Gauhati High Court
Shri Yognedra Kumar Maheshwari vs The Registrar Of Companies & Ors on 11 October, 2011
Author: T Vaiphei
Bench: T Vaiphei
IN THE GAUHATI HIGH COURT
THE HIGH COURT OF ASSAM, NAGALAND, MEGHALAYA, MANIPUR,
TRIPURA, MIZORAM AND ARUNACHAL PRADESH
SHILLONG BENCH
Criminal Petition No. (SH) 16 of 2011
Shri Yognedra Kumar Maheshwari,
Son of Late S.N. Maheshwari,
Resident of B-7-5089 Vasant Kunj,
New Delhi-110070. : Petitioner
-Vs-
1.The Registrar of Companies,
Morellow Building,
Shillong-793001.
2.Union of India
Through Secretary,
Ministry of Corporate Affairs,
Shastri Bhavan, New Delhi.
3.M/s DSS E Contact Ltd.
Through Chief Executive Officer,
NEDFI's IT Park,
B.K. Kakoti Road, Ulubari,
Guwahati, Assam-781007. : Respondents
BEFORE
THE HON'BLE MR JUSTICE T VAIPHEI
For the Petitioner : Mr HS Thangkhiew, Sr.Adv.
Mr P Nongbri Junior Adv.
For the Respondents : Mr R Deb Nath, CGC.
Date of hearing : 11.10.2011
Date of Judgment & Order : 11.10.2011
JUDGMENT AND ORDER (ORAL)
Heard Mr HS Thangkhiew, the learned senior counsel assisted by Mr P Nongbri Junior, the learned counsel for the petitioner.
2. Also heard Mr R Deb Nath, the learned CGC appearing for the respondents, who once again seeks time to obtain instruction. Considering the nature of the case as projected in the criminal petition and also of the fact that Crl.Petn. No.(SH)16/2011 Page 1 of 3 the case was directed to be listed for disposal as a first and fixed item on 20.09.2011, the prayer is rejected.
3. The material facts of the case are that M/s DSS E Contact Ltd. is a public limited company and was incorporated under the Companies Act, 1956. According to the petitioner, he was at one time an employee of this company and was directed by the company in the month of June, 2003 to accept the assignment of Additional Director of the Company. The petitioner accepted the assignment and was appointed as Additional Director of the Company w.e.f. 30.06.2003. The fact of his appointment was also communicated to the Registrar of Companies by the company vide Form No.32, which is at Annexure-P-5 to the criminal petition. It is the case of the petitioner that he never received any remuneration from the company as its Director nor was he ever in charge of the affairs of the company. Section 260 of the Companies Act, 1956 deals with the appointment of Additional Director of a company which is as under:-
" Additional Directors:
Sec.260: Nothing in Section 255, 258 or 259 shall effect any power conferred on the Board of Directors by the articles to appoint additional directors.
Provided that such additional director shall hold office only up to the date of the next annual general meeting of the company.
Provided further that the number of directors and additional directors together shall not exceed the maximum strength fixed for the Board by the articles."
4. On a plaint reading of the aforesaid provision, it is clear that the Additional Director appointed under Section 260 is to hold the Office only up to the date of the next annual general meeting as provided under Section 166 of the Act whereafter he is to automatically vacate his office. In other words, the tenure of the Additional Director so appointed is a fixed tenure and will come to an end on the date of the next annual general meeting of the company. The law therefore mandates that the tenure of the Additional Director will cease to have effect by the operation of law irrespective of whether the annual general Crl.Petn. No.(SH)16/2011 Page 2 of 3 meeting was actually convened or not. In the instant case, the tenure of the petitioner had come to an end by efflux of time on 30.09.2003 when the Annual General Meeting (AGM) of the company was admittedly due. The petitioner was not appointed again as the Additional Director of the company thereafter. It would appear that the respondent authorities filed C.R. Case No.906-915 (S) of 2008, under Section 220(3) read with Section 162(1) of the Companies Act, 1956 before the learned Chief Judicial Magistrate, Shillong, and one of the accused in that complaint petition is the petitioner. The cause of action of the complaint so filed admittedly arose on 29.11.2003 i.e. when the petitioner had already ceased to be the Additional Director of the company by the operation of law. That being the position, the petitioner could not have committed the offences charged against him and the company. The legal position as found by me is also consistent with the decision of the Division Bench of the Madras High Court rendered on 31.12.2003.
5. For what has been stated in the foregoing, there is no prima facie case against the petitioner for the offence punishable under Section 220(3) read with Section 162(1) of the Companies Act, 1956 and the criminal proceeding in so far as the petitioner is concerned is liable to be set aside. Resultantly, the criminal petition succeeds. C.R. Case No. 906-915 (S) of 2008, under Section 220(3) read with Section 162(1) of the Companies Act, 1956 pending before the learned Chief Judicial Magistrate, Shillong is hereby quashed in so far as the petitioner is concerned, but by directing the parties to bear their respective costs.
JUDGE Lam Crl.Petn. No.(SH)16/2011 Page 3 of 3