Section 269(2) of the Companies Act is declaratory only, so prosecution under section 629A was not maintainable.

Section 269(2) of the Companies Act, 1956 was held to be declaratory and not penal in nature, because it only provides that a re-appointment does not take effect without Central Government approval and does not itself impose an express prohibition or direction. Since liability under section 629A arises only on contravention of a statutory prohibition or direction, the provision was found not to create a punishable offence. Prosecution on that basis was therefore not maintainable.

---

---

Issues: Whether section 269(2) of the Companies Act, 1956 creates a punishable offence so as to attract section 629A of the Companies Act, 1956.

Analysis: Section 269(2) was held to be only declaratory in nature. It states that a re-appointment shall not take effect unless approved by the Central Government, but it does not contain any express direction or prohibition against a person acting under such re-appointment. Penal liability under section 629A presupposes a contravention of a statutory direction or prohibition, and in the absence of such a prohibition in section 269(2), no offence could be said to be created. The limitation point therefore did not arise.

Conclusion: Section 269(2) does not create an offence, and prosecution under section 629A is not maintainable on that basis.

---