Discretionary relief for directors may cover penalties, but not repayment claims without clear stakeholder evidence.

Section 372 of the Companies Act, 1929 was treated as a wide discretionary power that could extend to penalty proceedings and anticipated liability where a director acted honestly and reasonably without qualification shares; relief from fines and penalties was granted on those facts. Relief was not extended to repayment of remuneration said to belong to the company, because the court required clear evidence of the views and interests of shareholders, fellow directors, and creditors before cutting off such a claim. The company's solvency alone was insufficient, so relief from repayment was refused.

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Issues: (i) Whether the Court had jurisdiction under Section 372 of the Companies Act, 1929 to relieve a director from liability for penalties incurred by acting as a director without qualification shares, and whether such relief should be granted on the facts; (ii) Whether the Court should also relieve the director from liability to repay remuneration received while acting without being duly qualified.

Issue (i): Whether the Court had jurisdiction under Section 372 of the Companies Act, 1929 to relieve a director from liability for penalties incurred by acting as a director without qualification shares, and whether such relief should be granted on the facts.

Analysis: Section 372 was treated as a wide enabling provision capable of applying not only to proceedings for misfeasance but also to penalty proceedings and to anticipated claims within its terms. The Court accepted that a director who apprehends such liability may seek relief under sub-section 2. On the facts, the petitioner had acted honestly and reasonably, and his default in obtaining qualification shares was not serious. The penalty was penal in character and, in the circumstances, relief was appropriate.

Conclusion: Relief from liability for fines or penalties was granted in favour of the petitioner.

Issue (ii): Whether the Court should also relieve the director from liability to repay remuneration received while acting without being duly qualified.

Analysis: The proposed repayment concerned sums claimed to belong to the company, and the Court emphasised that relief under Section 372(2) should be exercised with caution in such cases. There was no evidence as to the views of the shareholders, brother directors, or creditors, and the company's solvency alone was insufficient to justify cutting off a possible claim without such material. In the absence of clear evidence on the interests of those concerned, relief from this liability was declined.

Conclusion: Relief from liability to repay remuneration was refused.

Final Conclusion: The petition succeeded only to the extent of the penal liability, while the claim to relieve the director from repayment of remuneration failed for want of sufficient material to justify the exercise of discretion.

Ratio Decidendi: Section 372 of the Companies Act, 1929 confers a discretionary power to relieve a director from penalties and certain liabilities, but relief against claims belonging to the company should not be granted without clear evidence of the views and interests of shareholders or creditors where those interests may be affected.

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