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        Companies Law

        1984 (8) TMI 273 - HC - Companies Law

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        Director liability prerequisites: absence of required statutory averment prevents invoking director liability provision, so discharges upheld. Complaints that omit the statutory averment required to show absence of other company officers cannot support imposing director liability under the ...
                        Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.

                            Director liability prerequisites: absence of required statutory averment prevents invoking director liability provision, so discharges upheld.

                            Complaints that omit the statutory averment required to show absence of other company officers cannot support imposing director liability under the Companies Act provision read with the related director liability clause; the petitions failed to allege absence of managing agent, secretaries, treasurers, managing director or manager, so the condition precedent for treating directors as solely liable was not established on the face of the complaints, and the revisional challenge to the magistrate's discharges was dismissed with the discharges upheld.




                            Issues: Whether the impugned discharges of the accused directors could be interfered with on revision when the complaints failed to contain the specific averment required by section 209(6)(d) of the Companies Act, 1956 necessary to fasten liability under section 211(7) of the Companies Act, 1956.

                            Analysis: The complaint petitions were examined for compliance with the statutory averment requirement in section 209(6)(d) of the Companies Act, 1956 which, read with section 211(7) of the Companies Act, 1956, is a prerequisite to fix liability on a director where the company lacks the other officers listed in that provision. The petitions of complaint did not allege that the company had neither a managing agent, nor secretaries and treasurers, nor managing director, nor manager, nor did they make the necessary exclusionary averment to show that a director alone was liable. In the absence of that specific averment, the statutory condition precedent for invoking director liability under section 211(7) was not established on the face of the petitions. The question whether the accused were officers in default under section 5 of the Companies Act, 1956 therefore did not require further consideration once the foundational averment was found lacking.

                            Conclusion: The revisional challenge to the Metropolitan Magistrate's discharges fails; no illegality is found in discharging the accused where the complaints lack the specific averment mandated by section 209(6)(d) of the Companies Act, 1956, and the petitions are dismissed.


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