managing Director's 70th birthday is known from the day he joins the company, it is entirely possible for a general meeting to be called and that special resolution to be passed in such a way and at such a time that there is no unseating of the Managing Director at all. In other words, a company may well order its affairs to give its Managing Director an advance pass to remain aboard the bus, or to ensure that if he is forced to alight one evening, he is allowed to board the bus again the very next morning. To do any of this would be as permissible as it is entirely unnecessary and meaningless, and I do not believe that any statute should be read in a manner that results in so pointlessly pedantic a result. All of this militates against the interpretation canvassed by Mr. Mylsamy. 18. The only conclusion that one can draw is that the word 'continue' is correctly used in its strict sense in relation to clauses (b), (c) and (d) of Section 196(3), i.e., as a cessation eo instante on the occurrence of any of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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